Dallas Corporation prepared the following two income statements:

	First Quarter						Second Quarter
Sales Revenue				$	17,000					$	20,400
Cost of Goods Sold
Beginning Inventory	$	3,400					$	4,400
Purchases		7,400						12,400
Goods Available for Sale		10,800						16,800
Ending Inventory		4,400						9,400
Cost of Goods Sold					6,400						7,400
Gross Profit					10,600						13,000
Operating Expenses					5,400						6,400
Income from Operations				$	5,200					$	6,600

  

During the third quarter, the company’s internal auditors discovered that the ending inventory for the first quarter should have been $4,900. The ending inventory for the second quarter was correct.  

Required:

1. What effect would the error have on total Income from Operations for the two quarters combined?
2. What effect would the error have on Income from Operations for each of the two quarters?
3. Prepare corrected income statements for each quarter. Ignore income taxes.

Both competitive market firms and monopoly market firms use the same marginal cost equals marginal revenue rule to select profit maximizing output, but economists argue that the profit maximizing behavior of competitive firms leads to a socially efficient allocation of resources but that the profit maximizing behavior of a monopoly leads to an inefficient allocation of resources. Explain.

Adams, Inc. recorded the following journal entry on March​ 2, 2018.

Cash	7,500
Unearned Revenue		7,500

From the journal entry​ above, identify the transaction on March​ 2, 2018.

A.

Adams sold goods for

$7,500

cash.

B.

Adams received

$7,500

for services to be performed in a later period.

C.

Adams paid

$7,500

for services to be received at a later date.

D.

Adams purchased goods worth

$7,500

and signed a

one−year

note for the same amount.

A company has

$110,000

in current​ assets;

$550,000

in total​ assets;

$80,000

in current​ liabilities, and

$120,000

in total liabilities. Calculate the current ratio of the company.​ (Round your answer to two decimal​ places.)

A.

0.92

B.

1.77

C.

1.73

D.

The balances of select accounts of​ Sandra, Inc. as of December​ 31, 2018 are given​ below:

	Debit	Credit
Building	$110,000
Cash	8,000
Office Supplies	700
Furniture	4,000
Prepaid Insurance	600
Accumulated Depreciation—Furniture		$1,000
Land	30,000
Accumulated Depreciation—Building		4,500
Accounts Receivable	2,300

The insurance has been prepaid until June​ 30, 2019. Determine the amount of total current assets reported on the balance sheet at December​ 31, 2018.  

A.

$14,300

B.

$11,600

C.

$8,700

D.

The following are selected current​ month's balances for​ Morgan, Inc.

Accounts Payable	$10,000
Revenue	9,000
Cash	4,150
Expenses	1,100
Furniture	12,000
Accounts Receivable	15,000
Common Stock	9,250
Notes Payable	4,000

Based on this​ information, calculate the total amount of credits for the trial balance.

A.

$32,250

B.

$23,250

C.

$23,000

D.

$22,250

The following Office Supplies account information is available for​ Nabors, Inc.

Beginning balance	$1,500
Office Supplies expensed	6,000
Ending balance	1,000

From the above​ information, calculate the amount of office supplies purchased.

A.

$6,000

B.

$5,500

C.

$1,500

D.

$1,000

The net income of​ Hendley, Inc. for the year is

$30,000.

The dividends declared during the year were

$36,000.

Which of the following statements is​ true?

A.

Retained Earnings account increases by

$36,000.

B.

Retained Earnings account decreases by

$30,000.

C.

Retained Earnings account decreases by

$6,000.

D.

Retained Earnings will remain the same.

The Accounts Payable account of​ Waterford, Inc. has the following​ postings:

Accounts Payable
14,000	27,000
7,000	13,000

Calculate the ending balance of the account.

A.

$19,000

credit

B.

$19,000

debit

C.

$7,000

debit

D.

$13,000

credit

Watson Tax Planning Service has the following plant​ assets: Communications​ Equipment: Cost,

$7,200

with useful life of eight​ years; Furniture:​ Cost,

$21,600

with useful life of 12​ years; and​ Computer: Cost,

$12,000

with useful life of four years.​ (Assume residual value of all the assets is​ zero.) Watson's monthly depreciation expense calculated using the

straight−line

method is​ ________. (Round any intermediate calculations to two decimal​ places, and your final answer to the nearest​ cent.)

A.

$250.00

B.

$150.00

C.

$475.00

D.

Ten years ago a corporation purchased a building for

$150,000.

At that​ time, the corporation felt that the building was worth

$175,000.

The current market value of the building is

$470,000.

The building has been assessed at

$445,000

for property tax purposes. At which amount should the corporation record the building in its accounting​ records?

A.

$150,000

B.

$470,000

C.

$175,000

D.

A business purchases equipment by paying

$5,487

in cash and issuing a note payable of

$12,574.

Which of the following​ occurs?

A.

Cash is debited for

$5,487​,

Equipment is credited for

$12,574​,

and Notes Payable is debited for

$7,087.

B.

Cash is credited for

$5,487​,

Equipment is credited for

$18,061​,

and Notes Payable is debited for

$12,574.

C.

Cash is debited for

$5,487​,

Equipment is debited for

$12,574​,and

Notes Payable is credited for

$18,061.

D.

Cash is credited for

$5,487​,

Equipment is debited for

$18,061​,

and Notes Payable is credited for

$12,574.

Question from Economics of public revenue

Miss P has 1,000,000 baht in her bank account. Miss P has 2 options for spending her money.

1. Buy a mutual fund and get 5 percent a year in return,
or
2. Buy a house worth 1,000,000 baht.

If Miss P borrows money to buy her house, she has to pay 7 percent in interest per year. She can deduct interest paid for her home loan from her personal income tax base. Miss P's marginal tax rate is 40 percent. Can Miss P get any benefits from tax arbitrage? How?

Problem 4. (20 Pts) A $400,000 investment in a Surface Mount Machine produces before-tax net revenue of $100,000/yr for 10 years, at which time the SMP machine will have a salvage value of $15,000. We assume $250,000 is borrowed at 12% annual compound interest and repaid in 10 years. We will use a 10 year planning horizon, a 40% tax rate, at 10% BTMARR, and SLN depreciation. Determine (i) ATMARR, and then the preferred payment plan based on ATPW and determine the ATFW, ATAW, ATIRR, and ATERR for each of the following four plans:

Plan 1: Pay interest each period, but make no principal payment until the end of the loan period

Plan 2: Make equal end-of period principal payments and pay interest each period on the unpaid balance at the beginning of the period

Plan 3: Make equal end-of period payments over the loan period

Plan 4: Make no payment until the end of the loan period

Please summarize into short sentences.

1. Marginal revenue and Marginal Cost

2. Four market

3. Production input optimization

4. Prisoners' Dilemma game

5. 1st, 2nd, 3rd Degree price discriminations

Thank you in advance.

Royal Lawncare Company produces and sells two packaged products—Weedban and Greengrow. Revenue and cost information relating to the products follow:

	Product
	Weedban		Greengrow
Selling price per unit	$	10.00	$	33.00
Variable expenses per unit	$	2.70	$	12.00
Traceable fixed expenses per year	$	138,000	$	41,000

Common fixed expenses in the company total $99,000 annually. Last year the company produced and sold 38,000 units of Weedban and 19,500 units of Greengrow.

Required:

Prepare a contribution format income statement segmented by product lines.

Royal Lawncare Company produces and sells two packaged products—Weedban and Greengrow. Revenue and cost information relating to the products follow:

	Product
	Weedban		Greengrow
Selling price per unit	$	10.00	$	33.00
Variable expenses per unit	$	2.70	$	12.00
Traceable fixed expenses per year	$	138,000	$	41,000

Common fixed expenses in the company total $99,000 annually. Last year the company produced and sold 38,000 units of Weedban and 19,500 units of Greengrow.

Required:

Prepare a contribution format income statement segmented by product lines.

Llama Realtors, Inc., earns it revenue from re-selling houses. Commissions for salespersons, listing agents and listing companies are their major expenses. As a result of the strong market over the past decade, business has been improving. As usual, Chris Llama, the managing partner of Llama Realtors, Inc., received a report summarizing the performance for the most recent year.

Llama Realtors, Inc.
Performance Report
For the year ended December 31, 2019

	Budget	Actual	Variance
Number of home re-sales	185	204	19 F
Variable expenses
Sales commissions	$1,102,600	$1,207,365	$104,765 U
Automobile	36,075	38,880	2,805 U
Advertising	170,940	193,460	22,520 U
General overhead	656,565	720,970	64,405 U
Total	$1,966,180	$2,160,675	$194,495 U
Fixed expenses
General overhead	60,000	64,380	4,380 U
Total expenses	$2,026,180	$2,225,055	$198,875 U

Required:

a) What are the major weakness of the performance report and explain what the problems are.
b) Explain clearly why all the variances for the variable expenses are unfavourable (U).
c) In order to help Chris Llama evaluate his cost/expense control in the organization, complete the following for the year ended December 31, 2019, assuming the only cost driver is the number of home re-sales. (Note: Indicate any variance as either favourable (F) or unfavourable (U).)

	Budget	Actual	Variance
Number of home re-sales	____	204	____
Variable expenses
Sales commissions	$_____	$1,207,365	$_____
Automobile	$_____	38,880	$_____
Advertising	$_____	193,460	$_____
General overhead	$_____	720,970	$_____
Total	$_____	$2,160,675	$_____
Fixed expenses
General overhead	$_____	62,300	$_____

Repeated by accident Sorry

Llama Realtors, Inc., earns it revenue from re-selling houses. Commissions for salespersons, listing agents and listing companies are their major expenses. As a result of the strong market over the past decade, business has been improving. As usual, Chris Llama, the managing partner of Llama Realtors, Inc., received a report summarizing the performance for the most recent year.

Llama Realtors, Inc.
Performance Report
For the year ended December 31, 2019

	Budget	Actual	Variance
Number of home re-sales	185	204	19 F
Variable expenses
Sales commissions	$1,102,600	$1,207,365	$104,765 U
Automobile	36,075	38,880	2,805 U
Advertising	170,940	193,460	22,520 U
General overhead	656,565	720,970	64,405 U
Total	$1,966,180	$2,160,675	$194,495 U
Fixed expenses
General overhead	60,000	64,380	4,380 U
Total expenses	$2,026,180	$2,225,055	$198,875 U

Required:

a) What are the major weakness of the performance report and explain what the problems are.
b) Explain clearly why all the variances for the variable expenses are unfavourable (U).
c) In order to help Chris Llama evaluate his cost/expense control in the organization, complete the following for the year ended December 31, 2019, assuming the only cost driver is the number of home re-sales. (Note: Indicate any variance as either favourable (F) or unfavourable (U).)

	Budget	Actual	Variance
Number of home re-sales	____	204	____
Variable expenses
Sales commissions	$_____	$1,207,365	$_____
Automobile	$_____	38,880	$_____
Advertising	$_____	193,460	$_____
General overhead	$_____	720,970	$_____
Total	$_____	$2,160,675	$_____
Fixed expenses
General overhead	$_____	62,300	$_____

Orange Inc. manufactures two products called Unit 1 and Unit 2. Revenue and expense amounts per unit are as follows:

Description

All amounts are Per Unit	Unit 1	Unit 2
Sales price	$39.00	$93.00
Costs:
Direct material	21.00	15.00
Direct manufacturing labor	3.00	18.00
Overhead - variable	3.75	22.50
Overhead - fixed	2.00	12.00
Selling and administrative costs - Variable	2.25	1.50
Total expense	32.00	69.00
Operating income	$ 7.00	$ 24.00

Orange Inc's production process uses highly skilled labor, which is in short supply. The demand for these products in greater than the number that Orange Inc. can make (limited in how many they can make due to the difficulty in finding the necessary skilled labor). The same skilled employees produce both products and earn the same wage rate when producing either product.

REQUIRED:

Assuming that the skilled employees earn $12 per hour, which product is most profitable. Please show your work and provide a short explanation.