Reference no: EM133106502
Question 1 - Listed below are several transactions that took place during the second and third years of operations for the RPG Company.
In addition, you learn that the company incurred advertising costs of $25,000 in year 2, owed the advertising agency $5,000 at the end of year 1, and there were no liabilities at the end of year 3. Also, there were no anticipated bad debts on receivables, and the rent payment was for a two-year period, year 2 and year 3.
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Year 2
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Year 3
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Amounts billed to customers for services rendered
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$350,000
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$450,000
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Cash collected from credit customers
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260,000
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400,000
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Cash disbursements:
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Payment of rent
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80,000
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-0-
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Salaries paid to employees for services rendered during the year
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140,000
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160,000
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Utilities
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30,000
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40,000
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Advertising
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15,000
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35,000
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Required - Calculate accrual net income for both years.
Question 2 - Determine the amount due the advertising agency that would be shown as a liability on RPG's balance sheet at the end of year 2.
Question 3 - Participants in establishing GAAP - Three groups that participate in the process of establishing GAAP are users, preparers, and auditors. These groups are represented by various organizations. For each organization listed below, indicate which of these groups it primarily represents.
1. Securities and Exchange Commission - Users
2. Financial Executives International - Preparers
3. American Institute of Certified Public Accountants - Auditors
4. Institute of Management Accountants - Preparers
5. Association of Investment Management and Research - Users