Activity 26 Accrual Accounting and Gaap 1.On December 1, Year 1 RETAIL STORE sells a $1,500 computer. Customer Nancy pays $500 in cash and signs an installment agreement for the remaining $1,000 to be paid the following year, Year 2. On the income statement of RETAIL STORE, how much revenue should be recognized? a.In Year 1$1,500 b.In Year 2$0 2.In this accounting period, CYCLES GALORE purchased 10 bicycles for $200 each at wholesale and sold 6 bicycles for $500 each to customers. On the income statement of CYCLES GALORE, how much will be reported for: a.Sales revenue?$3,000 b.Cost of goods sold? $1,200 c.Gross profit? $1,800 d.The cost of the four unsold bicycles will remain part ofinventory reported on theBS. What amount will be reported? $800 3.Kiger Kayaking, a sporting goods retailer, began operations on August 1 with the following transactions during the first month of operation. Compute August net income (using accrual- based accounting) and the August 31 cash balance.
Activity 30 Analysis: Common-Size Statements 1.Q1 For Lenovo and Hewlett Packard companies listed below, complete the common-size statements by dividing each item on the income statement by sales revenue. Record the resulting common-size percentage in the shaded area provided.
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Refer to the information above to answer the following questions. 2.The greatest amount of sales revenue was reported byHPQ and the greatest net income was reported byHPQ, which would beexpected. 3.The company that reported the highest ratio for: a.Gross profit margin?HPQ b.Operating income as a percentage of sales?HPQ c.ROS?HPQ d.Ahigher profitability ratio is preferred. 4.The company that reported the greatest percentage of expense for: a.COGSLNVG, which is consideredunfavorable. Why? i.It is considered unfavorable because it lowers the profitability of the company. b.SGADELL which is consideredunfavorable. Why? i.The company did not control its expenses and takes away profit. c.R&DHPQ, which is consideredfavorable. Why? i.R&D is viewed as more of an investment in the growth of the company, rather than an expense. 5.Q5 During 2010,DELL remained the #1 direct-sale computer vendor. (Hint: Refer to company descriptions in Appendix A—Featured Corporations)
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