Question:
Shields Company is preparing its interim report for the second quarter ending June 30. The following
payments were made during the first two quarters:
For each expenditure indicate the amount that would be reported in the quarterly income statements for
the periods ending March 31, June 30, September 30, and December 31.
Answer:
Quarters Ending
March 31 June 30 Sept. 30 Dec. 31
Advertising $200,000 $200,000 $200,000 $200,000
Property tax 87,500 87,500 87,500 87,500
Equipment repairs 65,000 65,000 65,000 65,000
Extraordinary casualty loss -0- 185,000 -0- -0-
Research and development -0- 96,000 0 0
Note: this solution assumes that advertising, property tax, and equipment repairs are viewed as
benefitting all periods following the one in which the expenditure is made, but that the extraordinary
casualty loss and the R&D consulting fee only benefit the periods in which they occurred.
Shields Company is preparing its interim report for the second quarter ending June 30. The following
payments were made during the first two quarters:
For each expenditure indicate the amount that would be reported in the quarterly income statements for
the periods ending March 31, June 30, September 30, and December 31.
Answer:
Quarters Ending
March 31 June 30 Sept. 30 Dec. 31
Advertising $200,000 $200,000 $200,000 $200,000
Property tax 87,500 87,500 87,500 87,500
Equipment repairs 65,000 65,000 65,000 65,000
Extraordinary casualty loss -0- 185,000 -0- -0-
Research and development -0- 96,000 0 0
Note: this solution assumes that advertising, property tax, and equipment repairs are viewed as
benefitting all periods following the one in which the expenditure is made, but that the extraordinary
casualty loss and the R&D consulting fee only benefit the periods in which they occurred.
