The following account balances are shown on November 30, 1999, for the Clever Bookstore: Cash $ 8,000 Accounts payable $ 4,000 Accounts receivable 9,000 Salaries payable 2,000 Inventory 60,000 Notes payable 35,000 Supplies 3,000 J. Clever, capital 39,000 Total $80,000 Total $80,000 The following transactions occurred during December. 1. Paid workers the $2,000 owed them on November 30. 2. Made sales totaling $40,000. One-half of […]

Restate the following income statement in contribution format. Sales ($100 per unit) $50,000 Less cost of goods sold ($60 per unit) 30,000 Gross margin 20,000 Less operating costs: Commissions ($6 per unit) $3,000 Salaries 8,000 Advertising 6,000 Shipping ($2 per unit) 1,000 18,000 Operating income $ 2,000

The following transactions all occurred on January 2 of the current year: 1. A company paid a $2,000 bill for a fire insurance policy that covers the current year and next year. 2. A company purchased for $200 a trash compactor that has an expected life of five years. 3. Two attorneys, working under a corporate structure, decide that a ski chalet at Vail is […]

Complete each of the following contribution format income statements by supplying the missing numbers. Sales revenue ? $450,000 ? $600,000 Variable costs 210,000 ? 96,000 ? Contribution margin 90,000 150,000 ? 400,000 Fixed costs ? 90,000 120,000 ? Operating income 15,000 ? ? ? Income taxes ? 18,000 16,000 55,000 Net income $10,500 ? $48,000 $165,000

On June 1, a sole proprietorship was formed to sell and service personal computers. During the first six months, the following transactions occurred: 1. On June 1, invested $50,000 in the business. 2. On July 1, purchased a four-wheel-drive pickup truck for $22,000 (on account) that will be used in the business. 3. On September 1, paid fuel and repairs costs of $1,750 for the […]

The Robinson Company sells sports decals that can be personalized with a player”s name, team name, and jersey number for $5 each. Robinson buys the decals from a supplier for $1.50 each and spends an additional $0.50 in variable operating costs per decal. The results of last month”s operations are as follows: Sales $10,000 Cost of goods sold 3,000 Gross profit 7,000 Operating costs 2,500 […]

Seaver & Co., a CPA firm, prepare their own financial statements with a December 31 year-end. 1. As of December 31, Seaver & Co. have rendered $20,500 worth of services to clients for which they have not yet billed the client, and for which they have not made any accounting entry. 2. Seaver & Co. owns equipment (computers, etc.) having an original cost of $12,000. […]

Mary Smith sells gourmet chocolate chip cookies. The results of her last month of operations are as follows: Sales revenue Cost of goods sold (all variable) 25,575 Gross margin Selling expenses (20% variable) 8,000 Administrative expenses (60% variable) 12,000 Operating income $ 4,425 Required Prepare a contribution format income statement for Mary. If Mary sells her cookies for $1.60 each, how many cookies did she […]

Susan’s Sweets opened a candy shop on January 1. 1. Susan invested $100,000 in cash on January 1, 1999, and began business as a sole proprietorship. 2. Susan paid $20,000 for a six-month lease. The lease is renewable for another six months on July 1. 3. Susan purchased candy and other “sweetmeats” at a cost of $40,000 in cash. 4. Susan purchased store fixtures at […]

Matt’s Ski Shop is in the process of acquiring a vehicle for the business. The following transactions took place in December, 2000: 1. Verbally agreed to purchase a used car from Slee-Z-Auto for $3,500. 2. Paid $400 for a warranty on the used car. 3. Took the car on a test drive, found it faulty, and told the salesperson to deliver a different car. 4. […]