When a firm's demand curve is tangent to its average total cost curve, economic profits are zero and the firm will exit the industry in the long run since firms are unwilling to operate at zero economic profit.

true or false

If the gain from a product-variety externality is less than the loss from a business-stealing externality, then there are likely to be too many firms in a monopolistic competitive market.

true or false

Although the monopolistically competitive firm maximizes profits at the output level where marginal revenue equals marginal cost, the firm’s price exceeds marginal cost

true or false

If firms in a monopolistic competitive market are earning economic profits in the short run, then, in the long run, new firms will enter and existing firms will lose customers to the new entrants.

true or false

the show time movie theatre sells thousands of gift certificates every year. The certificates can be redeemed at any time because they have no expiry date. Some of them may never be redeemed (because they are lost or forgotten for example). the owner of the theatre has raised some questions about the accounting for these gift certificates.

write an email to answer the following questions from the owner:

a) why is a liability recorded when these certificates are sold? After all, they bring customers into the theatre, where they spend money on snacks and drinks. Why should something that helps generate additional revenue be treated as a liability?

b) how should the gift certificates that are never redeemed be treated? At some point in the future, can the liability related to them be eliminated? If so, what type of journal entry would be made?

a) Find ABC’s average fixed costs, average variable costs, average total costs and marginal costs.

b) Since ABC is charging the customers at the price of $50, it seems that the company cannot make a profit. The owner decides to shut down operations. What are ABC’s profits/losses? Should the owner shut down operations? Explain.

c) Economic adviser suggested that it is better to produce unit of output, because marginal revenue equals marginal cost at the quantity. What are the ABC's profit /losses at the level of production? Was this the best decision? Explain.

Advertisers contract with internet service providers and search engines to place ads on websites. They pay a fee based on the number of potential customers who click on their ad. Unfortunately, click fraud—the practice of someone clicking on an ad solely for the purpose of driving up advertising revenue—has become a problem. Business week reports that 40 percent of advertisers claim they have been a victim of click fraud. Suppose a simple random sample of 360 advertisers will be taken to learn more about how they are affected by this practice. (Round your answers to four decimal places.) (a) What is the probability that the sample proportion will be within ±0.04 of the population proportion experiencing click fraud? Incorrect: Your answer is incorrect. (b) What is the probability that the sample proportion will be greater than 0.45?

TPO, an IP telephony company, offers various combinations of handsets and usage plans to its customers under two-year non-cancelable contracts. It offers two handset models: a basic model that it offers free of charge (stand-alone selling price is $150); and the most recent model, which offers additional features and functionalities and for which TPO charges $300 (stand-alone selling price is $600). The entity also offers two usage plans: a 500-minute plan and an 1000- minute plan. The 500-minute plan sells for $50 per month, and the 1000-minute plan sells for $70 per month (which also corresponds to the stand-alone selling price for each plan). Assignment: Create a table showing the various revenue recognition possibilities. There are at least four combinations.

Instructions

(a)   Journalize the transactions.

(b)   Indicate the statement presentation of interest revenue and service charges.

Exercise 3

Para Float Company often requires customers to sign promissory notes for major credit purchases. Journalize the following transactions for Para Float Company.

Feb. 12    Accepted a $30,000, 4%, 60-day note from Yancy Blair for a 24-foot motorboat built to his specifications.

April 14    Received notification from Yancy Blair that he was unable to honor his promissory note but that he expects to pay the amount owed in May.

May 26    Received a check from Yancy Blair for the total amount owed.

June 10    Received notification by the bank that Yancy Blair check was being returned "NSF" and that Mr. Blair had declared personal bankruptcy.

The Show Time movie theatre sells thousands of gift certificates every year. The certificates can be redeemed at any time because they have no expiry date. Some of them may never be redeemed (because they are lost or forgotten, for example). The owner of the theatre has raised some questions about the accounting for these gift certificates.

Instructions

Write an email to answer the following questions from the owner:

a.  

Why is a liability recorded when these certificates are sold? After all, they bring customers into the theatre, where they spend money on snacks and drinks. Why should something that helps generate additional revenue be treated as a liability?

b.  

How should the gift certificates that are never redeemed be treated? At some point in the future, can the liability related to them be eliminated? If so, what type of journal entry would be made?

OSE provides a one year warranty on all its electronic products. The warranty is an assurance against manufacturing defects. In December 2016, OSE sold $500,000 worth of electronic products. The cost of the goods sold was $250,000 and OSE estimates the cost of repairs under the warranty to be $5,000.
During the financial year ended December 2017, OSE incurred cost of $3,000 to repair the products under warranty that were sold in December 2016. It also incurred costs of $1,000 on repairs that did not fall under the warranty agreement and charged its customers $1,200 for these repairs.
OSE complies with FRS 18 Revenue and FRS 37 Provision, Contingent Liabilities and Contingent Assets.

Prepare journal entries to record the sale of the electronic products and the warranty for the financial years ended 31 December 2016 and 31 December 2017.

1. Suppose that we have an economy with four workers. Paris H. can teach 3 yoga lessons or make 20 lattes a shift. Kim K. can teach 2 yoga lessons or make 8 lattes a shift. Mike S. can teach 1 yoga lesson or make 40 lattes a shift. And Pauly D. can teach 4 yoga lessons or make 4 lattes a shift. Suppose customers are willing to pay $4 each for lattes and $15 for yoga lessons. Who should teach yoga? Who should pull lattes? How many lattes will the economy make and how many yoga lessons will it teach? Show the calculation of opportunity cost in your answer, and show how much revenue your solution brings.   Assume that everyone will work a shift.

ABC Company reported accounts receivable of $225,000 and an allowance for doubtful accounts with a $28,000 credit balance on January 1, 2017. ABC Company records bad debt expense using the net credit sales method. The following information was available for ABC Company for the years 2017 and 2018:

Calculate the percentage of sales estimated to be uncollectible in 2018.

Please only attempt if you can solve the question with a proper explanation. Please do not copy from Chegg.