Intermediate Accounting------Chapter 1.docVIP

Exercise 1-1 Requirement 1 Year 2 Year 3 Revenues INR 350,000 INR 450,000 Expenses: Rent (100,000 ( 2) (50,000) (50,000) Salaries (140,000) (160,000) Travel and entertainment (30,000) (40,000) Advertising (25,000) (20,000)* Net Income INR 105,000 INR 180,000 Requirement 2 Amount owed at the end of year one INR 5,000Advertising costs incurred in year two 25,000 30,000 Amount paid in year two (15,000) Liability at the end of year two 15,000 Less cash paid in year three (35,000) Advertising expense in year three INR 20,000* Exercise 1-2 Requirement 1 Jackson and Monroe Operating Cash Flow Year 1 Year 2 Cash collected NZD 160,000 NZD 190,000 Cash disbursements: Salaries (80,000) (85,000) Utilities (30,000) (40,000) Purchase of insurance policy (60,000) - 0 - Net operating cash flow NZD (10,000) NZD 65,000 Requirement 2 Pete, Pete, and Roy Income Statements Year 1 Year 2 Revenues NZD 170,000 NZD 220,000 Expenses: Salaries (80,000) (85,000) Utilities (35,000) (35,000) Insurance (20,000) (20,000) Net Income NZD 35,000 NZD 80,000 Requirement 3 Year 1: Amount billed to customers NZD 170,000 Less: Cash collected (160,000) Ending accounts receivable NZD 10,000 Year 2: Beginning accounts receivable NZD 10,000 Plus: Amounts billed to customers 220,000 230,000 Less: Cash collected (190,000) Ending accounts receivable NZD 40,000 Exercise 1-3 Organization Group 1. Securities and Exchange Commission Users 2. Financial Executives International Preparers 3. American Institute of Certified Public Accountants Auditors 4. Institute of Management Accountants Preparers 5. Association of Investment Management and Research Users Exercise 1-4 Organization Pronouncements 1. Accounting Principles Board e. 2. Financial Accounting Standards Board a., d., and g. 3. Securi