1.Tom produces commemorative t-shirts in a competitive market.  If Tom decides to decrease his output, this will

2. Exiting decisions are long-run decisions.

a.True

b.False

3. If a firm observes that the price of its product is above average variable cost, it would choose to continue to produce the good in the short run, even if that firm experiences economic losses.

a.True

b.False

4. In a perfectly competitive market there

5. Which of the following is a characteristic of a competitive market?

Suppose that low-skilled workers employed in clearing woodland can each clear one acre per month if each is equipped with a shovel, a machete, and a chainsaw. Clearing one acre brings in $1300 in revenue. Each worker’s equipment costs the worker’s employer $235 per month to rent and each worker toils 40 hours per week for 4 weeks each month.

a. What is the marginal revenue product of hiring one low-skilled worker to clear woodland for one month? $.

b. How much revenue per hour does each worker bring in? $.

c. If the minimum wage were $8.03, would the revenue per hour in part b exceed the minimum wage? (Click to select)YesNo. If so, by how much per hour? $ per hour.

d. Consider the employer’s total costs. These include the equipment costs as well as a normal profit of $50 per acre. If the firm pays workers the minimum wage of $8.03 per hour, what will the firm’s economic profit or loss be per acre? The firm’s (Click to select)profitloss per acre will be $. e.

At what value would the minimum wage have to be set so that the firm would make zero economic profit from employing an additional low-skilled worker to clear woodland?

The company's total shareholders' equity as of 12/31/2020 is $1,777,000 Common stock; par value of $2; Auth 500,000 and issued/outstanding 100,000 @ an average issue price of $4.75. Accumulted other comprehensive income is $180,000. The balance in shareholders' equity is retained earnings.

During 2021: Sales revenue $880,000, interest revenue $30,000 ; rent revenue $160,000; Dividend Revenue $80,000; sales Returns & Allowances $25,000; Sales discounts $70,000; COGS $350,000; Selling exp $100,000; General Administrative expenses $80,000; Interest expense $70,000; Loss on sale of Investments $60,000; Restructuring Costs $75,000; Gain on sale of compenant that qualifies as a discontinued ops $150,000; Write down of inventory $50,000; foreign currency translation gain $20,000; unrealized gain in value of land $50,000; .Unrealized gain in the value of patents $50,000; unrealized loss in value of available for sale securities $60,000 ;

Additional information: Tax rate is 20% The company issues 50,000 shares on 10/1/21 for $250,000. The company issues 20,000 shares on 7/1/21 for equipment that has a fair value of $100,000 The company declared dividends of $100,000 of which $25,000 will be paid on 1/31/22.

2.) Prepare a statement of shareholders' equity.

Cornwell Construction Company has been operating in Pennsylvania for a
Cornwell Construction Company has been operating in Pennsylvania for a number of years. During 2019, the firm contracted with the Borough of Lewisburg to build a domed sports complex. Cornwell estimated that it would take three years to complete the facility at a total cost of $25 million. The total contract price was $30 million. During 2019, construction costs of $8 million were incurred related to the sports complex; estimated additional costs to complete the project were $16 million as of December 31, 2019. Contract billings through December 31, 2019, were $9 millions of which the Borough of Lewisburg had paid $7.5 million

1. Determine the amount of revenue and income to be recognized by Cornwell Construction on the sports complex for the year ended December 31, 2019, assuming it recognizes revenue over time and uses costs incurred to measure the extent to which its performance obligation has been satisfied.

2. Determine the amount of revenue and income to be recognized by Cornwell Construction on the sports complex for the year ended December 31, 2019, assuming it recognizes revenue at a point in time when control of the completed complex is transferred to the Borough of Lewisburg

3. How should Cromwell determine which of the two approaches is appropriate?

On January 1, 2018, Wright Transport sold four school buses to the Elmira School District. In exchange for the buses, Wright received a note requiring payment of $526,000 by Elmira on December 31, 2020. The effective interest rate is 7%. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.):

Required:

1. How much sales revenue would Wright recognize on January 1, 2018, for this transaction?
2. Prepare journal entries to record the sale of merchandise on January 1, 2018 (omit any entry that might be required for the cost of the goods sold), the December 31, 2018, interest accrual, the December 31, 2019, interest accrual, and receipt of payment of the note on December 31, 2020.

Required 1: How much sales revenue would Wright recognize on January 1, 2018, for this transaction? (Round your final answer to nearest whole number.)  

Required 2: - Record the sale of goods on January 1, 2018 in exchange for the long term note.

- Record the interest accrual on December 31, 2018.

- Record the interest accrual on December 31, 2019.

- Record the interest revenue in 2020 and collection of the note.

Exercise 9-2 Prepare a Report Showing Revenue and Spending Variances [LO9-2]

Quilcene Oysteria farms and sells oysters in the Pacific Northwest. The company harvested and sold 7,900 pounds of oysters in August. The company’s flexible budget for August appears below:

The actual results for August appear below:

Required:

Calculate the company’s revenue and spending variances for August. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

The following activity occurred during May 2016 for ABC Inc.:

Using the information above, what journal entry would be required to record the transaction of May 4?

Select one:

a.

b.

c.

d.

Fremont has struggled over recent years to keep downtown businesses thriving. Locals report that the inability to park anywhere other than at overpriced parking meters prevents them from shopping downtown. Last week, the city of Clarion reported that adding two new parking lots and decreasing the hourly parking rate in their downtown area increased the surrounding business revenue by 7% in the past year. Fremont and Clarion are similar in terms of population and sales tax rates. The Fremont city manager’s office is looking for ways to increase downtown revenue and asks the public for suggestions.

Q1) Which of the following is a likely suggestion the city manager’s office will receive from the public?

1. Fremont should reorganize downtown traffic into one-way streets
2. Fremont should increase available parking spaces downtown
3. Fremont should give tax breaks to downtown business owners
4. Fremont should add parking meters to increase revenue.

2) Which of the following is the purpose of editorial about downtown Fremont?

A.To encourance residents to shop in downtown Fremont

B.To engage residents in the discussion about increasing business revenue

C.To prevent residents from shopping in Clarion

D.To determine how residents feel about adding more parking downtown

Comparing accrual and cash-basis accounting, preparing adjusting entries, and preparing income statements [15-25 min] Sweet Catering completed the following selected transactions during May, 2012: May 1 Prepaid rent for three months, $1,500. 5 Paid electricity expenses, $400. 9 Received cash for meals served to customers, $2,600. 14 Paid cash for kitchen equipment, $2,400. 23 Served a banquet on account, $3,000. 31 Made the adjusting entry for rent (from May 1). 31 Accrued salary expense, $1,400. 31 Recorded depreciation for May on kitchen equipment, $40. Requirements 1. Prepare journal entries for each transaction. 2. Using the journal entries as a guide, show whether each transaction would be handled as a revenue or an expense using both the cash and accrual basis by completing the following table. Amount of Revenue (Expense) for May Date Cash-Basis Amount of Accrual-Basis Amount of Revenue (Expense) Revenue (Expense) 3. After completing the table, calculate the amount of net income or net loss for Sweet Catering under the accrual and cash basis for May. 4. Considering your results from Requirement 3, which method gives the best picture of the true earnings of Sweet Catering? Why?

Cordova, Inc., reported the following receivables in its December 31, 2017, year-end balance sheet:

Additional information:

The notes receivable account consists of two notes, a $120,000 note and a $290,000 note. The $120,000 note is dated October 31, 2017, with principal and interest payable on October 31, 2018. The $290,000 note is dated March 31, 2017, with principal and 10% interest payable on March 31, 2018. Interest rate on $120,000 note is 6%

During 2018, sales revenue totaled $2,110,000, $1,970,000 cash was collected from customers, and $40,000 in accounts receivable were written off. All sales are made on a credit basis. Bad debt expense is recorded at year-end by adjusting the allowance account to an amount equal to 10% of year-end gross accounts receivable.

Required:
1. In addition to sales revenue, what revenue and expense amounts related to receivables will appear in Cordova’s 2018 income statement?
2. Calculate the receivables turnover ratio for 2018. (Round your answer to 2 decimal places.)

Interest Revenue

Bad Debt Expense

AR Turnover Rate?