Question 1. Alpaca Corporation had revenues of $210,000 in its first year of operations. The company has not collected on $19,500 of its sales and still owes $26,800 on $85,000 of merchandise it purchased. The company had no inventory on hand at the end of the year. The company paid $13,500 in salaries. Owners invested $17,000 in the business and $17,000 was borrowed on a five-year note. The company paid $4,200 in interest that was the amount owed for the year, and paid $7,400 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.
Question 2. Tri Fecta, a partnership, had revenues of $377,000 in its first year of operations. The partnership has not collected on $45,000 of its sales and still owes $38,600 on $245,000 of merchandise it purchased. There was no inventory on hand at the end of the year. The partnership paid $32,900 in salaries. The partners invested $48,000 in the business and $26,000 was borrowed on a five-year note. The partnership paid $2,340 in interest that was the amount owed for the year and paid $9,700 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.
Question 3. The most political issue in the FASB's most recent deliberations and amendments to GAAP on business combinations was:
A. The negative effects on subsequent earnings of amortizing goodwill if firms were required to use the purchase method of accounting for the combination.
B. The negative effects on subsequent earnings of amortizing goodwill if firms were required to use the pooling method of accounting for the combination.
C. The unrealistic balance sheet assets that would be created if firms were required to use the purchase method of accounting for the combination.
D. The unrealistic balance sheet assets that would be created if firms were required to use the pooling method of accounting for the combination.
Question 4. On December 31, 2015, Coolwear, Inc. had a balance in its prepaid insurance account of $62,400. During 2016, $100,000 was paid for insurance. At the end of 2016, after adjusting entries were recorded, the balance in the prepaid insurance account was 49,000. What would be the Insurance expense for 2016?
Question 5. On December 31, 2016, the end of Larry's Used Cars' first year of operations, the accounts receivable was $52,900. The company estimates that $1,800 of the year-end receivables will not be collected. Accounts receivable in the 2016 balance sheet will be valued at?