HomeworkLib
Question

Wacky Entertainment Inc. is in the middle a copyright lawsuit. Next month, the company anticipates winning $500,000 in the settlement. How should Wacky Entertainment record the $500,000 this month? SELECT ONLY ONE As a gain on the income statement As a liability on the income statement As revenue on the income statement As a footnote of the financial statements It should not be reportedIn the statement below, which activity is miscategorized? Cash Flow Statement Operations Cash receipts from customers Cash paid for 250,000 Inventory purchases Purchase of property and equipment (59,000) 75,000 116,000 Net Cash Flow from Operations Investing Activities Cash receipts from collection of principal on loans Cash paid for making loans to other entities 230,000 (25,000 205,000 Net Cash Flow from Investing Activities Financing Activities Cash receipts from issuance of stock Cash paid for 32,000 Repayment of loans Dividends (31,000) 5,000 (4 Net Cash Flow from Financing Activities Net Increase in Cash 317,000Please show work

business   accounting   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Answers

  • Answer #1

The amount should be reported as a footnote of the financial statements.
This is because such amount is of considerable value, but is uncertain.
It is of ‘contingent’ in nature.
The business anticipates that will win, its not sure though. Following the principal of conservatism, the same cannot be recognised as a revenue either.
Hence, correct answer is Option #4: reported as a footnote of the financial statements.

  • Answer #2

Correct Answer: Operations, or Operating activities is mis categorised.
This is because it should include only items that are of operating nature.
In the data, Operations include “Purchase of property and Equipment”, which is incorrect.
Purchase of property and equipment is an INVESTING ACTIVITIES, not operating activities.
Hence, “Operations” activity is mis categorised.

0 0
Add a comment
Know the answer?
Add Answer to:
Please show work Wacky Entertainment Inc. is in the middle a copyright lawsuit. Next month, the...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • Analyze the following financial statement. What can this company do to improve revenue streams? Lola Inc...

    Analyze the following financial statement. What can this company do to improve revenue streams? Lola Inc 3-Year Cash Flow For the Year Ending Cash at Beginning of Year Cash at End of Year 12131/2019 1,984,521 4,680,563 121312020 1213112021 7,181,709 9,532,305 7,181709 Operations Cash receipts from 2019 2020 2021 146,14 Customers Other operations 2,965,821 1,134,179 1,203,138 1156,863 Cash paid for tory purchases 960,400) 941,192 76,492 402,000) 13,500) 980,000 (83,000 418,000 12,500 79,680 410,000 General Wage expenses Interest Income taxes operating and...

  • Problem 17-04A (Video) The income statement of Whitlock Company is presented here. WHITLOCK COMPANY Income Statement...

    Problem 17-04A (Video) The income statement of Whitlock Company is presented here. WHITLOCK COMPANY Income Statement For the Year Ended November 30, 2020 Sales revenue $7,425,000 Cost of goods sold     Beginning inventory $1,833,800     Purchases 4,408,000     Goods available for sale 6,241,800     Ending inventory 1,381,900 Total cost of goods sold 4,859,900 Gross profit 2,565,100 Operating expenses 1,006,500 Net income $1,558,600 Additional information: 1. Accounts receivable increased $205,000 during the year, and inventory decreased $451,900. 2. Prepaid expenses increased $177,600 during the year....

  • Prepare a One Year Income Statement (Profit and Loss) for your proposed Business Plan. Cost per...

    Prepare a One Year Income Statement (Profit and Loss) for your proposed Business Plan. Cost per unit is $10 Cash Flow Statement Cash flow from operations Cash receipts from customers 100,000 Cash paid for inventory (7,000) Cash paid for wages (30,000) Net Cash Flow from Operations 63,000 Cash Flow from Investing Trade fair 500 Cash paid for purchase of equipment 900 Net cash flow from Investing 1400 Cash Flow from Financing Cash paid for loan repayment 5000 Net Cash Flow...

  • Which of the following is a noncash investing and financing activity? payment of a cash dividend...

    Which of the following is a noncash investing and financing activity? payment of a cash dividend payment of a six-month note payable purchase of merchandise inventory on account d i nce of common stock to acquire Land 10. A company purchases equipement for $32,000 cash. This transaction should be shown on the statement of cash flows under a investing activities h financing activities C oncach investing and financing activities d. operating activities 11. Cash flow per share is a required...

  • Shasta Inc. Statement of Cash Flows For the Year Ended December 31, 2049 Cash flows from...

    Shasta Inc. Statement of Cash Flows For the Year Ended December 31, 2049 Cash flows from operating activities: Net income Adjustments to reconcile net income to net cash flow from operating activities: $360,000 100,800 17,280 Depreciation Gain on sale of investments Changes in current operating assets and liabilities: Increase in accounts receivable Increase in inventories Increase in accounts payable 27,360 (36,000) (3,600) (2,400) Decrease in accrued expenses payable 5463,440 Net cash flow from operating activities Cash flows from investing activities:...

  • QUESTION 5 (Points 30) 5. The accounting staff of Sparks INC has assembled the following information...

    QUESTION 5 (Points 30) 5. The accounting staff of Sparks INC has assembled the following information for the year ended December 31, 2019: 5.1. Prepare a statement of cash flows in the format Example below (Allison corporation) Place brackets around amounts representing cash outflows. Use the direct method of reporting cash flows from operating activities. 5.2. Some of the items above will be listed in your statement without change. However, you will have to combine certain given information to compute...

  • Faith Busby and Jeremy Beatty started the B&B partnership on January 1, 2018. The business acquired...

    Faith Busby and Jeremy Beatty started the B&B partnership on January 1, 2018. The business acquired $114,000 cash from Busby and $186,000 from Beatty. During 2018, the partnership earned $65,300 in cash revenues and paid $37,200 for cash expenses. Busby withdrew $2,500 cash from the business, and Beatly withdrew $5,200 cash. The net income was allocated to the capital accounts of the two partners in proportion to the amounts of their original investments in the business. Required: Prepare an income...

  • Statement of cash flow Operating Activities Net income $             51,667.00 Adjustment Depreciaton $   30,000.00 Increase in...

    Statement of cash flow Operating Activities Net income $             51,667.00 Adjustment Depreciaton $   30,000.00 Increase in trade receivebles -$ 100,000.00 Increase in trade Payable $   52,000.00 Increase in inventory $   86,667.00 Increase in Outstanding wages $      4,000.00 -$           100,667.00 Operations -$             49,000.00 Investing activities Purchase of Equipment -$ 150,000.00 Net Cash used in investing activities -$           150,000.00 Financing Activities Proceeds from common stock $ 300,000.00 Dividends paid -$   11,000.00 Net cash used in financing activities $           289,000.00 Net increase in...

  • Marin Inc.’s CFO has just left the office of the company president after a meeting about the draft SFP at April 30, 2020, and income statement for the year then ended. (Both are reproduced below.) “Our liquidity position looks healthy,” the president had

    Marin Inc.’s CFO has just left the office of the company president after a meeting about the draft SFP at April 30, 2020, and income statement for the year then ended. (Both are reproduced below.) “Our liquidity position looks healthy,” the president had remarked. “Look at the current and acid-test ratios, and the amount of working capital we have. And between the goodwill write off and depreciation, we have almost $23 million of non-cash expenses. I don’t understand why you’ve been...

  • AP-10B LO 3 6 Carlin's Pub Inc. has prepared the following statement of cash flows for...

    AP-10B LO 3 6 Carlin's Pub Inc. has prepared the following statement of cash flows for the year end. Carlin's Pub Inc. Statement of Cash Flows For the Year Ended December 31, 2020 Cash Flow from Operating Activities Net Income $56,200 Adjustments for Non-Cash Items Depreciation Expense 3,100 Changes in Opening Assets and Liabilities Increase in Accounts Receivable (31,000) Increase in Food & Beverage Inventory (33,000) Decrease in Accounts Payable (26,000) Net Cash Provided (Used) by Operating Activities ($30,700) Cash...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT