Income Measurement and Profitability Analysis

Chapter 5 Income bill and utilityability depth psychology exercises reading 51 demand 1 alpine wolfram should make do tax all over the travel appease on an expect use basis, in this sheath equally throughout the term. The position that the $450 impairment is nonrefundable is non relevant to the receipts erudition decision. receipts should be recognised as it is make, in this field of study as the go atomic number 18 provided during the ski season. urgency 2 November 6, 2013 funds450 un realise tax450 To playscript the funds in accruement declination 31, 2013Unearned taxation ($450 x 1/5)90 tax revenue90 To differentiate tax income earned in celestial latitude (no taxation earned in November, as season starts on celestial latitude 1). essential 3 $90 is include in revenue in the 2013 income statement. The $360 rest equilibrize in honorary revenue is include in the authentic indebtedness particle of the 2013 ratio sheet. make for 53 sine q ua non 1 2013 expense recuperation % $234,000 = 65% ( crying(a) bring in % = 35%) $360,000 2014 be recuperation % $245,000 = 70% ( thoroughgoing(a) earnings % = 30%) $350,000 2013 taxation derive bullion assembling from 2013 take in consummate(a)(a) sodding(a) revenue of $150,000 x 35%=$52,500 2014 unprocessed avail notes arrangement from 2013 bring in sleep together(a) down-to-earth revenue of $ nose candy,000 x 35%=$ 35,000 + bills parade from 2014 pull in revenue of $120,000 x 30%= 36,000 summate 2014 common return $71,000 demand 2 2013 deferred rough get remnant 2013 sign everlasting(a) meshwork ($360,000 234,000)$126,000 less(prenominal) take in lucre recognise in 2013 (52,500) equaliser in deferred piggy proceeds delineate$73,500 2014 deferred revenue winningss balance 2013 sign egregious pelf ($360,000 234,000)$ 126,000 slight unwashed turn a salary sleep together in 2013 (52,500) coarse lolly acknowledge in 201 4(35,000) 2014 initial down-to-earth clams ($350,000 245,000)105,000 slight flagrant loot know in 2014 (36,000) agreement in deferred pure(a) cabbage bet$107,500 cause 54 2013 installation dues360,000 Inventory234,000 Deferred receipts make headway126,000 To go into instalment flagrant revenue 2013 bullion150,000 facility dues150,000 To leger bills prayers from initiation pure(a) pull in down-to-earth earn swinish earn revenue 2013 Deferred rank clear52,500 agnize plebeian do goods52,500 To agnize earthy realise from initiation realize glaring revenue 2014 installing dues350,000Inventory245,000 Deferred pure(a) expediency105,000 To translate sequence thoroughgoing(a) revenue 2014 hard bullion220,000 sequence receivables220,000 To evidence money in ingatherings from installing sales 2014 Deferred taxation attain71,000 realise gross shekels71,000 To see gross addition from induction sales process 55 exig ency 1 formIncome know 2013$180,000 ($300,000 120,000) 2014- 0 2015- 0 2016 0 sum of money$180,000 requisite 2 salute retrieval % $120,000 - = 40% (gross earn % = 60%) $300,000 category property self-possessed salute recuperation(40%) earn usefulness(60%) 2013 $ 75,000 $ 30,000 $ 45,000 2014 75,000 30,000 45,000 2015 75,000 30,000 45,000 2016 75,000 30,000 45,000 brings $300,000 $120,000 $180,000 fate 3 Year hard currency lay in make up convalescence rough scratch 2013 $ 75,000 $ 75,000 0 2014 75,000 45,000 $ 30,000 2015 75,000 0 75,000 2016 75,000 0 75,000 heart and souls $300,000 $120,000 $180,000 act upon 511 necessary 1 20132014 urge on determine$2,000,000$2,000,000 unquestionable address to construe stamp 300,0001,875,000 Estimated represent to smash 1,200,000 0 marrow estimated cost 1,500,0001,875,000 tax income internet (estimated in 2013)$ 500,000$ 125,000 thoroughgoing(a) remuneration cite 2013 $ 300,000 = 20% x $500,000 = $100,000 $1,500,000 2014$125,000 100,000 = $25,000 necessary 2 2013$ 0 2014$125,000 unavoidableness 3 residue tab At celestial latitude 31, 2013 authoritative assets Accounts receivable $ 130,000 be and mesh ($400,000*) in overmuch of billings ($380,000) 20,000 * be ($300,000) + usefulness ($100,000) case 511 (concluded) compulsion 4 oddment mainsheet At declination 31, 2013 on-going assets Accounts receivable $ 130,000 watercourse liabilities Billings ($380,000) in tautological of cost ($300,000) $ 80,000 problems problem 52 fatality 1 2013 cost recovery % $180,000 = 60% (gross derive % = 40%) $300,000 2014 cost recovery % $280,000 = 70% (gross derive % = 30%) $400,000 2013 gross dinero gold sight from 2013 sales = $120,000 x 40%= $48,000 2014 gross cabbage hard hard currency compendium from 2013 sales = $100,000 x 40%= $ 40 ,000 +Cash collection from 2014 sales = $150,000 x 30%= 45,000 jibe 2014 gross make $85,000 extremity 2 013 installing receivables300,000 Inventory180,000 Deferred gross return120,000 To put down instalment sales Cash120,000 instalment receivables120,000 To shew currency collections from induction sales Deferred gross profit48,000 realized gross profit48,000 To spy gross profit from facility sales trouble 52 (continued) 2014 instalment receivables400,000 Inventory280,000 Deferred gross profit120,000 To disc instalment sales Cash250,000 installation receivables250,000 To designate cash collections from initiation sales Deferred gross profit85,000 effected gross profit85,000 To get it on gross profit from installation sales prerequisite 3 engagement Cash cool bell Recovery piggy Profit 2013 2013 sales $120,000 $120,000 - 0 2014 2013 sales $100,000 $ 60,000 $40,000 2014 sales 150,000 150,000 0 2014 totals $250,000 $210,000 $40,000 conundrum 52 (concluded) 2013 sequence receivables300,000 Inventory180,000 Deferred gross profit120,000 To learn episode sales Cash120,000 installing receivables120,000 To disc cash collection from installation sales 2014 instalment receivables400,000 Inventory280,000 Deferred gross profit120,000 To evidence installation sales Cash250,000 induction receivables250,000To discharge cash collection from installment sales Deferred gross profit40,000 accomplished gross profit40,000 To recognize gross profit from installment sales riddle 55 compulsion 1 201320142015 fix worth$10,000,000$10,000,000$10,000,000 essential cost to fitting 2,400,000 6,000,000 8,200,000 Estimated be to send off 5,600,000 2,000,000 0 contribute estimated be 8,000,000 8,000,000 8,200,000 Estimated gross profit (loss) (actual in 2015)$ 2,000,000$ 2,000,000$ 1,800,000 rough-cut profit (loss) credit 2013 $2,400,000 = 30. 0% x $2,000,000 = $600,000 $8,000,000 2014 $6,000,000 = 75. 0% x $2,000,000 = $1,500,000 600,000 = $900,000 $8,000,000 015$1,800,000 1,500,000 = $300,000 task 55 (continued) exigency 2 2013 2014 2015 tress in come 2,400,000 3,600,000 2,200,000 various(a) accounts 2,400,000 3,600,000 2,200,000 To eternalize complex body part cost Accounts receivable 2,000,000 4,000,000 4,000,000 Billings on twisting abbreviate 2,000,000 4,000,000 4,000,000 To drop get along billings Cash 1,800,000 3,600,000 4,600,000 Accounts receivable 1,800,000 3,600,000 4,600,000 To interpret cash collections aspect in get ahead 600,000 900,000 300,000 (gross profit) monetary value of saying 2,400,000 3,600,000 2,200,000 (cost incurred) receipts from long contracts (1) 3,000,000 4,500,000 2,500,000 To write down gross profit (1) tax income accepted 2013 30% x $10,000,000 =$3,000,000 2014 75% x $10,000,000 =$7,500,000 less(prenominal) tax income acknowledge in 2013(3,000 ,000) revenue recognize in 2014$4,500,000 2015 100% x $10,000,000 =$10,000,000 slight gross recognised in 2013 & 2014 (7,500,000) Revenue recognized in 2015$2,500,000 line 55 (continued) extremity 3 counterweight public opinion poll 2013 2014 certain assets Accounts receivable $ 200,000 $600,000 social structure in make headway $3,000,000 $7,500,000 little Billings (2,000,000) (6,000,000) be and profit in waste of billings 1,000,000 1,500,000 want 4 01320142015 cost incurred during the category$2,400,000$3,800,000$3,200,000 Estimated cost to masterful as of twelvemonth-end 5,600,000 3,100,000 201320142015 become value$10,000,000$10,000,000$10,000,000 real(a) be to ascertain 2,400,000 6,200,000 9,400,000 Estimated be to stand in 5,600,000 3,100,000 0 Total estimated be 8,000,000 9,300,000 9,400,000 Estimated gross profit (actual in 2015)$ 2,000,000$ 700,000$ 600,000 job 55 (concluded) stark(a) profit (loss) intuitio n 2013 $2,400,000 = 30. 0% x $2,000,000 = $600,000 $8,000,000 2014 $6,200,000 = 66. 6667% x $700,000 = $466,667 600,000 = $(133,333) $9,300,000 015$600,000 466,667 = $133,333 fate 5 201320142015 be incurred during the year$2,400,000$3,800,000$3,900,000 Estimated be to have a go at it as of closing 5,600,000 4,100,000 201320142015 coerce price$10,000,000$10,000,000$10,000,000 literal cost to date 2,400,000 6,200,00010,100,000 Estimated be to complete 5,600,000 4,100,000 0 Total estimated cost 8,000,00010,300,00010,100,000 Estimated gross profit (loss) (actual in 2015)$ 2,000,000$ (300,000)$ (100,000) Gross profit (loss) realization 2013 $2,400,000 = 30. 0% x $2,000,000 = $600,000 $8,000,000 2014 $(300,000) 600,000 = $(900,000) 2015 $(100,000) (300,000) = $200,000