1. ABD Company declared a cash dividend of $2,400 on July 1, 2020. It sets the record date as July 17, 2020, and the payment date as August 5, 2020. What date would ABC Company record the:
a) Dividend Payable?
b) Payment of the Dividend Payable?
2. ABC Company sells season passes to its entertainment center and uses the accrual basis of accounting to account for them. The first event is scheduled for February 14, year 1 . The passes sell for $85 each and are good for the year. On January 1, year 1, ABC Company sells 3,000 passes and received cash.
That is the amount of revenue to be recognized on January 1, Year 1?
3. At the start of the year, ACB Company had total assets of $21,891 and total liabilities of $5,357.
Total revenues and total expenses for the year amounted to $9,351 and $18,854, respectively.
During the year, the company did not issue any common stock, but it did declare and pay dividends of $3,333.
What is ABC Company's net income/net loss for the year?
1. a) The dividend payable would be recorded on July 17, 2020.
b) The payment of the dividend payable would be recorded on August 5, 2020.
2. The amount of revenue to be recognized on January 1, Year 1 would be $255,000 (3,000 passes x $85/pass).
3. Net income/net loss can be calculated using the formula:
Net Income/Net Loss = Total Revenues - Total Expenses - Dividends
Net Income/Net Loss = $9,351 - $18,854 - $3,333
Net Income/Net Loss = -$12,836.
1. a) The Dividend Payable would be recorded on the record date, which is July 17, 2020.
b) The Payment of the Dividend Payable would be recorded on the payment date, which is August 5, 2020.
2. The amount of revenue to be recognized on January 1, Year 1 would be calculated by multiplying the number of passes sold (3,000) by the selling price per pass ($85).
Revenue = Number of passes sold x Selling price per pass
Revenue = 3,000 passes x $85/pass
Revenue = $255,000
Therefore, the amount of revenue to be recognized on January 1, Year 1 is $255,000.
3. Net income/net loss for the year can be calculated using the formula:
Net Income/Net Loss = Total revenues - Total expenses - Dividends
Given the following information:
Total revenues = $9,351
Total expenses = $18,854
Dividends = $3,333
Net Income/Net Loss = $9,351 - $18,854 - $3,333
Net Income/Net Loss = -$12,836
Therefore, ABC Company's net loss for the year is $12,836.