Simulazione esame Environmental accounting

Exercises

1. Rose Corporation

Rose Corporation began operations at the start of 2014. During 2014, it made cash and credit sales totaling $500,000 and collected $420,000 in cash from its customers. It purchased inventory costing $250,000, paid $15,000 for dividends and the cost of goods sold was $210,000. Also, the corporation incurred the following expenses during 2014:

Requirements

1. Prepare an income statement showing revenues, expenses, income before income taxes, income tax expense, and net income for the year ended December 31, 2014.

2. Based on the above information, what is the amount of accounts receivable on the balance sheet prepared as of December 31, 2014?

3. Based on the above information, what is the amount of retained earnings on the balance sheet prepared as of December 31, 2014?

2. Cosmos Corporation

Cosmos Corporation was established on December 31, 2013, by a group of investors who invested a total of $1,000,000 for shares of the new corporation's common stock. During the month of January 2014, Cosmos provided services to customers for which the total revenue was $100,000. Of this amount, $10,000 had not been collected by the end of January. Cosmos recorded salary expense of $20,000, of which 90% had been paid by the end of the month; rent expense of $5,000, which had been paid on January 1; and other expenses of $12,000, which had been paid by check. On January 31, 2014, Cosmos purchased a van by paying cash of $30,000. There were no other transactions that affected cash.

Requirements

1. In which section of the statement of cash flows would the amount of cash paid for rent be reported?

2. In which section of the statement of cash flows would the amount of cash paid for the van purchase be reported?

3. By how much did Cosmos's cash increase or decrease during January 2014?

4. What was Cosmos's net income or net loss (after income tax expense) for the month of January 2014? The income tax expense was $18,900.

5. Explain why the net increase or decrease in cash for a business generally will be different than the net income, or net loss, for the same period.

3. Parker Pool Supply, Inc.

Parker Pool Supply, Inc. reported the following items for the year ended December 31, 2014: