Question

1.The Company sold merchandise on account for $37.450 which includes 7% sales tax. The merchandise originally cost $25,000

2.Goods were sold to a customer for $20,000 on account under terms 3/10, net/30. The sale transaction has previously been recorded in the general journal. On the 7th day after the sale the customer paid the bill. Record the receipt of the payment.
3.The Company sold some used equipment and received $17,000 in cash. The equipment was on the books at an original cost of $25,500. Accumulated depreciation at the time of disposal was $15,000
4.The Company purchased new factory equipment. The equipment cost $120,000. In addition 6% sales tax was paid on the purchase. Freight and insurance costs to ship in the equipment were $1,000 under shipping terms of FOB shipping point. The equipment was paid for by issuing a 3% 4 month note to the equipment supplier.
5.Record depreciation expense for equipment which cost $36,000 and was acquired on May 1, 2019. The equipment has a 10 year economic useful life and is depreciated using the straight line method. Record depreciation expense at the end of the calendar year assuming no salvage value and no previous entries have yet been made on The Company's books.
6.The Company received a cash payment of $5,000 for services to be rendered early in 2020

Answer 1

Accounting profit is derived by subtracting explicit costs from total revenues. For a firm with $1 million in revenue and a total of $950,000 in explicit costs, the accounting profit is $50,000.

Step-by-step explanation:

Calculation of Accounting Profit

The concept of accounting profit is an essential part of financial analysis in business. When calculating accounting profit, the formula is total revenues minus explicit costs. For the scenario provided where a firm has sales revenue of $1 million and explicit costs comprising $600,000 on labor, $150,000 on capital, and $200,000 on materials, the accounting profit can be calculated as follows:

Accounting profit = Total revenues - (Labor costs + Capital costs + Material costs)

= $1,000,000 - ($600,000 + $150,000 + $200,000)

= $1,000,000 - $950,000

= $50,000

This result indicates that after the firm has accounted for its explicit costs, it is left with an accounting profit of $50,000 for the year.