The Champ Is Here Essay

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Homework Chapter 1 Student: Terrell Jenkins_____________________________________________________ ________________ 1. Listed below are ten terms followed by a list of phrases that describe or characterize five of the terms. Match each phrase with the correct term by placing the letter designating the best term in the space provided by the phrase. Terms: A. Comprehensive income B. Distribution to owners C. Feedback value D. Gain E. Materiality F. Predictive value G. Relevance H. Reliability I. Representational faithfulness J. Timeliness 1. __F__Information is useful in projecting cash flows. 2. __G__Pertinent to the decision at hand. 3. __J__Information is available prior to the decision. 4. __B__Decrease in equity due to transfers to owners. 5. __C__Information confirms expectations. 2. Alpaca Corporation had revenues of $200,000 in its first year of operations. They have not collected on $20,000 of their sales, and still owe $25,000 on $70,000 of merchandise they purchased. The company paid $15,000 in salaries. The company had no inventory on hand at the end of the year. Owners invested $20,000 in the business and $20,000 was borrowed on a five-year note. The company paid $2,000 in interest that was the amount owed for the year, and paid $6,000 for a two-year insurance policy on the first day of business. Alpaca has an effective income tax rate of 40%. a.. Compute net income for the first year for Alpaca Corporation. Revenues Expenses CGS Salaries Interest Insurance Income before tax Income tax 40% Net income 200,000 70,000 15,000 2,000 3,000 90,000 110,000 44,000 $66,000 b. Compute the cash balance at the end of the first year for Alpaca Corporation. Sales revenue Accts Rec Owner Invest Note payable Total Purchases Accts Pay Salaries Interest Insurance Taxes paid Total Cash Disbursed Ending Cash Balance 200,000 (20,000) 180,000

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