INSTRUCTIONS

10. Prepare a post-closing trial balance as of April 30, 2020.

Janet Stevens began her tax business, Stevens Tax Service, on February 1, 2020. Below is the Chart of Accounts for the company:

Acct # Account Title

11 Cash

12 Accounts receivable

14 Supplies

15 Prepaid Rent

16 Prepaid Insurance

18 Office Equipment

19 Accumulated Depreciation

21 Accounts Payable

23 Unearned Fees

31 Janet Stevens, Capital

32 Janet Stevens, Drawing

41 Fees Earned

51 Salary Expense

52 Rent Expense

53 Supplies Expense

54 Depreciation Expense

55 Insurance Expense

59 Miscellaneous Expense

After closing the books at the end of March, Stevens Tax Service had the following post-closing trial balance:

Stevens Tax Service

Post-Closing Trial Balance

March 31, 2020

Acct # Account Title Debit Credit

11 Cash 12,800

12 Accounts Receivable 9,750

14 Supplies 725

15 Prepaid Rent 5,000

16 Prepaid Insurance 2,250

18 Office Equipment 10,500

19 Accumulated Depreciation 700

21 Accounts Payable 1,510

23 Unearned Fees 1,800

31 Janet Stevens, Capital 37,015

Totals 41,025 41,025

During the month of April, 2020, Stevens Tax Service entered into the following transactions:

Apr. 3. Received cash from clients as advance payments for services to be provided and recorded it as unearned fees, $4,500.

5. Received cash from clients on account, $5,550.

8. Paid cash for an online advertisement for $600.

10. Paid Office Depot on account, $1,000.

12. Recorded services provided on account for the period of April 1-15, $9,450.

14. Paid receptionist for two weeks’ salary $1,500.

15. Recorded cash from cash clients for fees earned during the period of April 1-15, $8,300.

16. Purchased office supplies on account, $1,500.

20. Paid telephone bill, $500.

21. Paid electricity bill, $720.

25. Recorded cash received from clients on account, $6,200.

28. Paid receptionist for two weeks’ pay, $1,500.

30. Recorded cash from cash clients for fees earned for the period March 16-30, $8,900.

30. Recorded services on account for February 16-30, $10,600.

30. Janet withdrew $9,000 for personal use.

Following are two income statements for Alexis Co. for the year ended December 31. The left number column is prepared before any adjusting entries are recorded, and the right column includes the effects of adjusting entries. The company records cash receipts and payments related to unearned and prepaid items in balance sheet accounts. The middle column shows a blank space for each income statement effect of the eight adjusting entries a through g (the balance sheet part of the entries is not shown here).

Analyze the statements and prepare the eight adjusting entries a through g that likely were recorded. Note: Answer for a has two entries 30% of (i) the $4,800 adjustment for Fees Earned has been earned but not billed, and (ii) the other 70% has been earned by performing services that were paid for in advance.

1-Record the adjusting entry for accrued revenues.

2-Record the adjusting entry related to fees collected in advance.

3-Record depreciation on computers.

4-Record depreciation on office furniture.

5-Record the adjusting entry related to salaries.

6-Record the adjusting entry related to insurance.

7-Record the adjusting entry related to office supplies.

8-Record the adjusting entry related to utilities.

Journal Entries

Jan 1 Equipment with a historical cost of $10,000 and an accumulated depreciation of $3,000 was sold for $6,000

Jan   2 Equipment with a historical cost of $20,000 and an accumulated depreciation of $18,000 was disposed of with an additional disposal cost of $1,300.

Jan   2 Sanford Company borrowed $24,000 on a short-term discounted 90 day, 3.0% noninterest-bearing note payable.

Jan 3 Sanford Company paid $18,000 in advance for the 6 month rental of a warehouse.

Jan 3 Equipment with a historical cost of $50,000 and an accumulated depreciation of $35,000 was traded for new similar equipment valued at $75,000. Sanford Company received $14,500 as a trade in for the old equipment, paid $7,500 and established a 4.5% long-term note payable for the balance due.

Jan 4 Equipment with a historical cost of $35,000 and an accumulated depreciation of $20,000 was traded for new dissimilar equipment valued at $60,000. The salvage value of the old equipment was $5,000 and the trade in value was $7,000. Sanford paid $4,000 for the equipment and established a 4.5% long-term note payable for the balance due.

Jan 5 Sanford Company declared a dividend of $2.00 per share payable on February 10, 20x3 to all shareholders of record on January 20, 20x3.

Jan 6 The amount in wages payable and taxes payable was paid in full.

Jan 8 Sanford Company paid a total of $18,000 on accounts payable and was able to take advantage of $1,500 in purchase discounts for early payment. The original inventory purchase was recorded at the full amount (gross method).

Jan 15 Cash sales for two weeks equaled $22,000. The cost of inventory sold equaled $12,000.

Jan 20 Supplies in the amount of $4,200 were purchased for cash.

Jan 21 A customer who owed $10,000 on an account receivable, agreed to sign a 60-day note receivable with an interest rate of 6.0%. The interest earned on the note will be paid at the maturity date of the note receivable.

Jan 29 The balance of $14,500 in accounts payable was paid.

Jan 30 The company purchased $45,000 of inventory on account with the terms 2/10, net 30. The company has decided to switch to the net method for all inventory purchases on account beginning in 20x3.

Jan 31 Cash sales for two weeks equaled $24,000. The cost of inventory sold equaled $13,000.

Jan 31 Sales on account for the month of January totaled $55,000 with the terms 2/10, net 30. The cost of inventory sold equaled $26,000.

Jan 31 The unearned revenue represented the rental of special equipment that was used by another company on weekends. $4,000 of the revenue was earned in January.

Jan 31 Collected cash of $48,000 from the accounts receivable, plus there was a total sales discount of $1,000 for the payment of receivables within the ten day discount period.

Jan 31 Salary expenses in the amount of $14,000 and tax expenses in the amount of $8,000 were paid.

Jan 31 The utility bill of $2,500 was paid.

Jan 31 A bill in the amount of $3,600 for advertising expenses incurred during the month of January was received.

Jan 31 The monthly payment for January of the mortgage payable was made.

Feb 1 The Sanford Company made a new issue of 5,000 shares of common stock for cash. The market price of the stock was $40 per share.

Feb 2 A petty cash fund in the amount of $500 was established.

Feb 3 The Sanford Company bought back 1,000 shares of its own common stock for $40 per share.

Feb 8 The purchase of inventory on account on Jan 30th was paid in full.

Feb 10 Sanford Company sold the note receivable from Jan 21st to the bank, which discounted the note at 8.0%.

Feb 15 Cash sales for two weeks equaled $20,000. The cost of inventory sold equaled $11,000.

Feb 20 The company purchases $20,000 of inventory on account with the terms 2/10, net 30.

Feb 27 The company paid an advertising bill for $5,600 which included the February advertising expense of $2,000 plus the balance due from January.

Feb 28 Cash sales for two weeks equaled $25,000. The cost of inventory sold equaled $14,000.

Feb 28 The monthly payment for February of the mortgage payable was made.

Feb 28 The company collected cash of $59,000 from the accounts receivable, plus there was a total sales discount of $1,100 for the payment of receivables within the ten day discount period.

Feb 28 Salary expenses in the amount of $21,000 and tax expenses in the amount of $9,000 were paid.

Feb 28 The utility bill of $2,100 was paid.

Feb 28 Sales on account for the month of February totaled $60,000 with the terms 2/10, net 30. The cost of inventory sold equaled $30,000.

Mar 1 The short-term note payable that was due on March 1st plus all appropriate interest was paid.

Mar 3 The amount of the petty cash fund was increased by $200.

Mar 10 Supplies in the amount of $2,700 were purchased for cash.

Mar 15 Cash sales for two weeks equaled $27,000. The cost of inventory sold equaled $15,000.

Mar 20 Sanford Company reissued 300 shares of its own stock for $42 per share.

Mar 21 The bank notified Sanford Company that the note receivable from January 21st had not been paid. The bank collected the amount of the note plus the interest due and a $20 protest fee from Sanford Company. Sanford Company charged the full amount of the note receivable plus related fees against the customer’s account receivable balance.

Mar 25 The company purchased $50,000 of inventory on account with the terms 2/10, net 30.

Mar 28 The purchase of inventory on account on Feb 20th was paid in full.

Mar 29 The petty cash fund had $150 in cash and receipts in total amounts for the following expense categories: entertainment$160, travel $170, postage $90, and supplies $115. The petty cash fund was replenished.

Mar 30 Cash sales for two weeks equaled $20,000. The cost of inventory sold equaled $11,000.

Mar 30 The unearned revenue represented the rental of special equipment that was used by another company on weekends. $9,000 of the revenue was earned in March.

Mar 31 Sales on account for the month of March totaled $67,000 with the terms 2/10, net 30. The cost of inventory sold equaled $36,000.

Mar 31 Salary expenses in the amount of $16,000 and tax expenses in the amount of $7,000 were paid.

Mar 31 Collected cash of $70,000 from the accounts receivable, plus there was a total sales discount of $1,200 for the payment of receivables within the ten day discount period.

Mar 31 A warehouse building was acquired for $250,000. Closing costs on the acquisition equaled $7,000, and there were costs of $10,300 to get the building into an operational condition to be used by Sanford Company. Employee salaries specifically related to the building renovation were an additional $5,400. This salary expense was part of the normal monthly expenses and would have been incurred regardless of whether the employees worked on the warehouse or did other activities within the company. Sanford Company paid $100,000 in cash as a down payment with the balance due being added to the mortgage payable account.

Mar 31 The utility bill of $3,000 was paid.

Mar 31 Sanford Company repaid the 90 day discounted note payable from January 2nd in full.

Mar 31 The equipment depreciation entry for the three months of 20x3 was completed.

Mar 31 The depreciation entry for the building for the months of January, February, and March was entered.

Mar 31 The amortization of intangible assets for the three months of 20x3 was completed.

Mar 31 The bad debt expense based on the aging schedule for accounts receivable was determined for the three month period.

Mar 31 Salary expenses incurred during the month of March but not yet paid equaled $8,400 and tax expenses equaled $2,800.

Mar 31 A physical inventory of supplies indicated a total amount of $5,000 of supplies still on hand.

Mar 31 A customer sent an advance payment of $10,000 for the use of special equipment in April and May.

Mar 31 The amount of rent expense for the warehouse for the first three months of 20x3 was recognized.

Mar 31 Sanford Company provided services to a customer in the amount of $3,000 during March but a bill has not been sent.

Mar 31 The amount of insurance expense for the first three months of 20x3 was recognized.

Mar 31 The amount of interest earned on marketable securities for the three months of 20x3 was recognized.

Mar 31 The amount of interest expense for the total long-term notes payable for the first three months of 20x3 was recognized.

Mar 31 The amount of interest expense for the bonds payable for the three months of 20x3 was recognized.

Mar 31 The monthly payment for March of the mortgage payable was made.

Required

1.   Supply journal entries for each of the transactions. The numbers in the journal entries can be rounded to the nearest dollar.

Which of the following is the best description of a simple random sample of size n from a population of size N.

4. Members of a fishing village in New England have open access to a fishery (no one in the village explicitly owns the fishery). As long as an individual is a resident of the village, the individual can harvest as much fish as he wants from the fishery. All non‐residents are not allowed to fish.  Given this scenario, is the equilibrium level of fishery harvest “too much” or “too little” or equal to the social optimum? Explain why this occurs.  Support your answer by drawing the private and social, marginal cost and marginal benefit curves for fish. Identify the deadweight loss area if any exists.

4. Members of a fishing village in New England have open access to a fishery (no one in the village explicitly owns the fishery). As long as an individual is a resident of the village, the individual can harvest as much fish as he wants from the fishery. All non‐residents are not allowed to fish.  Given this scenario, is the equilibrium level of fishery harvest “too much” or “too little” or equal to the social optimum? Explain why this occurs.  Support your answer by drawing the private and social, marginal cost and marginal benefit curves for fish. Identify the deadweight loss area if any exists.

CHOICE UNDER UNCERTAINTY

III. Consider an individual with an initial wealth of $50,000. They have the opportunity to

invest in a project where they may win $40,000 with a probability of 0.8 and may lose

$40,000 with a probability of 0.2. There are no out-of-pocket costs for investing in the

project but if they lose then that will be deducted from their initial wealth.

1. What would be the individual’s expected wealth if they participate in the investment

project?

2. If the individual’s preference towards risk are defined by the function: ? = √?, would

they invest in the project? (Hint: Calculate the expected utility of wealth if the individual

participates in the investment and compare it with the utility of their current wealth)

Question 24 page 397 Chapter 16.(Principles of Microeconomics) book

Imagine that you can divide 50 year old men into two groups: those who have a family history of cancer and those who do not.   For the purposes of this example, say that 20% of a group of 1,000 men have a family history of cancer, and these men have one chance of 50 of dying in the next year, while the other 80% of men have one chance in 200 of dying in the next year. The insurance company is selling a policy that will pay $100,000 to the estate of anyone who dies in the next year.

If the insurance company were selling life insurance separately to each group, what would be the actuarially fair premium for each group?

If an insurance company were offering life insurance to the entire group, but could not find out about family cancer histories, what would be the actuarially fair premium for the group as a whole?

What will happen to the insurance company if it tries to charge the actuarially farm premium to the group as a whole rather than to each group separately? Include in your answer a full explanation as to who purchase the insurance and who does not.

During the classic period the court lifted the veil on a number of occasions - from the list below select the correct answers (you may choose more than one answer)

Group of answer choices

When groups of companies should be viewed as one single entity. (DHN Food Distributors)

Defendant set up a company to solicit customers he was prohibited from soliciting due to previous employment contract (Gilford Motor Co v Horne)

Setting up a company to avoid an estate contract (Jones v Lipman);

Setting up a company to force compulsory purchase of minority shareholdings (Re Bugle Press).

Dealing with the enemy (Daimler v Continential Tyre);

Lord Denning argued in DHN Food Distributors v Tower Hamlets that groups of companies should be viewed as one single entity.

Group of answer choices

True

False

The key question in the case of Adams v Cape Industries was ?

Group of answer choices

It is possible for a company to be held as a mere facade even though it was not originally set up as a sham.

The company was used for some impropriety unconnected to the corporate form.

If there was an existence of an agent-principal relationship.

Whether Cape, the parent company, had a presence in the US through it subsidiaries.

The three situations where the case of Adams v Cape limited veil lifting to are :-

1. Where the interpretation of a statute or document shows that the group of companies is to be treated as one;
2. Where a company is being used as a sham or mere facade;
3. Where there is no agent-principal relationship

We know that the uncertainty principle tells us that the product of the standard deviation of energy and the standard deviation in time must always be greater than h-bar. Since there is a unit element of action, is there a unit element of power as well? In other words, if action is always present, then must power always be positive?

Clarification: This is not intended to be a question related to people who think that there is "vacuum energy/zero point energy/free energy" that can be harvested. This is more along the lines of whether the universe can self-perpetuate.

Clarification 2: Self perpetuate I would define as the ability for the universe, through mechanisms of quantum fluctuations related to the uncertainty principle to produce another epoch similar to our own that would appear to be later in time, from our perspective, and after an apparent thermodynamic death of our current universe.

Question restatement: Is quantizing action analagous to there being a source of power at the quantum level?