On January 1, 2018, Red Flash Photography had the following balances: Cash, $13,000; Supplies, $8,100; Land, $61,000; Deferred Revenue, $5,100; Common Stock $51,000; and Retained Earnings, $26,000. During 2018, the company had the following transactions:  

The following information is available on December 31, 2018:
  
1. Employees are owed an additional $4,100 in salaries.
2. Three months of the rental space has expired.
3. Supplies of $5,100 remain on hand.
4. All of the services associated with the beginning deferred revenue have been performed.

Consider the following hourly demand and cost schedule for a firm facing a fixed price of $ 6.00 per unit. (Tπ, is Total Profit).

Q    P             TR   MR    TFC       TVC          TC         MC           ATC          AVC         Tπ

0    $6.00                                                               $2.00            

1                                                           4             

2                                                           6             

3                                                           8             

4                                                          11             

5                                                          15                     

6                                                          20             

7.                                                      26             

8                                                          33          

  9                                                          41          

10                                                       50

11                                                       60

1. Complete the columns for ATC, AVC, and MC as well as those for (TC), TVC, & TFC.
2. Draw the curves for Demand, MR (Marginal Revenue), ATC, AVC, and MC, all in one diagram. Also draw the Total Revenue (TR), Total Cost (TC), TVC, and TFC in a second diagram right below the first one.
3. Determine, in order to maximize profit, how many units should this firm produce and why?
4. Calculate the total profit at the profit-maximizing level and demonstrate it graphically and geometrically in the diagrams wherever applicable.

Question 4

Suppose 100,000 kilograms of gold can be obtained from a gold mine during its first year in operation. However, its subsequent yield is expected to decrease by 10% over the previous year’s yield. The gold mine has a proven reserve of 1,000,000 kilograms.

1. a) Suppose that the price of gold is expected to be $60 per gram for the next several years. What would be the present worth of the revenue earned at an interest rate of 12% per annum compounded annually over the next seven years?
2. b) Suppose that the price of gold is expected to start at $60 per gram during the first year, but to increase at the rate of 5% over the previous year’s price. What would be the present worth of the revenue earned at an interest rate of 12% per annum compounded annually over the next seven years?
3. c) Consider part b again, find the net worth of the revenues to be earned in the next 4 years at the end of year 3.

The following accounts are taken from Equilibrium Riding, Inc., a company that specializes in occupational therapy and horseback riding lessons, as of December 31.

Colah Company purchased $1,500,000 of Jackson, Inc., 8% bonds at par on July 1, 2021, with interest paid semi-annually. Colah determined that it should account for the bonds as an available-for-sale investment. At December 31, 2021, the Jackson bonds had a fair value of $1,750,000. Colah sold the Jackson bonds on July 1, 2022 for $1,350,000. Required:

1. Prepare Colah’s journal entries for the following transactions: The purchase of the Jackson bonds on July 1. Interest revenue for the last half of 2021. Any year-end 2021 adjusting entries. Interest revenue for the first half of 2022. Any entries necessary upon sale of the Jackson bonds on July 1, 2022, including updating the fair-value adjustment, recording any reclassification adjustment, and recording the sale.

2. Complete the following table to show the effect of the Jackson bonds on Colah’s net income, other comprehensive income, and comprehensive income for 2021, 2022, and cumulatively over 2021 and 2022.

Question 2: Yankee Hotel Foxtrot initiated operations on July 1, 2014. To manage the company officers and managers have requested monthly financial statements starting July 31, 2014. The adjusted trial balance amounts at July 31 are shown below.

Instructions

(A) Determine the net income for the month of July

(B) Determine the amount for Owner’s, Capital at July 31, 2014

(C) Determine the Balance Sheet at July 31, 2014 for

Assume your company has the following adjusted account balances at the end of the quarter for all dividend, revenue, and expense accounts. All accounts have a normal debit or credit balance. Financial statements are prepared on a quarterly basis.

Dividends: $14,000

Services Revenue: $100,000

Rent Expense: $9,000

Salaries Expense: $23,000

Utilities Expense: $6,000

Depreciation Expense - Furniture: $18,000

1. Prepare the four closing entries required to close the books at the end of the quarter. Be sure to clearly number each entry and clearly identify debits and credits by using the following format (these sample entries are not related to closing entries and are simply here as a formatting example):

Entry #1 Dr. Cash

Cr. Accounts Receivable

Entry #2 Dr. Wages Expense

Cr. Wages Payable

2. Are the financial statements prepared before or after the closing entries? Use several sentences to explain your answer.

3. Why do companies close the books at the end of the reporting period?

An airline regularly running a flight between Chicago and Zurich has 100 business travelers who are willing to pay $1000 for a ticket and 50 tourist travelers who are willing to pay only $500 for a ticket. There is a $20,000 fixed associated with running the flight, which is fixed regardless of the number of passengers on the plane. a.Suppose the airline must set a single ticket price. What is the optimal ticket price? How much revenue does the airline earn and how much profit does it make?b.Now suppose that the airline can price discriminate by charging different prices to business travelers and to tourists. What are the airline’s revenue and profit now?c.The airline attempts to price discriminate in the following way. It initially sets the ticket price at $1000, so that business travelers will buy tickets immediately. A few days before the flight, it lowers the price to $500, hoping that tourists will buy a ticket. What problem would the airline would run into if it applied this strategy repeatedly?