ZuoTi.Pro
Question

unshine Company is a business consulting firm. The company also sells computer equipment to its clients....

unshine Company is a business consulting firm. The company also sells computer equipment to its clients. The sales of equipment account for approximately 35% of the company's gross receipts. The company has consistently used the cash method to report its income from services and the accrual method to report its income from the sale of inventory. In August of the current year, Sunshine's accountant discovered that as a small business, the company qualifies to use the cash method for all of its activities. The company is a calendar year taxpayer. As of the beginning of the current year, the company had $350,000 of inventory on hand and $180,000 of accounts receivable from the sales of equipment and $78,000 of receivables from the consulting services.

a. Compute the total adjustment due to the change in accounting method.

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

Homework Answers

Answer #1

a.

Due to change in accounting method total adjustment will be $608,000 ($350,000 + $180,000 + $78,000) in cash method sales will be recognized only when cash is received.

Hence, total adjustment will be $608,000.

0 0
Add a comment
Know the answer?
Add Answer to:
unshine Company is a business consulting firm. The company also sells computer equipment to its clients....
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

  • Problem 16-35 (b) (LO. 3) Tolbert Company is a audio-visual consulting firm. The company also sells...

    Problem 16-35 (b) (LO. 3) Tolbert Company is a audio-visual consulting firm. The company also sells audio-visual equipment to its clients. The sales of equipment account for approximately 30% of the company's gross receipts. The company has consistently used the cash method to report its income from services and the accrual method to report its income from the sale of inventory. In July of the current year, Tolbert's accountant discovered that as a small business, the company qualifies to use...

  • Problem 16-35 (C) (LO. 3) Carolina Builders Company is a contractor and consulting firm. The company...

    Problem 16-35 (C) (LO. 3) Carolina Builders Company is a contractor and consulting firm. The company also sells construction equipment to its clients. The sales of equipment account for approximately 45% of the company's gross receipts. The company has consistently used the cash method to report its income from services and the accrual method to report its income from the sale of inventory. In May of the current year, Carolina Builders' accountant discovered that as a small business, the company...

  • Scenario Bizcon a consulting firm has just completed its first year of operations. to encourage clients...

    Scenario Bizcon a consulting firm has just completed its first year of operations. to encourage clients to hire its services Bizcon offered an 180 day financing meaning its largest customers do not pay for nearly 6 months. because BizCon is a new company, its equipment suppliers insist on bieng paid cash on delivery. also it had to pay up front for two years of insurance. at the end of the year BizCon owed employees for one full month of salaries,...

  • Scenario: BizCon, a consulting firm, has just completed its first year of operations. The company's sales...

    Scenario: BizCon, a consulting firm, has just completed its first year of operations. The company's sales growth was explosive. To encourage clients to hire its services, BizCon offered 180-day financing - meaning its largest customers do not pay for nearly 6 months. Because BizCon is a new company, its equipment suppliers insist on being paid cash on delivery. Also, it had to pay up front for 2 years of insurance. At the end of the year, BizCon owed employees for...

  • BizCon, a consulting firm, has just completed its first year of operations. The com- pany’s sales...

    BizCon, a consulting firm, has just completed its first year of operations. The com- pany’s sales growth was explosive. To encourage clients to hire its services, BizCon offered 180-day financing—meaning its largest customers do not pay for nearly 6 months. Because BizCon is a new company, its equipment suppliers insist on being paid cash on delivery. Also, it had to pay up front for 2 years of insurance. At the end of the year, BizCon owed employees for one full...

  • BizCon, a consulting firm, has just completed its first year of operations. The com- pany’s sales...

    BizCon, a consulting firm, has just completed its first year of operations. The com- pany’s sales growth was explosive. To encourage clients to hire its services, BizCon offered 180-day financing—meaning its largest customers do not pay for nearly 6 months. Because BizCon is a new company, its equipment suppliers insist on being paid cash on delivery. Also, it had to pay up front for 2 years of insurance. At the end of the year, BizCon owed employees for one full...

  • Payson Sports, Inc., sells sports equipment to customers. Its fiscal year ends on December 31. The...

    Payson Sports, Inc., sells sports equipment to customers. Its fiscal year ends on December 31. The following transactions occurred in the current year a. Purchased $250,000 of new sports equipment inventory, paid $90,000 in cash and owed the rest on account b. Paid employees $180,300 in wages for work during the year, an additional $3.700 for the current year's wage will be paid in January of the next year. c. Sold sports equipment to customers for $750,000; received $500,000 in...

  • Orange Cable TV Company, an accrual basis taxpayer, allows its customers to pay by the year...

    Orange Cable TV Company, an accrual basis taxpayer, allows its customers to pay by the year in advance ($600 per year), or two years in advance ($960). In September 2018, the company collected the following amounts applicable to future services: October 2018-September 2020 services (200 two-year contracts) $192,000 October 2018-September 2019 services (200 one-year contracts) 120,000 Total $312,000 As a result of the above, Orange Cable should report as gross income for 2019: $54,000 $78,000 $258,000 $312.000

  • Orange Cable TV Company, an accrual basis taxpayer, allows its customers to pay by the year...

    Orange Cable TV Company, an accrual basis taxpayer, allows its customers to pay by the year in advance ($600 per year), or two years in advance ($960). In September 2018, the company collected the following amounts applicable to future services: October 2018-September 2020 services (200 two-year contracts) $192,000 October 2018-September 2019 services (200 one-year contracts) 120,000 Total $312,000 As a result of the above, Orange Cable should report as gross income for 2019: $54,000 $78,000 $258,000 $312.000

  • Please answer the True/False questions to the best of your knowledge. 1) For federal tax purposes,...

    Please answer the True/False questions to the best of your knowledge. 1) For federal tax purposes, gross income from the sale of tangible goods is reduced by the seller's cost of goods sold.    2) Taxable income is defined as gross income minus allowable deductions and credits. 3) A taxpayer that wants to change its taxable year from a fiscal year to a calendar year is not required to receive permission from the IRS to make the change.    4)...

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
ADVERTISEMENT