Vulcan Flyovers offers scenic overflights of Mount St. Helens, the volcano in Washington State that explosively erupted in 1982. Data concerning the company’s operations in July appear below: Vulcan Flyovers Operating Data For the Month Ended July 31 Actual Results Flexible Budget Planning Budget Flights (q) 62 62 60 Revenue ($350.00q) $ 16,400 $ 21,700 $ 21,000 Expenses: Wages and salaries ($3,800 + $90.00q) 9,340 9,380 9,200 Fuel ($33.00q) 2,210 2,046 1,980 Airport fees ($860 + $30.00q) 2,605 2,720 2,660 Aircraft depreciation ($9.00q) 558 558 540 Office expenses ($240 + $1.00q) 470 302 300 Total expense 15,183 15,006 14,680 Net operating income $ 1,217 $ 6,694 $ 6,320 The company measures its activity in terms of flights. Customers can buy individual tickets for overflights or hire an entire plane for an overflight at a discount. Required: 1. Prepare a flexible budget performance report for July that includes revenue and spending variances and activity variances. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

Suppose that there are drastic technological improvements in shoe production in Home such that shoe factories can operate almost completely with computer-aided machines. Consider the following data for the Home country:

Shoes:  Sales revenue = Ps x Qs = 100 , Payments to labor = W x Ls = 10 , Payments to labor = R x Ks = 90 , Percentage increase in the price = ∆Ps/Ps = 40%

Computers: Sales revenue = Pc x Qc = 100,  Payments to labor = W x Lc = 50 , Payments to capital = R x Kc = 50,  Percentage increase in the price = ∆Pc/Pc= 0%

a. Which industry is capital-intensive?

b. Given the percentage changes in output prices in the data provided, calculate the percentage change in the rental on capital.

c. How does the magnitude of this change compare with that of change in the earnings of labor?

d. Which factor gains in real terms, and which factor loses? Are these results consistent with the Stohlper-Samuelson theorem?

Using a diagram of relative labor demand (RD), show the effect of a decrease in the relative price of computers in Foreign. What happens to the wage relative to the rental? Is there an increase in the labor-capital ratio in each industry? Explain.

Vulcan Flyovers offers scenic overflights of Mount St. Helens, the volcano in Washington State that explosively erupted in 1982. Data concerning the company’s operations in July appear below:

The company measures its activity in terms of flights. Customers can buy individual tickets for overflights or hire an entire plane for an overflight at a discount.

Required:

1. Prepare a flexible budget performance report for July that includes revenue and spending variances and activity variances. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

The transactions of Finkel Brothers Limited are recorded in the general journal below. You are to post the journal entries to the accounts in the general ledger (use T accounts). After all entries have been posted, you are to prepare a trial balance at September 30, 2018.

                                                               General Journal

——————————————————————————————————————————

Date                Account Titles and Explanation                                                 Debit           Credit

2018

Sep      1       Cash...................................................................................         20,000

                            Common Shares.........................................................                            20,000

                            (Shareholders invested cash in business)

            4       Vehicles..............................................................................         40,000

                            Cash............................................................................                            15,000

                            Bank Loan Payable.....................................................                            25,000

                            (Paid cash and issued 2-year, 9% bank loan for balance)

            8       Rent Expense....................................................................           1,200

                            Cash............................................................................                              1,200

                            (Paid September rent)

          15       Prepaid Insurance..............................................................              500

                            Cash............................................................................                                 500

                            (Paid one-year liability insurance)

          18       Cash...................................................................................           3,200

                            Service Revenue........................................................                              3,200

                            (Received cash for delivery services)

          20       Salaries Expense...............................................................              750

                            Cash............................................................................                                 750

                            (Paid salaries for current period)

          25       Utilities Expense................................................................              125

                            Accounts Payable.......................................................                                 125

                            (Received a bill for September utilities)

          30       Dividends Declared............................................................              800

                            Cash............................................................................                                 800

                            (Paid dividends)

          30       Accounts Receivable.........................................................           1,450

                            Service Revenue........................................................                              1,450

                            (Billed customer for delivery service)

5. Plover Corporation prepares monthly financial statements. Below are listed some selected accounts and their balances on the September 30 trial balance before any adjustments have been made for the month of September.

PLOVER CORPORATION

Trial Balance

September 30, 2018

——————————————————————————————————————————

                                                                                                                        Debit            Credit

Cash........................................................................................................       $12,300

Supplies...................................................................................................           2,700

Prepaid insurance...................................................................................           5,775

Equipment...............................................................................................         16,200

Accumulated depreciation—Equipment.................................................                              $ 540

Accounts payable....................................................................................                              1,100

Unearned revenue..................................................................................                              1,200

Common shares......................................................................................                            10,000

Retained earnings...................................................................................                            18,925

Rent revenue...........................................................................................                              6,360

Salaries expense.....................................................................................          1,150     _______

Total.........................................................................................................       $38,125      $38,125

An analysis of the account balances provided the following additional information:

1.    A physical count of supplies revealed $1,200 on hand on September 30.

2.    A two-year insurance policy was purchased on June 1 for $6,600.

3.    The equipment was purchased on July 1^st for $16,200 and has an estimated useful life of five years.

4. Rent received in advance that remains unearned at September 30 is $500.
5. Income tax of $800 is owed.

Instructions

(a)        Using the above additional information, prepare the adjusting entries that should be made by Plover on September 30 (adjusting entries are made on a monthly basis).

(b)        Prepare an adjusted trial balance at September 30.

Income Statement

The following account balances were taken from the adjusted trial balance for Capstone Messenger Service, a delivery service firm, for the fiscal year ended April 30, 20Y7:

Prepare an income statement.

Income Statement; Net Loss

The following revenue and expense account balances were taken from the ledger of Guardian Health Services Co. after the accounts had been adjusted on February 28, 20Y0, the end of the fiscal year:

Prepare an income statement. Use a minus sign to indicate a net loss.

On February 1, 2018, Arrow Construction Company entered into a three-year construction contract to build a bridge for a price of $8,540,000. During 2018, costs of $2,180,000 were incurred with estimated costs of $4,180,000 yet to be incurred. Billings of $2,680,000 were sent, and cash collected was $2,430,000.

In 2019, costs incurred were $2,680,000 with remaining costs estimated to be $3,870,000. 2019 billings were $2,930,000 and $2,655,000 cash was collected. The project was completed in 2020 after additional costs of $3,980,000 were incurred. The company’s fiscal year-end is December 31. Arrow recognizes revenue over time according to percentage of completion.

Required:
1. Compute the amount of revenue and gross profit or loss to be recognized in 2018, 2019, and 2020 using the percentage of completion method?
2a. Prepare journal entries for 2018 to record the transactions described (credit "various accounts" for construction costs incurred).
2b. Prepare journal entries for 2019 to record the transactions described (credit "various accounts" for construction costs incurred).
3a. Prepare a partial balance sheet to show the presentation of the project as of December 31, 2018.
3b. Prepare a partial balance sheet to show the presentation of the project as of December 31, 2019.

Sonya's Christmas Tree Company began operations on April 1, 2016, when Sonya bought a parcel of land on which she intended to grow Christmas trees. The normal growth time for a Christmas tree is approximately six years, so she divided her land into seven plots. In 2016, she planted the first plot with trees and watered, cultivated, and fertilized her trees all summer. In 2017, she planted her second plot with trees and watered, cultivated, and fertilized both planted plots. She continued with her plantings and cultivation every year through 2022, when she planted the last plot. In November 2022, she harvested the first plot of trees that she had planted in 2016. In 2023, she replanted the first plot.

Required:

a.  

Explain when the company should be recognizing revenue. Why is this the case?

b.  

Using your recommended revenue recognition policy, how would Sonya account for all her costs for growing the trees?

c.

Why Sonya split her land into 7 plots, and planted only one plot each year. Why didn’t she plant ALL of the land in 2016?

Lavage Rapide is a Canadian company that owns and operates a large automatic carwash facility near Montreal. The following table provides data concerning the company’s costs:

For example, electricity costs are $1,100 per month plus $0.07 per car washed. The company expected to wash 8,100 cars in August and to collect an average of $6.70 per car washed.

The actual operating results for August appear below.

Required:

Compute the company's revenue and spending variances for August. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)