Sign Up Now
Get instant access to over 1 million+ study documents
OR
Already registered? click here to login
By creating your account, you agree to our terms of service, privacy policy and student honor code.
Financial Statements: Hay and Barnabas Company
There are five adjustments that need to be made before the financial statements of Hay and Barnabas Company are prepared at year end. Show the effect of each of the following (a -- e) on the accounting equation
The accounting equation is essentially indicative of the relationship between assets, liabilities, and the owner's equity in a particular business. According to Clarke (2011), the three components reflect the company's financial position. Assets are the resources owned by the business and liabilities are the claims other parties, such as creditors, have in the business. Investors also contribute to a business and buy ownership hence have a claim in the business. The following are the adjustments deemed necessary and the effect they had on the components of the accounting equation:
a) Equipment purchased on January 1, 2003 with a useful life of 12 years and no salvage value
This will increase assets in the amount of $840,000 and will also increase the liabilities with a depreciation and amortization expense of $70,000 (840000/12) on a straight line basis.
b) Interest accrued on the bonds payable is $20,000 as of December 31, 2003
The interest accrued on bonds will increase the...
It is categorized as a prepaid expense. Assets will therefore increase with an amount of $7,000.
d) The rent payment of $140,000 covered the four months from December 1, 2003 through March 31, 2004.
Since cash had already been deducted to pay the rent in 2003, it will not be deducted in 2004. The prepaid rent falls in the category of prepaid expenses. Therefore, assets will increase with a prepaid expense of $35,000 (140000/4) in the months of January, February and March.
e) Salaries and wages of $28,000 were earned but unpaid at December 31, 2003
These salaries and wages were unpaid at the end of the year and hence will be classified as expenses to be paid in 2014. They are categorized as salaries payable and they will increase the liabilities with an amount of $28,000. They will thus reduce the income in that period.
Indicate the proper balance sheet classification of each of the preceding 12 financial statement items on the December 31, 2003, balance sheet. If the account title would not appear…
References
Clarke, E.A. (2011). Accounting: An Introduction to Principles and Practice. South-Western: Cengage Learning
Warren, C.S., Reeve, J.M. & Duchac, J.E. (2013). Financial Accounting. South- Western: Cengage Learning.
These long-term fixtures must be analyzed on a regular basis in order to decide their future market value for a company. Assetsystems.com (2010), states that, "One of the most common barriers in implementing an asset management system is the reconciliation of existing records to the results of the new system." Often, how assets have been inventoried or managed, is the first factor that must be considered by retrieving the
Financial Analysis Marco Polo Statement of Income Revenue Cost of Goods Sold Gross Profit Marketing Expenses Distribution Overheads Interest Exp Total Expenses Net Income The first year of trading was rough, in that the company lost money. While on the surface this poor performance, it should be noted that the cost of goods sold is somewhat inflated because the expenses of putting together each guide were not amortized. Thus, they are fully applied to this year, even though the sales of these
Income Statement Vertical2011 Vertical 2010 Horizontal Sales Other Revenue Total Less Cost of Goods Sold Operation & Admin Expenses Income Tax Interest Expense Total Net Income Because of economic decline and uncertainties of unemployment, energy prices, etc. 2010 was in over deflation and 2011 had an overall inflation (2011 Annual Report, 2011). Income tax increased in 2011 due to repatriation taxes on dividends from a Canadian subsidiary. Balance Sheet Vertical 2011 Vertical 2010 Horizontal Cash & equivalent Receivables Inventories Prepaid Expenses Total Property' Depreciation & Amortization -71.30% -68.20% Goodwill Invest. Unconsolidated affiliate Other Assets Total Assets Cur. Note Maturities Cur. Cap. Lease
This is the result of the decline in inventory levels. If the inventory levels had not changed, there would have been no difference between the net profit for the two methods. If the company sold another 10,000 units, it would have a higher profit. This calculation was based on the contribution margin method. What occurs in this method is that the company sells more, but it does not produce more.
An example here may be income from an original Rembrandt that one possesses and, occasionally, loans for parties, or income from one's continuing retail business, or income that is still coming in from last month's rental payment even though the original inhabitants have discontinued their lease. This part of the income statement remains unchanged. The only element that SFAS 130 appends is the category of other comprehensive income. 3. Definition
3% decline. The decrease in gross margin was primarily due to an increase in postage rates effective May 2007 and a reduction in the prices of Netflix's most popular subscription plans during the second quarter of 2007 caused by increased competition. The company is anticipating further pressures on gross margin in 2008 due to continued price competition and another slight increase in postage rates. The company is anticipating a shift from