Two local golf pros, Nick L. Dime and his wife Penny Pincher recently opened a new...

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Two local golf pros, Nick L. Dime and his wife Penny Pincher recently opened a new golf course called Par-Busters, Inc. They invested S$10,000 of their cash savings, and received $10,000 of common stock on June 1. During June, the firm had the following transactions: • Constructed a caddy shack for $4,000 cash. • Bought golf clubs for $800 cash. • Leased land for $1,000 per month and paid the first month's rent. • Incurred $750 of advertising expenses for June. Of that amount, $600 was paid up front, but $150 had not been paid by the end of the month. • Paid members of the high school golf team $400 to retrieve golf balls. • Deposited all fees from customers in the corporate bank account. • Paid a cash dividend of $700 to Nick and Penny. • Received a $100 utility bill on June 30, but did not pay it until July. • Determined that the firm bank balance was $8,650 on June 30. a) Determine the actual fees earned and actual operating income or loss for Par-Busters in June. (Hint: You can solve this problem in several ways: 1) by considering the cash inflows and outflows; 2) by preparing a retained earnings statement and an income statement; or 3) by using transactional analysis.) Calculations: Fees earned in June = Operating income (loss) for June : Two local golf pros, Nick L. Dime and his wife Penny Pincher recently opened a new golf course called Par-Busters, Inc. They invested S$10,000 of their cash savings, and received $10,000 of common stock on June 1. During June, the firm had the following transactions: • Constructed a caddy shack for $4,000 cash. • Bought golf clubs for $800 cash. • Leased land for $1,000 per month and paid the first month's rent. • Incurred $750 of advertising expenses for June. Of that amount, $600 was paid up front, but $150 had not been paid by the end of the month. • Paid members of the high school golf team $400 to retrieve golf balls. • Deposited all fees from customers in the corporate bank account. • Paid a cash dividend of $700 to Nick and Penny. • Received a $100 utility bill on June 30, but did not pay it until July. • Determined that the firm bank balance was $8,650 on June 30. a) Determine the actual fees earned and actual operating income or loss for Par-Busters in June. (Hint: You can solve this problem in several ways: 1) by considering the cash inflows and outflows; 2) by preparing a retained earnings statement and an income statement; or 3) by using transactional analysis.) Calculations: Fees earned in June = Operating income (loss) for June :

Answer rating: 100% (QA)

That Penny used the cash flows rather that accrual basis of accounting in determination of income or ... View the full answer