2. The following selected accounts and account balances were taken from the records of Nowell Company. Except as otherwise indicated, all balances are as of December 31, 2018, before the closing entries were recorded.

1. Prepare the income statement Nowell would include in its 2018 annual report.

2. Identify the accounts that should be closed to the Retained Earnings account. (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer.)

• Consulting revenue checked
• Supplies expense unchecked
• Travel expenses unchecked
• Salaries payable unchecked
• Dividends unchecked
• Cash unchecked
• Rent expense unchecked
• Salary expense unchecked
• Other operating expense unchecked

1. c-1. Determine the Retained Earnings account balance at December 31, 2018.

2. c-2. Which of the following statement(s) is true? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer.)

Net income does not include revenue of the current year.unanswered

• Retained earnings does not include current year net income, but only the balance from previous years.unanswered
• Retained earnings not only includes current year net income, but also the balance from previous years and reductions for dividends.unanswered
• Retained earnings does not include the balance from previous years, but only the reductions for dividends.unanswered
• Net income only includes revenues and expenses for the current year.unanswered

The following income statement items appeared on the adjusted trial balance of Schembri Manufacturing Corporation for the year ended December 31, 2021 ($ in thousands): sales revenue, $17,100; cost of goods sold, $7,100; selling expenses, $1,390; general and administrative expenses, $890; interest revenue, $160; interest expense, $210. Income taxes have not yet been recorded. The company’s income tax rate is 25% on all items of income or loss. These revenue and expense items appear in the company’s income statement every year. The company’s controller, however, has asked for your help in determining the appropriate treatment of the following nonrecurring transactions that also occurred during 2021 ($ in thousands). All transactions are material in amount.

1. Investments were sold during the year at a loss of $310. Schembri also had an unrealized gain of $400 for the year on investments in debt securities that qualify as components of comprehensive income.
2. One of the company’s factories was closed during the year. Restructuring costs incurred were $2,100.
3. During the year, Schembri completed the sale of one of its operating divisions that qualifies as a component of the entity according to GAAP. The division had incurred a loss from operations of $620 in 2021 prior to the sale, and its assets were sold at a gain of $1,580.
4. In 2021, the company’s accountant discovered that depreciation expense in 2020 for the office building was understated by $290.
5. Negative foreign currency translation adjustment for the year totaled $380.

Required:
1. Prepare Schembri’s single, continuous multiple-step statement of comprehensive income for 2021, including earnings per share disclosures. One million shares of common stock were outstanding at the beginning of the year and an additional 400,000 shares were issued on July 1, 2021.
2. Prepare a separate statement of comprehensive income for 2021.

Prepare Schembri’s single, continuous multiple-step statement of comprehensive income for 2021, including earnings per share disclosures. One million shares of common stock were outstanding at the beginning of the year and an additional 400,000 shares were issued on July 1, 2021. (Amounts to be deducted should be indicated with a minus sign. Enter your answers in thousands. Round EPS answers to 2 decimal places.)

Prepare a separate statement of comprehensive income for 2021. (Amounts to be deducted should be indicated with a minus sign. Enter your answers in thousands.)

The following income statement items appeared on the adjusted trial balance of Schembri Manufacturing Corporation for the year ended December 31, 2021 ($ in thousands): sales revenue, $19,100; cost of goods sold, $8,100; selling expenses, $1,490; general and administrative expenses, $990; interest revenue, $250; interest expense, $220. Income taxes have not yet been recorded. The company’s income tax rate is 25% on all items of income or loss. These revenue and expense items appear in the company’s income statement every year. The company’s controller, however, has asked for your help in determining the appropriate treatment of the following nonrecurring transactions that also occurred during 2021 ($ in thousands). All transactions are material in amount.

1. Investments were sold during the year at a loss of $410. Schembri also had an unrealized gain of $520 for the year on investments in debt securities that qualify as components of comprehensive income.
2. One of the company’s factories was closed during the year. Restructuring costs incurred were $2,200.
3. During the year, Schembri completed the sale of one of its operating divisions that qualifies as a component of the entity according to GAAP. The division had incurred a loss from operations of $700 in 2021 prior to the sale, and its assets were sold at a gain of $1,700.
4. In 2021, the company’s accountant discovered that depreciation expense in 2020 for the office building was understated by $390.
5. Negative foreign currency translation adjustment for the year totaled $440.

Required:
1. Prepare Schembri’s single, continuous multiple-step statement of comprehensive income for 2021, including earnings per share disclosures. One million shares of common stock were outstanding at the beginning of the year and an additional 800,000 shares were issued on July 1, 2021.
2. Prepare a separate statement of comprehensive income for 2021.

Prepare Schembri’s single, continuous multiple-step statement of comprehensive income for 2021, including earnings per share disclosures. One million shares of common stock were outstanding at the beginning of the year and an additional 800,000 shares were issued on July 1, 2021. (Amounts to be deducted should be indicated with a minus sign. Enter your answers in thousands. Round EPS answers to 2 decimal places.)

Prepare a separate statement of comprehensive income for 2021. (Amounts to be deducted should be indicated with a minus sign. Enter your answers in thousands.)

The Pritzker Music Pavilion in downtown Chicago is a technologically sophisticated and uniquely designed performing arts venue that hosts live concerts attended by over half a million patrons a year. A group of local organizers, led by a prominent local businesswoman, would like to use the pavilion for a concert to benefit a non-profit, national network of investors and environmental organizations working with companies and investors to address sustainability challenges such as global climate change. If the pavilion management agrees to host the concert, the organizers will donate all profits to the non-profit (or absorb any losses).

Based on the following revenue and cost information, the organizers would like answers to several questions.

There are three sources of revenue for the concert:

1. Tickets will be sold for $14.00 each.
2. A large multinational corporation headquartered in Chicago will donate $2.50 per ticket sold.
3. Each concert attendee is expected to spend an average of $17.00 for parking, food, and merchandise.

On the expense side, there are also three components:

1. A popular national group has agreed to perform at the concert. Normally, the group demands a significant fixed fee to perform, but to reduce the risk for the organizers, the group has agreed to perform for $5.50 per ticket sold.
2. The organizers will pay several companies to operate the parking, food, and merchandise concessions. They will pay $21,000 plus 15% of all parking, food, and merchandise revenue.
3. The organizers will pay the pavilion $95,000 plus $7.00 per ticket sold to cover its operating expenses (production, maintenance, advertising, etc.).

Part A (8 tries; 8 points)
1. What is the estimated contribution margin per ticket sold for the benefit concert (rounded to two decimal places)?   
2. What are the estimated total fixed costs for the benefit concert?   

Part B (8 tries; 8 points)
1. What is the estimated profit from the benefit concert if 10,000 tickets are sold?   
2. How many tickets must be sold in order for concert profit to be $100,000?   
3. Assuming a tax rate of 37% on profits from the concert, what must dollar ticket sales be in order for after-tax concert profits to be $100,000?

Part C (4 tries; 4 points)
1. Assume that the organizers can negotiate the fixed portion of the pavilion's operating expenses. If the organizers expect to sell 10,000 tickets, how much operating fixed costs can they afford to pay and still earn a profit of $100,000 (ignore taxes)?

(Sorry for multiple questions in one question)

Instructions:

1. General Journal - Adjusted journal entries and post to ledger

2. Ledger - T Accounts

A. Post adjusting activity - with journal reference (add on to unadjusted balance)

B. Show adjusted ending balance

3. Trial Balance - Adjusted

4. Financial Statements - Financial, R/E, Balance sheet, Cash flow - direct method (GAAP requires a reconciliation)

5. General Journal - Post closing journal entries & Post to ledger

6. Ledger - T accounts

A. Show adjusted balance

B. Post-closing activity with journal entry reference

C. Show ending closing balances

7. Trial Balance - Post closing

Adjusting Entries:

A.) Salaries earned but not paid for the period $1,500.

B.) Record Accrued interest income on investments of $400.

C.) Depreciation of $600.

D.) Determine the amount of insurance that has expired. (June 1 - Purchased two years of insurance for $6,000)

E.) Supplies on hand - $500.

F.) Earned $2,000 of unearned revenue.  

G.) Record the amount of expired rent. (Oct 1 - Paid rent for period of $12,000 for the next year)

H.) Record accrued interest expense of $950 note payable.

Assume two firms 1 and 2. The inverse market demand function is given by:             

P=30-(q₁+q₂)

Each firm produces with marginal costs of

MC = 6

Fixed costs are zero.

The next questions refer to the Cournot duopoly.

Question 1 (1 point)

What is Firm 1's total revenue function?

Question 1 options:

Question 2 (1 point)

What is Firm 1's marginal revenue function?

Question 2 options:

Question 3 (1 point)

What is Firm 1's response function?

Question 3 options:

Question 4 (1 point)

If Firm 1 thinks that Firm 2 chooses to supply q₂=10, then Firm 1's profit maximizing quantity would be q₁*=

Question 4 options:

Question 5 (1 point)

If Firm 2 thinks that Firm 1 chooses to supply q₁=7, then Firm 1's profit maximizing quantity would be q₁*=

Question 5 options:

Question 6 (1 point)

In equilibrium, each firm will supply q_i=

Question 6 options:

Question 7 (1 point)

The market price in equilibrium will be P*(q₁+q₂)=

Question 7 options:

Question 8 (1 point)

In equilibrium, each firm's total revenue is equal to TR_i=

Question 8 options:

Question 9 (1 point)

In equilibrium, each firm's total variable cost is TVC_i=

Question 9 options:

Question 10 (1 point)

In equilibrium, each firm's total profit is _i=

Question 10 options:

Question 11 (1 point)

In equilibrium, total consumer surplus is CS=

Question 11 options:

Synergy is now considering a project to launch a new product called M1. The life of the project is expected to be six years, and the project’s risk is similar to that of the company’s existing operations.
To manufacture M1, a new machine costing $1,200,000 will be required. The machine will be sold at the end of the project, and a $42,000 salvage value is expected.
Production and sales of M1 are expected to be 100,000 units in the first year, 110,000 units in the second year, 120,000 units in the third year, and 125,000 units in each of the remaining three project years. Variable costs of $12 will be incurred for each unit, which can be sold for $19. Incremental fixed cost amounting to $300,000 per year will also be incurred.
Working capital investment required at the beginning of the project is estimated to be 15% of the expected sales revenue in the first year of the project. Thereafter, Synergy will review working capital requirement at the end of each year to determine if the existing level of working capital investment requires adjustment.
In each review, the level of working capital investment considered appropriate will always be 15% of the expected sales revenue in the next year. (For example, in the first review, which will take place at the end of the first year, the level of working capital investment considered appropriate will be equal to 15% of the expected sales revenue in the second year of the project).

The project is expected to use a factory building owned by Synergy. The building is currently unoccupied but recently the company received an offer to rent the building for $55,000 a year for six years. The rental income will not be taxable as it is exempted under a government scheme aimed at encouraging companies to rent out unused factory space.
The risk-free rate is 2.5% per year and the expected return on the market is 10% per year.
The company pays profit tax in the same year at an annual rate of 20%.
Tax allowable depreciation should be ignored.

(1)Evaluate the M1 project using the net present value method and recommend to Synergy whether the project should be launched.

(2)Explain how Synergy could use sensitivity analysis to assist the evaluation of the M1 project. Estimate the two sensitivities below and use them as illustrative examples in your explanations.
i) The sensitivity of the M1 project to M1’s unit selling price.
ii) The sensitivity of the M1 project to the incremental fixed cost.

(3)Synergy would also like to understand more about the limitations of the internal rate of return (IRR) method. Please explain.

Balance Sheet:  

1). Credits

a) decrease both assets and liabilities.

b) decrease assets and increase liabilities.

c) increase both assets and liabilities.

d) increase assets and decrease liabilities.

2). The normal balance of an account is the

a) left side.

b) right side.

c) side which increases that account.

d) side that decreases that account.

3). The double-entry system requires that each transaction must be recorded

a) in at least two different accounts.

b) in two sets of books.

c) in a journal and a ledger.

d) first as a revenue and then as an expense.

4). Wilbur Wildcat Company purchased supplies for $1,000. They paid $500 in cash and agreed to pay the balance in 30 days. The journal entry to record this transaction would include a debit to an asset account for $1,000, a credit to a liability account for $500. Which of the following would be the correct way to complete the recording of the transaction?

a) credit an asset account for $500.

b) credit another liability account for $500.

c) credit the Wildcat, Capital account for $500.

d) Debit the Wildcat, Capital account for $500.

5). On June 1, 2012, Sparky Inc. reported a cash balance of $15,000. During June, Sparky made deposits of $3,000 and made disbursements totaling $14,000. What is the cash balance at the end of June?

a) $15,000 debit

b) $18,000 debit

c) $4,000 debit

d) $32,000 debit

6). On August 4, 2012 Artie Enterprises performed cash services of $2,300. The entry to record this transaction would include a

a) debit to service revenue of $2300

b) debit to cash of $2300

c) credit to accounts receivable of $2300

d) debit to accounts receivable of $2300.

7). Which account below is not a subdivision of owner's equity?

a) drawing

b) revenues

c) expenses

d) liabilities

8). Which of the following is the correct sequence of steps in the recording process?

a) posting, journalizing, analyzing

b) analyzing, journalizing, posting

c) analyzing, posting, journalizing

d) journalizing, posting, analyzine

9). Wilma Kitty withdraws $500 cash from her business for personal use. The entry for this transaction will include a debit of $500 to

a) Wilma Kitty, drawing

b) Wilma Kitty, capital

c) owner's salary expense

d) salaries expense

10). A credit is the normal balance for which account listed below?

a) cash

b) accounts receivable

c) rent expense

d) unearned revenue

1). Credits

a) decrease both assets and liabilities.

b) decrease assets and increase liabilities.

c) increase both assets and liabilities.

d) increase assets and decrease liabilities.

2). The normal balance of an account is the

a) left side.

b) right side.

c) side which increases that account.

d) side that decreases that account.

3). The double-entry system requires that each transaction must be recorded

a) in at least two different accounts.

b) in two sets of books.

c) in a journal and a ledger.

d) first as a revenue and then as an expense.

4). Wilbur Wildcat Company purchased supplies for $1,000. They paid $500 in cash and agreed to pay the balance in 30 days. The journal entry to record this transaction would include a debit to an asset account for $1,000, a credit to a liability account for $500. Which of the following would be the correct way to complete the recording of the transaction?

a) credit an asset account for $500.

b) credit another liability account for $500.

c) credit the Wildcat, Capital account for $500.

d) Debit the Wildcat, Capital account for $500.

5). On June 1, 2012, Sparky Inc. reported a cash balance of $15,000. During June, Sparky made deposits of $3,000 and made disbursements totaling $14,000. What is the cash balance at the end of June?

a) $15,000 debit

b) $18,000 debit

c) $4,000 debit

d) $32,000 debit

6). On August 4, 2012 Artie Enterprises performed cash services of $2,300. The entry to record this transaction would include a

a) debit to service revenue of $2300

b) debit to cash of $2300

c) credit to accounts receivable of $2300

d) debit to accounts receivable of $2300.

7). Which account below is not a subdivision of owner's equity?

a) drawing

b) revenues

c) expenses

d) liabilities

8). Which of the following is the correct sequence of steps in the recording process?

a) posting, journalizing, analyzing

b) analyzing, journalizing, posting

c) analyzing, posting, journalizing

d) journalizing, posting, analyzine

9). Wilma Kitty withdraws $500 cash from her business for personal use. The entry for this transaction will include a debit of $500 to

a) Wilma Kitty, drawing

b) Wilma Kitty, capital

c) owner's salary expense

d) salaries expense

10). A credit is the normal balance for which account listed below?

a) cash

b) accounts receivable

c) rent expense

d) unearned revenue