Alsup Consulting sometimes performs services for which it receives payment at the conclusion of the engagement, up to six months after services commence. Alsup recognizes service revenue for financial reporting purposes when the services are performed. For tax purposes, revenue is reported when fees are collected. Service revenue, collections, and pretax accounting income for 2020–2023 are as follows:

There are no differences between accounting income and taxable income other than the temporary difference described above. The enacted tax rate for each year is 25%.

Prepare the appropriate journal entries to record Alsup's 2021 income taxes, 2022 income taxes and 2023 income taxes. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in thousands.)

1. The following comparative income statement (in thousands of dollars) for the two recent fiscal years was adapted from the annual report of Calvin Motorsports, Inc., owner and operator of several major motor speedways, such as the Atlanta, Texas, and Las Vegas Motor Speedways.

   				Current Year			Previous Year
   Revenues:
   	Admissions			$97,412			$110,592
   	Event-related revenue			138,663			145,920
   	NASCAR broadcasting revenue			179,417			169,472
   	Other operating revenue			81,508			86,016
   		Total revenue		$497,000			$512,000
   Expenses and other:
   	Direct expense of events			$103,873			$104,960
   	NASCAR purse and sanction fees			119,777			130,560
   	Other direct expenses			25,347			23,040
   	General and administrative			188,363			218,624
   		Total expenses and other		$437,360			$477,184
   Income from continuing operations				$59,640			$34,816

   a. Prepare a comparative income statement for these two years in vertical form, stating each item as a percent of revenues. Round to one decimal place. Enter all amounts as positive numbers.

   Calvin Motorsports, Inc.
   Comparative Income Statement (in thousands of dollars)
   For the Years Ended December 31
   	Current Year Amount	Current Year Percent	Prior Year Amount	Prior Year Percent
   Revenues:
   Admissions	$97,412	%	$110,592	%
   Event-related revenue	138,663	%	145,920	%
   NASCAR broadcasting revenue	179,417	%	169,472	%
   Other operating revenue	81,508	%	86,016	%
   Total revenue	$497,000	%	$512,000	%
   Expenses and other:
   Direct expense of events	$103,873	%	$104,960	%
   NASCAR purse and sanction fees	119,777	%	130,560	%
   Other direct expenses	25,347	%	23,040	%
   General and administrative	188,363	%	218,624	%
   Total expenses and other	$437,360	%	$477,184	%
   Income from continuing operations	$59,640	%	$34,816	%

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   b. While overall revenue

   • increased
   • decreased
   some between the two years, the overall mix of revenue sources did change somewhat. The NASCAR broadcasting revenue
   • increased
   • decreased
   as a percent of total revenue by 3 percentage points, while the percent of admissions revenue to total revenue
   • increased
   • decreased
   by 2 percentage points. Overall, it appears that income from continuing operations has significantly improved because of
   • aggressive cost cutting
   • a large increase in total revenue.

I'd like to discuss and learn what you think about one of the controversial issues in finance, both in corporate finance and asset pricing camps. That is about market-to-book ratio and its relation with the stock returns. My personal research agenda is also closely related to this field. For example, one camp argues that a high market to book ratio suggests the existence of valuable future growth options of that company. On the other hand, others argue that a high market to book ratio suggests the overvaluation and therefore future collapse of stock prices. I don't take a side.

I want you to think about these two sides, make a google search. It is beyond the exam coverage but it is definitely going to contribute to our understanding of the difference between book values and what is going in the real world (e.g., stock market).

Question 1. What is the difference between the short-run and the long-run?

Question 2. Explain the concepts of shocks in aggregate demand and aggregate supply.

Question 3. What is stabilization policy?

Question 4. Explain the impact of an increase in the money supply in the short-run and in the long run

Question 5. Which of the following changes would contribute to a decline in the index of leading indicators suggesting that a recession is more likely?

a. A rise in stock prices

b. A rise in building permits

c. A decline in initial claims for unemployment insurance

d. A decline in the slope of the yield curve

Question 6. An expansion in aggregate demand increases _____________in the short-run. In the longrun, however, it increases only the ______________

a. Real GDP, price level

b. Real GDP, velocity of money

c. The unemployment rate, price level

d. The unemployment rate, velocity of money

An increase in female non-agricultural wage employment opportunities is likely to reduce birth rates if the price effect is stronger than the income effect. Explain with a graph.

You have been asked by the minister of the economy in your country to make policy recommendations pertaining to your country’s high rate of growth of population growth among the poor. Displeased with the prospect of growing poverty the minister is hesitating between providing subsidies to poor families to reward them for few children or increasing funding to health care. Not being able to afford both policies, which of the two areas will you suggest that funds be allocated to? Write a report to the minister, justifying your choice and explaining why you think that your chosen area will contribute most to reducing poverty among the poor. Make sure to look at the problem from all sides.

1. A company had credit sales $30,000 and cash sales of $23,000 during the month of May. Also during​ May, the company paid wages of $24,000 and utilities of $9,000. It also received payments from customers on account totaling $4,400. What was the​company's net income for the​ month?

2. Which accounts are increased by​ debits?

A.

Accounts Receivable and Utilities Expense.

B.

Accounts Payable and Service Revenue.

C.

Salaries Expense and Common Stock.

D.

Cash and Accounts Payable.

3. Posting​ is:

A.

copying the information from the journal to the ledger.

B.

copying the information from the ledger to the financial statements.

C.

entering the data into the journal.

D.

copying the information from the journal to the trial balance

4. A business paid $3,000 on account. The journal entry​ would:

A.

debit Accounts Receivable for $3,000

and credit Revenue for $3,000.

B.

debit Accounts Payable for $3,000

and credit Cash for $3,000.

C.

debit Cash for $3,000 and credit Accounts Payable for $3,000.

D.

debit Cash for $3,000 and credit Retained Earnings for $3,000

5. On May​ 1, a business provided legal services to a client and billed the client $2,200.The client promised to pay the business in one month. Which journal entry should the business record on May​ 1?

1. Debit Cash for $2,200 and credit Retained Earnings for $2,200.

2. Debit Cash for $2,200 and credit Service Revenue for $2,200.

3. Debit Accounts Receivable for $2,200 and credit Service Revenue for $2,200.

4. Debit Accounts Payable for $2,200 and credit Service Revenue for $2,200.

6. The Accounts Receivable account for​ Johnny's Mechanic Shop had a beginning balance of $34,000. During the​ month, Johnny made sales on account of $47,000 The ending balance in the Accounts Receivable account is $35,000. What are cash collections for the​ month?

1. $47,000

2. $46,000

3. $81,000

4. $ 34,000

Best Electronics offers a “no hassle” returns policy. The number of items returned per day follows the normal distribution. The mean number of customer returns is 8.2 per day and the standard deviation is 1.60 per day. Refer to the table in Appendix B.1.  

a. In what percentage of the days 6 or fewer customers returning items? (Round z-score computation to 2 decimal places and the final answer to 2 decimal places.)

Percentage            %

b. In what percentage of the days between 12 and 14 customers returning items? (Round z-score computation to 2 decimal places and the final answer to 2 decimal places.)

Percentage            %

c. Is there any chance of a day with no returns?

(Click to select)  No, it is not possible.  Yes, but very unlikely.  Yes

At Elmo’s, an old-fashioned barber shop in Melbourne, FL, 70% of all customers get a haircut, 40% get 3. At Elmo’s, an old-fashioned barber shop in Melbourne, FL, 70% of all customers get a haircut, 40% get a shave, and 95% get a haircut or a shave. Let A = customer gets a haircut and B = customer gets a shave.

a. Draw a Venn diagram showing the relationship between the events A and B. (4 points)

b. What is the probability that a randomly selected customer gets both a haircut and a shave? _________________________________(3)

c. What is the probability that a randomly selected customer a haircut or a shave, but not both? _________________________________(3)

d. What is the probability that a randomly selected customer gets a shave, given that he gets a haircut? ________________________________

Between years 1982 and 1992, McDonalds has had more then 700 claims by people burned by its coffee, some claims involved thirddegree burns. Regardless, McDonald’s made no change to the temperature of their coffee. They were aware of this known risk! • McDonalds asserted that customers buy coffee on their way to work or home, intending to consume it there. However, the company's own research showed that customers intend to consume the coffee immediately while driving. • The Plaintiff’s physician testified that this was one of the worst scald burns he had ever seen. Other expert witnesses termed the risk of harm from McDonald’s coffee to be unacceptable. • A Psychologist testified that the addition of a warning to the McDonald’s coffee would have influenced The Plaintiff’s behavior. defend this legal claims