Question

1. Accounting Problem:

(Activities over the month of March):

i) Capital stock issued:                                                        $20,000

ii) Office equipment bought (and paid for in cash):        $1,500

iii) Production consumables purchased in cash:            $1,200           

iv) Raw material purchased (on credit):                            $3,000

v) Production machinery purchased L/T Note:                $8,000

vi) Sale of finished goods (in cash)                                   $8,700

vii) Sale of finished goods (on credit)                               $3,100

viii) Utilities (paid in cash):                                      $1,200

ix) Wages and salaries paid in cash to employees:       $2,500

x) Part payment to supplier (toward transaction iv)        $1,000

You are required to:

(a) Summarize and post the above transactions.

(b) Prepare an income statement for the transactions during the month of March.

(c) Prepare a balance sheet as on March 31.

2. (a) What is the definition of breakeven? (b) Please give an example.

3. (a) What is the relationship between the price of a commodity and the quantity demanded? (b) What is the difference between highly elastic and inelastic demand?

4. (a) What is net present value of money? (b) Compute how much $100 will be in two years if the cost of capital is 6%?

Answer 1