Question 2 5.5 pts Cornell is a building contractor who...

Question 2 5.5 pts Cornell is a building contractor who builds 25-30 homes a year. Charlotte is a real estate broker who sells all of Cornell's homes. Charlotte has recently referred a couple to Cornell who wanted him to build a $400,000 home for them. Knowing that Charlotte and her husband enjoy skiing, he bought her a nice pair of skis and boots. I. The gift appears to be a form of compensation. II. The skis are considered a gift for income tax purposes. III. Substance-over-form applies to this situation. IV. Charlotte recognizes gross income from the receipt of the skis. Only statement I is correct. Only statement II is correct. Statements I, III, and IV are correct. Statements II and IV are correct. Statements II, III, and IV are correct. Question 3 5.5 p

Transcript

00:01 Hello students, here is a question.

00:02 The alfine house inc is a large retailer of snow sikes and the company assembled the following information below.

00:08 Those are sales $1 ,056 ,000, sales price is $440, variable selling expenses is $50, variable administrative expenses is $19, total fixed expenses is $150 ,000 and fixed administrative expenses is $120 ,000, beginning merchandise inventory is $70 ,000, ending merchandise inventory is $105 ,000, merchandise purchase is $305 ,000.

00:35 So, let us start one by one.

00:37 Here they ask us to solve traditional income statement, combination format income statement, contribution margin per unit.

00:45 So, the first is traditional income statement, traditional income statement.

00:57 So, before that we have to calculate the number of units sold.

01:01 Number of units sold is $1 ,056 ,000 divided by 440 which gives us $2 ,400.

01:23 So, first is traditional income statement.

01:26 Under this the first one is, our first item is sale, sale is $1 ,056 ,000 and next is cost of goods sold.

01:43 So, to calculate cost of goods sold that is $70 ,000 plus $305 ,000 minus $105 ,000.

01:53 So, these are the information given in the question that comes to $270 ,000.

02:01 Next is gross margin.

02:08 So, gross margin is 270, sorry $786 ,000, $786 ,000 and selling administrative expenses are, selling administrative expenses are, selling expenses that is $2 ,400 into 50 plus $150 ,000 which gives us $270 ,000.

02:54 Next is administrative expenses.

02:57 So, that is $2 ,400 into 19 plus $120 ,000 which gives us $165 ,600.

03:15 When we add up this we get $435 ,600.

03:23 After substituting we get net operating income that is $350 ,400, $350 ,400...

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