year, and paid $6,300 for a two-year insurance policy on the first day of business. Alpaca has an effective income tax rate of 40%.
Compute net income for the first year for Alpaca Corporation.
$117,990
$116,100
$196,650
$215,000
Revenues $ 290,000
Expenses:
Cost of goods sold $ 75,000
Salaries 10,500
Interest 4,700
Insurance 3,150 93,350
Income before tax 196,650
Income tax at 40% 78,660
Net income $ 117,990
References
Multiple Choice Difficulty: 3 Hard Learning Objective: 01-02 Explain the difference between cash
and accrual accounting.
123.
Award: 10.00 points
Alpaca Corporation had revenues of $260,000 in its first year of operations. The company has not collected on $19,100 of its sales and still owes $27,200
on $97,000 of merchandise it purchased. The company had no inventory on hand at the end of the year. The company paid $12,900 in salaries. Owners
invested $15,000 in the business and $15,000 was borrowed on a five-year note. The company paid $4,000 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. Alpaca has an effective income tax rate of 40%. (Assume taxes are paid
in the same year).
Compute the cash balance at the end of the first year for Alpaca Corporation.
$140,569
$119,360
$172,569
$151,569
Cash receipts:
Sales revenue $ 260,000
Less: Accounts receivable 19,100 $ 240,900
Owners' investments 15,000
Note payable 15,000
Total receipts 270,900
Cash disbursements:
Purchases 97,000
Less: Accounts payable 27,200 $ 69,800
Salaries paid 12,900
Interest paid 4,000
Insurance paid 8,000
Estimated taxes paid 56,840
Total cash disbursements 151,540
Ending cash balance $ 119,360
Estimated taxes paid = Revenues of $260,000 less Cost of goods sold of $97,000 less $12,900 in salaries less $4,000 interest less $4,000 for insurance
($8,000/2) equals $142,100. Taxes at 40% are $56,840.
124.
Award: 10.00 points
References
Multiple Choice Difficulty: 2 Medium Learning Objective: 01-02 Explain the difference between cash
and accrual accounting.
Tri Fecta, a partnership, had revenues of $372,000 in its first year of operations. The partnership has not collected on $46,500 of its sales and still owes
$38,700 on $160,000 of merchandise it purchased. There was no inventory on hand at the end of the year. The partnership paid $27,100 in salaries. The
partners invested $49,000 in the business and $23,000 was borrowed on a five-year note. The partnership paid $2,760 in interest that was the amount
owed for the year and paid $9,400 for a two-year insurance policy on the first day of business.
Compute net income for the first year for Tri Fecta.
$184,900
$212,000
$251,260
$177,440
Revenues $ 372,000
Expenses:
Cost of goods sold $ 160,000
Salaries expense 27,100
Interest expense 2,760
Insurance expense 4,700 194,560
Net income $ 177,440
References
Multiple Choice Difficulty: 3 Hard Learning Objective: 01-02 Explain the difference between cash
and accrual accounting.
125.
Award: 10.00 points
Tri Fecta, a partnership, had revenues of $363,000 in its first year of operations. The partnership has not collected on $45,400 of its sales and still owes
$39,100 on $170,000 of merchandise it purchased. There was no inventory on hand at the end of the year. The partnership paid $28,300 in salaries. The
partners invested $48,000 in the business and $21,000 was borrowed on a five-year note. The partnership paid $1,890 in interest that was the amount
owed for the year and paid $9,900 for a two-year insurance policy on the first day of business. Ignore income taxes.
Compute the cash balance at the end of the first year for Tri Fecta.
$226,860
$260,740
$215,610
$221,910
Cash receipts:
Sales revenue $ 363,000
Less: Accounts receivable 45,400 $ 317,600
Owners' investments 48,000
Notes payable 21,000
Total receipts 386,600
Cash disbursements:
Purchases 170,000
Less: Accounts payable 39,100 130,900
Salaries paid 28,300
Interest paid 1,890
Insurance paid 9,900
Total cash disbursements 170,990