Question
2.Alpaca Corporation had revenues of $295,000 in its first year of operations. The company has not collected on $19,800 of its sales and still owes
2.Alpaca Corporation had revenues of $295,000 in its first year of operations. The company has not collected on $19,800 of its sales and still owes $27,900 on $95,500 of merchandise it purchased. The company had no inventory on hand at the end of the year. The company paid $13,600 in salaries. Owners invested $18,500 in the business and $18,500 was borrowed on a five-year note. The company paid $4,600 in interest that was the amount owed for the year, and paid $8,600 for a two-year insurance policy on the first day of business. Alpaca has an effective income tax rate of 8%. Compute the cash balance at the end of the first year for Alpaca Corporation.
A. $203,640
B. $215,640
C. $183,640
D. $194,640
3.
Listed below are several transactions that took place during the first two years of operations for the law firm of Pete, Pete, and Roy.
| Year 1 | Year 2 | |||||
| Amounts billed to customers for services rendered | $ | 180,000 | $ | 230,000 | ||
| Cash collected from customers | 155,000 | 185,000 | ||||
| Cash disbursements: | ||||||
| Salaries paid to employees for services rendered during the year | 85,000 | 95,000 | ||||
| Utilities | 27,500 | 35,000 | ||||
| Purchase of insurance policy | 58,500 | 0 | ||||
In addition, you learn that the company incurred utility costs of $32,500 in year 1, that there were no liabilities at the end of year 2, no anticipated bad debts on receivables, and that the insurance policy covers a three-year period. |
| Required: | |
| 1. | Calculate the net operating cash flow for years 1 and 2. (Net cash outflows should be indicated by a minus sign.) |
Year 1 Year 2
Net Operating Cash flow
| 2. | Prepare an income statement for each year according to the accrual accounting model. |
| Income Statements: Year 1 Year 2 Revenues Expenses: Salaries Utilities Insurance Net Income (loss) |
| 3. | Determine the amount of receivables from customers that the company would show in its year 1 and year 2 balance sheets prepared according to the accrual accounting model. |
Year 1 Year 2
Receivables
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Financial And Managerial Accounting 9th Edition Bycrosson
Authors: Crosson
9th Edition
B00650OLZE
