Question 1 In 2010, Jack\'s Art Gallery sold 200 original works of art for $1,24

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Question 1

In 2010, Jack's Art Gallery sold 200 original works of art for $1,240,520. The gallery acquired the works sold for $530,000. Each painting was framed using predesigned framing kits in the gallery's own workshop. The firm bought 100 kits in January for $50,000, 100 kits in March for $60,000.,100 kits in May for $40,000 and 100 kits in August for $30,000. Other costs of operation, including salaries, supplies, rent, etc., totaled $200,000. The company depreciated its assets by $120,000 and paid interest on loans totaling $55,000. Assuming no other costs and that Jack's Art Gallery used FIFO in its inventory management, the firm's EBITDA for 2010 was?


Question 2

Jake Smith opened his Balinese coffee shop business in downtown Boise on January 1st 2010. On December 31st, 2010, he sat down with his accountant to figure out how his business had done in its first year and heaved a sigh of relief when his accountant reported that his EBT came to $20,000. Revenues, at $1,050,000 looked good. His expenses were as follows:

Salaries and benefits paid to employees $210,000
Jake's own salary $100,000
Supplies (coffee, tea, milk, pastries, etc.) $620,000
Cost of Restaurant grade coffee machine $30,000
Miscellaneous operating costs $44,000
Interest on loan $12,000

How much did Jake's accountant allocate for depreciation and amortization?

Explanation / Answer

1) (b) $14,000 2) (b) $230,520 3) (a) $347,200 4) (d) $450,000

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