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Accounting - Income Statement and Cash Flow Statement

1. Calculate Earned Revenues
Big Blue University has a fiscal year that ends on June 30. 2009 Summer Session of the university runs seven weeks from June 9 through July 28. Total tuition paid by students for the summer session amount to $1.4 million.

a. How much revenue should be reflected in fiscal year ended June 30, 2009? Explain your answer (Hint: Calculate the number of weeks or days & the proportion before June 30) 21 Days of Revenue = $600,000 Revenue is realized when the product or service has been expended.
b. Would your answer to Part A be any different if the university had a tuition refund policy that no tuition would be refunded after the end of the third week of the summer session classes? Explain your answer. No as long as the university disclosed the tuition policy.

2. Calculate Operating Income and Net Income

The following information is available from the accounting records of Monofill Inc. the year ended December 31, 2009:

Net cash provided by financing activities $127,000
Dividends paid 28,000
Extraordinary loss from flood, net of tax savings of $35,000 135,000
Income tax expense 16,000
Depreciation 31,000
Interest Expense 12,500
Net sales 864,000
Advertising expense 25,000
Accounts receivable 77,000
Cost of goods sold 559,000
General and administrative expenses 183,000

a. Calculate the operating income for the company
b. Calculate the company's net income for the year

3. Cash flows from operating, investing and financing activities - direct method
The following information is available from Moonvessel Co.'s accounting records of the year ended December 31, 2009 (amounts in millions):

Cash dividends declared and paid $340
Interest and taxes paid 110
Collections from customers 1,530
Net Income 120
Repayment of long-term debt 320
Purchase of land and buildings 70
Cash paid to suppliers and employees 1230
Depreciation 70
Issuance of common stock 400
Purchase of new delivery trucks 80

a. Calculate the net cash provided (used) by operating activities for the company for the year
b. Calculate the net cash provided [used] by investing activities
c. Calculate the net cash provided (used) by financing activities
d. Calculate the net increase (decrease) in cash for the year

Solution Summary

Calculating Revenue Earned
Operating Income
Net Income
Cash Flow from Operating, Investing, and Financing Activities