Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

553 Sharkey's Fun Centre contains a number of electronic games, as well as a miniature golf course and various rides located outside the building.

image text in transcribedimage text in transcribed

553 Sharkey's Fun Centre contains a number of electronic games, as well as a miniature golf course and various rides located outside the building. Paul Sharkey, the owner, would like to construct a water slide on one portion of his property. Sharkey has gathered the following information about the slide: a. Water slide equipment could be purchased and installed at a cost of $240.000. According to the manufacturer, the slide would be usable for 12 years, after which it would have no salvage value. b. Sharkey would use straight-line depreciation on the slide equipment. c. To make room for the water slide, several rides would be dismantled and sold. These rides are fully depreciated, but they could be sold for $46,000 to an amusement park in a nearby city. d. Sharkey has concluded that about 28,000 more people would use the water slide each year than have been using the rides. The admission price would be $3.60 per person (the same price that the Fun Centre has been charging for the rides) e. On the basis of experience at other water slides, Sharkey estimates that incremental operating expenses each year for the slide would be as follows: salaries. $37,400; insurance, $1,800, utilities, $5,700; maintenance, $4,375. Required: 1. Prepare an income statement showing the expected incremental net income each year from the water slide. SHARKEY'S FUN CENTRE Incremental Income Statement Deduct Operating expenses

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Intermediate Accounting

Authors: Kin Lo, George Fisher

Volume 1, 1st Edition

132612119, 978-0132612111

More Books

Students also viewed these Accounting questions

Question

=+c) Does this model improve on the model in Exercise 18? Explain.

Answered: 1 week ago