[rehmanvohra]

Net Income from discontinued operations $24 -19 = $5m
Net loss from operations $3m
Net Income $2 million

[sagnik2422]

Hi, I have no idea how to solve this and it is due tomorrow , please help with steps, I thought gross profit would have been 120,000


Ajax Company appropriately accounts for certain sales using the installment sales method. The perpetual inventory system is used. Information related to installment sales for 2013 and 2014 is as follows:

2013 2014
Sales $ 300,000 $ 400,000
Cost of sales 180,000 280,000
Customer collections on:
2013 sales 120,000 100,000
2014 sales 150,000

Required:
1.
Calculate the amount of gross profit that would be recognized each year from installment sales.

[rehmanvohra]

2013 2014
Sales $ 300,000 $ 400,000
Cost of sales 180,000 280,000
Customer collections on:
2013 sales 120,000 100,000
2014 sales 150,000

Calculate GP rate:
2013 (300,000-180,000)/300,000 = 40%
2014 (400,000-280,000)/400,000 = 30%

Gross profit realized:
2013 120,000 * 40% = 48,000
2014 100,000 * 40% = 40,000
150,000 * 30% = 45,000
Total 85,000

[sagnik2422]

I need some help on this I get 12.77 % but this is marked wrong.


On June 30, 2013, the Esquire Company sold some merchandise to a customer for $30,000 and agreed to accept as payment a noninterest-bearing note with an 8% discount rate requiring the payment of $30,000 on March 31, 2014. The 8% rate is appropriate in this situation.

What is the effective interest rate on the note?

I did 1800 (discount on note receivable) divided by sales revenue of 28,200 and multiplied by 2 and got 12.77

[pready]

You have to use the formula for interest, which is: Interest (I) = Principal (P) times Rate (R) times time (T).

First start with the proceeds of $30,000 times the interest rate of 8% times the length of the note of 9 months divided by 12 months to get your interest amount of $1,800

Now the principal on the note is $30,000 proceeds minus $1,800 interest equals $28,200 principal.

Now you can calculate the effective interest rate on the $28,200 note.

The formula I = P * R * T can be rewritten as: R = I / (P * T)

So: $1,800 / ($28,200 * 9/12) equals 8.51% (rounded) Interest Rate.

[sagnik2422]

Hi I tried several answers, but I cannot figure out the right answer, please help with detailed steps, thanks in advance.


JWS Transport Company’s employees earn vacation time at the rate of 1 hour per 40-hour work period. The vacation pay vests immediately (that is, an employee is entitled to the pay even if employment terminates). During 2013, total wages paid to employees equaled $404,000, including $4,000 for vacations actually taken in 2013 but not including vacations related to 2013 that will be taken in 2014. All vacations earned before 2013 were taken before January 1, 2013. No accrual entries have been made for the vacations. No overtime premium and no bonuses were paid during the period.

Required:
Prepare the appropriate adjusting entry for vacations earned but not taken in 2013


I tried 404,000 , 400,000, 408,000

[sagnik2422]

For the question : record redemption of gift certificates in 2013, I put liability gift certificates as 1300 which is marked correct but when I put a credit to cash for 1300 it shows that cash is right account to put but 1300 is wrong, is there another account I have to add between?


Please help with steps :


Bavarian Bar and Grill opened for business in November 2013. During its first two months of operation, the restaurant sold gift certificates in various amounts totaling $5,200, mostly as Christmas presents. They are redeemable for meals within two years of the purchase date, although experience within the industry indicates that 80% of gift certificates are redeemed within one year. Certificates totaling $1,300 were presented for redemption during 2013 for meals having a total price of $2,100. The sales tax rate on restaurant sales is 4%, assessed at the time meals (not gift certificates) are purchased. Sales taxes will be remitted in January.

Required:
1.
Prepare the appropriate journal entries (in summary form) for the gift certificates sold during 2013 (keeping in mind that, in actuality, each sale of a gift certificate or a meal would be recorded individually). (If no entry is required for a event, select "No journal entry required" in the first account field.)

[pready]

1. For the total amount of gift certificates sold your accounts will be cash and Unearned revenue for $5,200

2. For the 80% take $5,200 times 80% to get your current liability amount. The other 20% will be long-term liability. There is no journal entry for this.

3. The $1,300 will be debited to Unearned Revenue and Credited to Revenues or Sales. For the difference between the $2,100 and $1,300 will be Debited to Cash and Credited to Revenues or Sales. This can be combined into one journal entry.

4. For this take the amount of your revenues from above times 4% to get the amount of sales tax. Your accounts will be Sales Tax Expense and Sales Taxes Payable.

[sagnik2422]

I need help finding the current and noncurrent portions of liability gift certificates.

I put 3900 for current but was marked wrong, and 1300 for noncurrent and was marked wrong.

Bavarian Bar and Grill opened for business in November 2013. During its first two months of operation, the restaurant sold gift certificates in various amounts totaling $5,200, mostly as Christmas presents. They are redeemable for meals within two years of the purchase date, although experience within the industry indicates that 80% of gift certificates are redeemed within one year. Certificates totaling $1,300 were presented for redemption during 2013 for meals having a total price of $2,100. The sales tax rate on restaurant sales is 4%, assessed at the time meals (not gift certificates) are purchased. Sales taxes will be remitted in January.

[sagnik2422]

I need help finding the current and noncurrent portions of liability gift certificates.

I put 3900 for current but was marked wrong, and 1300 for noncurrent and was marked wrong.

Bavarian Bar and Grill opened for business in November 2013. During its first two months of operation, the restaurant sold gift certificates in various amounts totaling $5,200, mostly as Christmas presents. They are redeemable for meals within two years of the purchase date, although experience within the industry indicates that 80% of gift certificates are redeemed within one year. Certificates totaling $1,300 were presented for redemption during 2013 for meals having a total price of $2,100. The sales tax rate on restaurant sales is 4%, assessed at the time meals (not gift certificates) are purchased. Sales taxes will be remitted in January.

[pready]

You have start with the $5,200. Now take that amount times 80% to get your current portion due and take your $5,200 times 20% to get your long-term portion due.

From your current portion due you have to subtract out the $1,300 that was presented for redemption to get your actual current portion due.

[pready]

This is a duplicate post and has been answered on the other post.

[sagnik2422]

Hi I need some help with this problem, I don't understand where 10/12 comes from
On November 1, 2013, Manufacturing rented a portion of its factory to a tenant for $30,000 per year, payable in advance. The payment for the 12 months ended October 31, 2014, was received as required and was credited to rent revenue.

The adjusting entry was shown as a debit to rent revenue calculated as (10/12 x 30,000) which comes out to be 25,000 and a credit to unearned rent revenue for 25,000.

Please say why every step is so.

[Fidget1]

It means that Manufacturing's financial year runs from 1 Jan to 31 Dec. Therefore it can only recognise 2 months rental income - Nov & Dec - of $5,000 (30,000*2/12), as earned for the year ended 31 Dec 2013. The other 10 months (30,000*10/12), or $25,000 has to be debited out of the rent received account and credited into deferred income/unearned rental income because it relates to the next accounting period.

[sagnik2422]

I don't get how/why this answer is so, please show with steps how to solve :


Mickey uses installment sales method to recognize revenue. Mickey sold goods to customers for $10,000 on 5 year installment note. The cost of goods sold was $7000. Which of following will be included in journal entry when Mickey receives installment payment of $2000 at end of year 1?

Answer was credit realized gross profit $600 and credit installment receivables $2000 but I don't get how/why.


Thanks

[sagnik2422]

ABC Company sold tract of land for $1,000,000. Sale agreement requires buyer to make 5 annual payments of $200,000. Land cost $400,000 to develop. ABC uses installment sales method to recognize revenue. What amount of gross profit is recognized when first payment is made?

Answer was $120,000 but I don't get why

My work : I know 1,000,000 - 400,000 = 600,000 but this doesn't get me anywhere

[sagnik2422]

Riley has $100,000 note receivable from customer. The note receivable is 8% note , due in 9 months. Three months after accepting note , Riley discounts note receivable at Third Bank at discount rate of 10%. What are cash proceeds of discounted note?

Answer was $100,700 but I don't get why


Please explain with steps

[rehmanvohra]

Gross profit rate = (10000-7000)/10000 = 30%
At inception:
Debit Installment Accounts receivable 10,000
Credit Cost of Installment sales 7,000
Credit Unrealized gross profit 3,000

On receipt of cash:
Debit Cash 2,000
Credit installment Accounts Receivable 2,000
This entry reduced receivables

Debit Unrealized gross profit 600
Credit Realized gross profit 600
This entry records gross profit realized.

[rehmanvohra]

Please see your similar post and you will understand.

[rehmanvohra]

Total amount receivable on note:
(100,000 x 8%)/9/12 + 100,000 = 106,000
Cash received on discounting
Principal 106,000
Rate 10%
Period remaining for maturity 6 months
Interest for 6 months 5,300
Proceeds 106,000 - 5,300 = 100,700