Question

Name 4-Digit # (if known) 12.30p 2.00p 3.30p Quiz 3: [20128003013120) Provide the proper values for each of items listed below. We will assume normal (left/right) balances for these accounts unless you specify otherwise. If the proper value is zero, you must indicate that clearly. Blanks will be graded as unanswered questions. All firms have fiscal years ending on December 31 and use accrual accounting. Each blank equally weighted. Consulting Revenue: Andrew is a consulting firm. This firm receives cash in a variety of ways. Sometimes the firm collects before and other times after the consulting fees have been earned. Sometimes, the firm collects at the time the revenues are earned. In Years 4 and 5, Andrew had cash basis revenues of $5,700 and $6,400, respectively. As part of a loan application process, the firm needed to state its revenues on the accrual basis. Accountants have determined these proper balances in the firm's Consulting Accounts Receivable and Unearned Consulting Revenues accounts at the dates indicated: Debit Credit Dec. Dec. Assets 31, Year 3 Year 4 Year 5 Debt Equity Consulting 7700 5300 Accounts Expense Revenue Receivable $900 $600 $1,300 Dec. 31, Liab 31, AR 600 Unearned Service + 1200 - 900 boo Consulting Revenues 1,100 2,300 1,400 service 2300 Unearned 230 Required: •Determine Andrew's accrual Consulting Revenues in Year 4: $ 6.600 •Determine Andrew's accrual Consulting Revenues in Year 5: $ 6,200

Answer 1

Consulting Revenue

Determination of Accrual Revenue from Cash basis of Revenue

Accrual Basis Revenue of Particular year =

1. Cash basis Revenue of that year
2. Less;

1. Cash received against last year receivable
2. Cash received in advance against revenue of next year

3. Add:

1. Accounts Receivable at the end of particular year
2. Cash received in advance in preceding year, which pertains to particular year

Particulars	Year 4	Year 5
Cash Revenue	5700	6400
Less:Cash received against last year receivable	900	600
Less: Cash received in advance against revenue of next year	2300	1400
Add: Accounts Receivable at the end of particular year	600	1300
Add: Cash received in advance in preceding year, which pertains to particular year	1100	2300
Accrual Revenue	4200	8000

Kinsey Interest Revenue determination on Accrual basis from Cash Basis for year 2

Particulars	Year 2
Cash Revenue	53000
Less: Interest Receivable for year 1	1600
Less: Unearned Interest as the end of year 2	500
Add: Interest Receivable at the end of year 2	1800
Add: Unearned Interest as the end of year 1	800
Accrual Revenue	53500