Reference no: EM132652051

Question - Compute net income

Identify the basic concepts that describes each situation

A Exchange Price D Business Entity G Realization

B Matching Price E Objectivity H Accrual

C Feedback Value F Predictive Value I Disclosure

1. Joshua bought a land for his business and issued a three year note due 2021 for 300,000 This was higher than the cash price of 250,000. The land was recorded for 250,000

2. Bernie Flower Shop issued a bill to customer for floral service on a wedding that will take place in the first month of October 2 2019 Bernie Flower Shop received a down payment and recorded it as an unearned revenue.

3. Merchandise sold for 500,000 was recorded as sales revenue by MORE Company. The accountants also recognized 300,000 cost of sales for this in the same year.

4. The company was confronted by a lawsuit in 2019 for breach of contract in the amount of 500,000. No final judgment has been rendered as at Dec. 31 2019 and the firm has some doubts about the outcome of the case. Nevertheless accountant added this information to the financial for the benefit of all readers.

5. Company accountant prepared a financial statements of the business as to its liquidity profitability and solvency for the past three years.

6. Using no 5 as guide management was able to foresee the future direction of the company and a master budget was prepared to approved to improved its financial performance.

7. Stationaries and supplies were purchased on several separate occasions and some of them were usable for a period longer than a year. This was expense incurred.

8. Refer to no.1 The land was appraised in 2020 for 350,000.The accountant still presented the land at 250,000 in its current statement of financial position but with a supporting note of its appraised value. (Give three principles of supporting this procedure).

9. The owner of Bernie Flower Shop took home some Flowers. The accountant recorded this as personal drawing of the owner.

The accounts of Greenfield Company with the increase or decrease that occurred during the year 2019 are as follows:

Increase Decrease

Cash 250,000

Accounts Receivable 50,000

Accounts Payable 110,000

Notes Payable 160,000

Except for net income, investment of 30,000 by the owner and a withdrawal of 11,000 by the owner, no other items affected the owner's capital account. Using the accounting equation compute net income for 2019?