The publisher Elsevier uses mixed-bundling pricing strategy. The publisher sells a university access to a bundle of 930 of its journals for $1.7million for one year. It also offers the journals separately at individual prices. Because Elsevier offers the journals online (with password access), universities can track how often their students and faculty access journals and then cancel those journals that they seldom read.
Suppose that a publisher offers a university only three journals – A, B and C – at the unbundled, individual annual subscription prices of pA = $1,600, pB = $800, and pC = $1,500. Suppose a university’s willingness to pay for each of the journals is vA = $2,000, vB = $1,100, and vC = $1,400.

a) If the publisher offers the journals only at the individual subscription prices, to which journals does the university subscribe?

b) Given these individual prices, what is the highest price that the university is willing to pay for the three journals bundled together?

c) Now suppose that the publisher offers the same deal to a second university with willingness to pay vA = $1,800, vB = $1,000, and vC = $2,100. With the two universities, calculate the revenue-maximizing individual bundle prices.

During 2020, Riverbed Company started a construction job with a contract price of $1,610,000. The job was completed in 2022. T

he following information is available. 2020 2021 2022

Costs incurred to date $383,800 $905,280 $1,063,000

Estimated costs to complete 626,200 198,720 –0–

Billings to date 302,000 896,000 1,610,000

Collections to date 271,000 817,000 1,419,000

Compute the amount of gross profit to be recognized each year, assuming the percentage-of-completion method is used.

Prepare all necessary journal entries for 2021. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. For costs incurred use account Materials, Cash, Payables.)

Compute the amount of gross profit to be recognized each year, assuming the completed-contract method is used.
Gross profit 2020? 2021? 2022?

Tabor Company had the following account balances on January 1, 2020: Raw Materials Inventory $ 42,000 Work in Process Inventory $ 87,000 Finished Goods Inventory $ 93,000 During 2020, the following transactions took place: 1. Raw materials costing $75,000 were purchased on account. 2. Raw materials costing $96,000 were issued to the factory, of which $70,000 is considered to be direct material cost. 3. Total factor labor costs for the period were $150,000 of which $120,000 is considered to be direct labor cost. 4. The following other factory overhead costs were incurred: Factory utilities (paid in cash) $32,000; factory depreciation $64,000; and miscellaneous factory costs (incurred on account) $53,000. 5. Units costing a total of $250,000 were completed. 6. Units costing $240,000 were sold on account for $500,000.

INSTRUCTIONS: A. Complete a cost flow diagram (T-accounts attached) for 2020.

B. Prepare the journal entries to record ALL of the 2020 transactions listed above.

C. Prepare a manufacturing statement and a partial income statement.

Problem 20-09 (Part Level Submission)

Sunland Co. has the following defined benefit pension plan balances on January 1, 2020.

The interest (settlement) rate applicable to the plan is 10%. On January 1, 2021, the company amends its pension agreement so that prior service costs of $595,000 are created. Other data related to the pension plan are:

a. prepare pension worksheet for the pension plan in 2020

c. Prepare a pension worksheet for 2021 and any JE related to the pension plan as of December 31, 2021

d. indicate the pension-related amounts reported in the 2021 financial statements

In July 2020, Worley Ltd calls for public subscriptions for 20 million shares. The issue price per share is $1.20, to be paid in three parts, these being $0.50 on application, $0.40 within one month of the shares being allotted and $0.30 within two months of the first and final call, with the call for final payment being payable on 1 September 2020. By the end of July, when applications close, applications have been received for 24 million shares; that is, 4 million in excess of the amount to be allotted. The shares are allotted on 1 August 2020. Regarding final call for $0.30 per share, it becomes apparent that the holder(s) of 200 000 shares have failed to pay the amount due. As a result, the directors of the company elect to forfeit the shares.

Worley Ltd reissues the shares on 1 October 2020 as fully paid for an amount of $1.00; that is, $0.20 below the original issue price. The costs involved in generating the sale of the shares amount to $5,000.

Required:

Provide the accounting entries to record the issue of Worley Ltd’s shares.

Brady Construction Company contracted to build an apartment complex for a price of $6,900,000. Construction began in 2018 and was completed in 2020. The following is a series of independent situations, numbered 1 through 6, involving differing costs for the project. All costs are stated in thousands of dollars.

Required:
Complete the following table. (Do not round intermediate calculations. Enter answers in dollars. Round your final answers to the nearest whole dollar. Negative amounts should be indicated by a minus sign.)

Gross Profit (loss) Recogonized

Revenue Recogonized over time/Revenue Recogonized upon completed for situation 1-6 years 2018, 2019, 2020

1. The table given below summarizes the 2019 income statement and end-year balance sheet of Drake’s Bowling Alleys. Drake’s financial manager forecasts a 10% increase in sales and costs in 2020. The ratio of sales to average assets is expected to remain at 0.40. Interest is forecasted at 5% of debt at the start of the year. At the end of 2018 debt was $2,400,000 and assets were $6,960,000. (10 points) Income Statement $ in thousands Sales $ 2,900 (40% of average assets) Costs 2,175 (75% of sales) Interest 120 (5% of debt at start of year) Pretax profit 605 Tax 242 (40% of pretax profit) Net income $ 363 Balance Sheet $ in thousands Net assets $ 7,540 Debt $ 2,400 Equity 5,140 Total $ 7,540 Total $ 7,540 a. What is the expected level of assets at the end of 2020? b. If the company pays out 50% of net income as dividends, how much cash will Drake need to raise in the capital markets in 2020? Assumes debt remains constant. c. If Drake is unwilling to make an equity issue, what will be the debt ratio at the end of 2020?

The table given below summarizes the 2019 income statement and end-year balance sheet of Drake’s Bowling Alleys. Drake’s financial manager forecasts a 10% increase in sales and costs in 2020. The ratio of sales to average assets is expected to remain at 0.40. Interest is forecasted at 5% of debt at the start of the year. At the end of 2018 debt was $2,400,000 and assets were $6,960,000.

Olin Beauty Corporation manufactures cosmetic products that are sold through a network of sales agents. The agents are paid a commission of 18% of sales. The forecast income statement for the year ending December 31, 2020, is as follows:

The company is considering hiring its own sales staff to replace the network of agents. It will pay its salespeople a commission of 9% and incur fixed costs of $7,050,150.

Under the current policy of using a network of sales agents, calculate Olin Beauty Corporation’s break-even point in sales dollars for the year 2020.

Calculate the company's break-even point in sales dollars for the year 2020 if it hires its own sales force to replace the network of agents. (Round answer to the nearest whole dollar, e.g. 5,275.)

On January 1, 2020, LMB, Inc. purchased some equipment for $42,000. In order to prepare the equipment for use, LMB had to pay $8,000 to have the equipment installed. LMB aos estimates that the equipment will be used for 5 years and that it can be sold to a smaller company for parts after 5 years. It expects to sell the parts for $5,000. LMB will use the equipment for 5 years but also estimates that it will produce 10,000 units in total during that time.

LMB's units of production were as follows:

2020: 2,000 units

2021: 4,000 units

2022: 2,000 units

2023: 1,500 units

2024: 500 units

Using the Units of Production method, calculate depreciation expense for the year ended December 31, 2020 (first blank) and for the year ended December 31, 2021 (second blank).  

In the third blank, fill in the total accumulated depreciation after the 2nd year (12/31/2020).

In the fourth blank, fill in the net book value of the equipment on 12/31/2021.

Question 11 options: