Short Problems
1.On May 1, 2009, $9,000 of annual magazine subscriptions were sold by Glolar, Inc. The subscribed magazines are delivered on the first day of each month beginning on May 1, 2009. The total cost of the subscribed magazines is $3,600 or $300 per month.
A.Determine the amount of revenue during 2009.
B.Explain how the matching concept is applied relative to the magazines.
2.During 2010, Hamot Company sold $30,000 of computer chips to a distributor on account. The distributor planned to sell those chips to a German company. The sold chips were shipped to a warehouse owned by Hamot and were still there on December 31, 2010. Hamot’s CFO left two messages for the distributor but received no return calls. The distributor has had no prior dealings with Hamot or any other manufacturer of computer chips. None of the past due balance of $30,000 has been paid. How much sales revenue associated with this transaction would be reported on the income statement for the year ending December 31, 2010? Explain your selection.
3.During January of 2010, Barry Corporation purchased five acres of land for cash of $110,000 from Foley Company. On December 31, 2010, after Barry built its plant, it was estimated that the land's fair market value was $140,000. At what amount would land be measured on Barry’s December 31, 2010 balance sheet?
4.On December 31, 2010, total assets and liabilities are measured at $16,000 and $12,000, respectively. The total market value of the company's common stock is $7,000. At what amount would shareholders' equity be measured on the December 31, 2010 balance sheet?
5.Equipment with an original cost of $23,000 has a fair market value of $19,000, current replacement cost of $26,000, and a depreciated value of $20,000 on December 31, 2010. At what amount would net equipment be measured on the December 31, 2010 balance sheet?