308 Chapter 11 CASE STUDYCase stUDYCollege and professional sports are economy boosters for their host cities. The stream of revenue to the local economy generated by excited fans comes from the sale of tickets, hotel room rentals, car rentals, restaurant meals served, gasoline sales, park-ing fees, and vendor sales. The sales become even greater when a team is winning.Cities such as Lincoln, Nebraska; Columbus, Ohio; Tallahassee, Florida; and Baton Rouge, Louisiana count on the revenue generated by sell-out crowds during the college football season. Stadiums that hold from 82,000 to 102,000 fans provide an eco-nomic windfall for the college com-munities where they are located.Some fans of professional sports teams, such as the Chicago Cubs and Green Bay Packers, are loyal no mat-ter how well their team is performing. These faithful fans provide a steady flow of revenue to the sports program and surrounding communities.College World Series Wars?Cities that host major sporting events understand the financial benefits. Omaha, Nebraska, appreciates the millions of dollars poured into the city during the annual College World Series. Zesto’s, a popular fast-food restaurant, has truckloads of food rolling in each day to meet the demands of customers from all over the United States.The event has been voted the Best Annual Local Event and ranks as the third-most important state tourist attraction, according to a survey conducted by Omaha Magazine. The revenue from this two-week event has attracted the attention of other cities, such as Oklahoma City, that would like the opportunity to host the event in the future. Economic experts estimate that the College World Series generates more than $40 million for the Omaha economy. It is no wonder that other cities would like to host thisevent.Omaha tore down Rosenblatt Stadium, the former home of the College World Series, to build the new $131-million TD Ameritrade Park Omaha that has 24,505 seats. Omaha must continue to demonstrate top-notch hospitality so that the College World Series event planners continue to choose Omaha as its host city.Think Critically

1. Why is it important for Omaha to continue hosting the College World Series? Consider both financial and nonfinancial benefits.

2. What are some of the greatest sources of revenue for cities that are home to popular college and professional sports teams?

3. How can hosting a major event like the College World Series help a city develop a national image? Explain your answer.

4. List ten good food items for ven-dors to sell at the College World Series

Identifying a Contract

Consider each of the following scenarios:

Required:

1. Determine if a contract exists for each of the scenarios.

2. If it is determined that a contract exists but the seller believes it is probable that it will not collect the expected consideration, how does this affect the seller's ability to recognize revenue?

If it is probable that the seller will not collect the expected consideration in exchange for goods or services that it has promised to transfer to the customer, any amounts that the seller does not expect to collect will the transaction price. This adjusted transaction price will be the starting point to apply the remaining steps of the revenue recognition model.

Check My Work1 more Check My Work uses remaining.

Your friend, Jane Lee, recently won the Lotto Max and is planning to sell her business and move to England. Jane owns the Vancouver Running Centre Inc. (Centre) that offers training and running clinics. She has provided you with the trial balance for the year ended October 31, 2018 (the company’s year-end).

Vancouver Running Centre Inc.

Unadjusted Trial Balance

October 31, 2020

Required:

She has asked you to review the trial balance and the additional information and prepare any adjusting journal entries you believe are necessary to ensure the accounts are complete and accurate in accordance with Generally Accepted Accounting Principles. Place your responses together with supporting calculations in the table provided. Explanations are not required.

1) The computer equipment is in excellent shape. It was purchased on July 1, 2019 and is expected to have a useful life of 4 years at which time it is expected to be sold for $4,000.

2) On February 1, 2020, Centre received and recorded in Revenue Earned a $20,000 cash advance from the Richmond School Board. The payment covers marathon training for the eight-month period starting July 1, 2020.

3) Each of Centre’s employees is paid $1,500 every two weeks – i.e.10 days of work. The six employees did not receive a pay cheque for the last seven working days of October 2020, as the bookkeeper was ill. The amounts were both recorded and paid upon her return on November 4, 2020.

4. Centre’s sales invoices for the last two weeks of October 2020 have not been prepared nor recorded. You estimate that $14,500 of services rendered during that period has not been recorded or billed to customers.

5. An inventory count completed at October 31, 2020 revealed inventory of $44,700.

6) On January 1, 2020 Centre purchased a two-year liability insurance policy for $4,800.

7) A letter from Centre’s landlord dated October 25, 2020 demands a total of $18,000 to be paid to cover the rent for the months of September to November 2020 inclusive. Centre’s monthly rent expense has been constant for the past three years.

8) Supplies on hand at October 31, 2020 are estimated at $3,500.

6. What is a tariff and what is a quota in international trade?

(a) In Tessland, suppose the domestic demand curve for sugar is given by: P = 16 - 0.05Q and the domestic supply curve is given by: P = 4 + 0.05Q:

i. In the absence of any trade, what is the equilibrium price and quantity of sugar? How much are the consumer surplus and domestic producer surplus?

ii. Suppose the equilibrium price of sugar in the world market is P = 6. How much are the new consumer surplus and new domestic producer surplus?

iii. Suppose Tessland is government imposes tariff $2 per unit (a ton) of sugar.

A. What will be the new effective price in the domestic market?

B. As a result, how much are the change in consumer surplus and change in domestic producer surplus compared to (ii)?

C. How is the loss in consumer surplus redistributed between domestic producer surplus, foreign producer surplus, government is revenue resulting from tariff and dead-weight loss to the society?

***PLEASE ONLY ANSWER FROM HERE (iv) AND BELOW. THANK YOU SO MUCH***

iv. Suppose, instead of imposing the tariff in (iii), Tessland is government imposes a quota restriction of 120 units of sugar.

A. What will be the new effective price in the domestic market?

B. As a result, how much are the change in consumer surplus and domestic producer surplus compared to (ii)?

C. How is the loss in consumer surplus redistributed between domestic producer surplus, foreign producer surplus, government is revenue resulting from quota and dead-weight loss to the society?

(b) Distinguish between a tariff and a quota. In what ways are they similar and in what ways are they different?

Details of Notes Receivable and Related Entries

Gen-X Ads Co. produces advertising videos. During the current year ending December 31, Gen-X Ads received the following notes:

Required:

Assume 360 days in a year.

1. Determine for each note (a) the due date and (b) the amount of interest due at maturity, identifying each note by number.

Feedback

Count the number of days in each month until the total number of days is reached for the term of the note and this will be the due date. Interest is not charged on the first day of the note.

Typically, the maker of a dishonored note fails to pay the note on the due date. A company that holds a dishonored note transfers the face amount of the note plus any interest due back to an accounts receivable account. Interest revenue is not dependent on receiving the interest at this point.

Cash received will include the maturity value of the note.

Learning Objective 6.

2. Journalize the entry to record the dishonor of Note (3) on its due date. If an amount box does not require an entry, leave it blank or enter "0".

Feedback

Count the number of days in each month until the total number of days is reached for the term of the note and this will be the due date. Interest is not charged on the first day of the note.

Typically, the maker of a dishonored note fails to pay the note on the due date. A company that holds a dishonored note transfers the face amount of the note plus any interest due back to an accounts receivable account. Interest revenue is not dependent on receiving the interest at this point.

Cash received will include the maturity value of the note.

Learning Objective 6.

3. Journalize the adjusting entry to record the accrued interest on Notes (5) and (6) on December 31.

4. Journalize the entries to record the receipt of the amounts due on Notes (5) and (6) in January. If an amount box does not require an entry, leave it blank or enter "0".

Feedback

Count the number of days in each month until the total number of days is reached for the term of the note and this will be the due date. Interest is not charged on the first day of the note.

Typically, the maker of a dishonored note fails to pay the note on the due date. A company that holds a dishonored note transfers the face amount of the note plus any interest due back to an accounts receivable account. Interest revenue is not dependent on receiving the interest at this point.

Cash received will include the maturity value of the note.

Learning Objective 6.

Recently, Quandl announced that they were purchased by NASDAQ. Both firms provide historic market data and other information about exchange transactions in equity and futures markets, so they offer substitute products. After the merger is completed, we should expect that the price of these market data products offered by the combined firm will:

To successfully adopt a price discrimination strategy, the seller must:

Which group is offered the lower price under a price discrimation scheme?

The remaining consumer surplus is zero under a successful first-degree price discrimination scheme.

True

False

In general, women's clothing items (e.g., running shoes) have higher prices than comparable products designed for men due to price discrimination. How do the clothing sellers prevent resale in these markets?

Which of the following claims is NOT true?

A consumer product testing organization uses a survey of readers to obtain customer satisfaction ratings for the nation's largest supermarkets. Each survey respondent is asked to rate a specified supermarket based on a variety of factors such as: quality of products, selection, value, checkout efficiency, service, and store layout. An overall satisfaction score summarizes the rating for each respondent with 100 meaning the respondent is completely satisfied in terms of all factors. Suppose sample data representative of independent samples of two supermarkets' customers are shown below.

(a)

Formulate the null and alternative hypotheses to test whether there is a difference between the population mean customer satisfaction scores for the two retailers. (Let μ₁ = the population mean satisfaction score for Supermarket 1's customers, and let μ₂ = the population mean satisfaction score for Supermarket 2's customers. Enter != for ≠ as needed.)

H₀:

H_a:

(b)

Assume that experience with the satisfaction rating scale indicates that a population standard deviation of 14 is a reasonable assumption for both retailers. Conduct the hypothesis test.

Calculate the test statistic. (Use μ₁ − μ₂. Round your answer to two decimal places.)

test statistic=

Report the p-value. (Round your answer to four decimal places.)

p-value =

At a 0.05 level of significance what is your conclusion?

Reject H₀. There is not sufficient evidence to conclude that the population mean satisfaction scores differ for the two retailers.

Do not reject H₀. There is not sufficient evidence to conclude that the population mean satisfaction scores differ for the two retailers.    

Do not reject H₀. There is sufficient evidence to conclude that the population mean satisfaction scores differ for the two retailers.

Reject H₀. There is sufficient evidence to conclude that the population mean satisfaction scores differ for the two retailers.

(c) Which retailer, if either, appears to have the greater customer satisfaction?

Supermarket 1

Supermarket 2  

  neither

Provide a 95% confidence interval for the difference between the population mean customer satisfaction scores for the two retailers. (Use x₁ − x₂. Round your answers to two decimal places.)

WHAT to WHAT

A consumer product testing organization uses a survey of readers to obtain customer satisfaction ratings for the nation's largest supermarkets. Each survey respondent is asked to rate a specified supermarket based on a variety of factors such as: quality of products, selection, value, checkout efficiency, service, and store layout. An overall satisfaction score summarizes the rating for each respondent with 100 meaning the respondent is completely satisfied in terms of all factors. Suppose sample data representative of independent samples of two supermarkets' customers are shown below.

(a)

Formulate the null and alternative hypotheses to test whether there is a difference between the population mean customer satisfaction scores for the two retailers. (Let μ₁ = the population mean satisfaction score for Supermarket 1's customers, and let μ₂ = the population mean satisfaction score for Supermarket 2's customers. Enter != for ≠ as needed.)

Assume that experience with the satisfaction rating scale indicates that a population standard deviation of 17 is a reasonable assumption for both retailers. Conduct the hypothesis test.

Calculate the test statistic. (Use

μ₁ − μ₂.

Round your answer to two decimal places.)

Report the p-value. (Round your answer to four decimal places.)

p-value =

At a 0.05 level of significance what is your conclusion?

Reject H₀. There is not sufficient evidence to conclude that the population mean satisfaction scores differ for the two retailers.Do not reject H₀. There is sufficient evidence to conclude that the population mean satisfaction scores differ for the two retailers.    Do not reject H₀. There is not sufficient evidence to conclude that the population mean satisfaction scores differ for the two retailers.Reject H₀. There is sufficient evidence to conclude that the population mean satisfaction scores differ for the two retailers.

Which retailer, if either, appears to have the greater customer satisfaction?

Supermarket 1Supermarket 2    neither

Provide a 95% confidence interval for the difference between the population mean customer satisfaction scores for the two retailers. (Use

x₁ − x₂.

Round your answers to two decimal places.)

A consumer product testing organization uses a survey of readers to obtain customer satisfaction ratings for the nation's largest supermarkets. Each survey respondent is asked to rate a specified supermarket based on a variety of factors such as: quality of products, selection, value, checkout efficiency, service, and store layout. An overall satisfaction score summarizes the rating for each respondent with 100 meaning the respondent is completely satisfied in terms of all factors. Suppose sample data representative of independent samples of two supermarkets' customers are shown below.

(a)

Formulate the null and alternative hypotheses to test whether there is a difference between the population mean customer satisfaction scores for the two retailers. (Let μ₁ = the population mean satisfaction score for Supermarket 1's customers, and let μ₂ = the population mean satisfaction score for Supermarket 2's customers. Enter != for ≠ as needed.)

H₀:

H_a:

(b)

Assume that experience with the satisfaction rating scale indicates that a population standard deviation of 16 is a reasonable assumption for both retailers. Conduct the hypothesis test.

Calculate the test statistic. (Use

μ₁ − μ₂.

Round your answer to two decimal places.)

Report the p-value. (Round your answer to four decimal places.)

p-value =

At a 0.05 level of significance what is your conclusion?

Do not reject H₀. There is not sufficient evidence to conclude that the population mean satisfaction scores differ for the two retailers.Reject H₀. There is sufficient evidence to conclude that the population mean satisfaction scores differ for the two retailers.    Do not reject H₀. There is sufficient evidence to conclude that the population mean satisfaction scores differ for the two retailers.Reject H₀. There is not sufficient evidence to conclude that the population mean satisfaction scores differ for the two retailers.

(c)

Which retailer, if either, appears to have the greater customer satisfaction?

Supermarket 1Supermarket 2    neither

Provide a 95% confidence interval for the difference between the population mean customer satisfaction scores for the two retailers. (Use

x₁ − x₂.

Round your answers to two decimal places.)

to

A consumer product testing organization uses a survey of readers to obtain customer satisfaction ratings for the nation's largest supermarkets. Each survey respondent is asked to rate a specified supermarket based on a variety of factors such as: quality of products, selection, value, checkout efficiency, service, and store layout. An overall satisfaction score summarizes the rating for each respondent with 100 meaning the respondent is completely satisfied in terms of all factors. Suppose sample data representative of independent samples of two supermarkets' customers are shown below.

(a)

Formulate the null and alternative hypotheses to test whether there is a difference between the population mean customer satisfaction scores for the two retailers. (Let μ₁ = the population mean satisfaction score for Supermarket 1's customers, and let μ₂ = the population mean satisfaction score for Supermarket 2's customers. Enter != for ≠ as needed.)

H₀:

H_a:

(b)

Assume that experience with the satisfaction rating scale indicates that a population standard deviation of 17 is a reasonable assumption for both retailers. Conduct the hypothesis test.

Calculate the test statistic. (Use

μ₁ − μ₂.

Round your answer to two decimal places.)

Report the p-value. (Round your answer to four decimal places.)

p-value =

At a 0.05 level of significance what is your conclusion?

Reject H₀. There is not sufficient evidence to conclude that the population mean satisfaction scores differ for the two retailers.Reject H₀. There is sufficient evidence to conclude that the population mean satisfaction scores differ for the two retailers.    Do not reject H₀. There is sufficient evidence to conclude that the population mean satisfaction scores differ for the two retailers.Do not reject H₀. There is not sufficient evidence to conclude that the population mean satisfaction scores differ for the two retailers.

(c)

Which retailer, if either, appears to have the greater customer satisfaction?

Supermarket 1Supermarket 2    neither

Provide a 95% confidence interval for the difference between the population mean customer satisfaction scores for the two retailers. (Use

x₁ − x₂.

Round your answers to two decimal places.)

to