Reference no: EM13678922
Alpaca Corporation had revenues of $200,000 in its first year of operations. The company has not collected on $20,000 of its sales and still owes $25,000 on $70,000 of merchandise it purchased. The company had no inventory on hand at the end of the year. The company paid $15,000 in salaries. Owners invested $20,000 in the business and $20,000 was borrowed on a five-year note. The company paid $2,000 in interest that was the amount owed for the year, and paid $6,000 for a two-year insurance policy on the first day of business. Alpaca has an effective income tax rate of 40%.
117. Compute net income for the first year for Alpaca Corporation.
118. Compute the cash balance at the end of the first year for Alpaca Corporation.
Tri Fecta, a partnership, had revenues of $360,000 in its first year of operations. The partnership has not collected on $35,000 of its sales and still owes $40,000 on $150,000 of merchandise it purchased. There was no inventory on hand at the end of the year. The partnership paid $25,000 in salaries. The partners invested $40,000 in the business and $25,000 was borrowed on a five-year note. The partnership paid $3,000 in interest that was the amount owed for the year and paid $8,000 for a two-year insurance policy on the first day of business.
119. Compute net income for the first year for Tri Fecta.
120. Compute the cash balance at the end of the first year for Tri Fecta.
The following information ($ in millions) comes from a recent annual report of Amazon.com, Inc.:
121. Compute Amazon's balance in cash at the beginning of the year.
122. Compute Amazon's total liabilities at the end of the year.
123. Compute Amazon's cost of goods sold for the year.
124. Compute the income before income tax for Amazon.
125. Compare net income (loss) for the year to net cash flow from operating activities. Why are these amounts different? Briefly explain.
126. For each of the following situations, state whether you agree or disagree with the financial reporting practice employed, and briefly explain the reason for your answer.
1. Cantor Corporation's accountant increased the book value of a patent from its original cost of $1 million to its recently appraised value of $6 million.
2. Stanton Corporation paid for the personal travel of its chief financial officer and charged travel expense.
3. At the end of its 2013 fiscal year, Dower, Inc., received an order from a customer for $60,000. The merchandise will ship early in 2014. Because the sale was made to a long-time customer and the invoice was paid in 2013, the controller recorded the sale in 2013.
4. In the middle of its 2013 fiscal year, Sanguinetti, Inc., paid $12,000 to its insurance company for one-year comprehensive insurance coverage. Sanguinetti recorded the entire expenditure as an expense in 2013.
5. The Churchill Pharmaceutical Company included a note in its financial statements that described a pending lawsuit against the company.
6. The Daily Corporation, a company whose securities are publicly traded, prepares monthly, quarterly, and annual financial statements for internal use but disseminates to external users only the annual financial statements.