Texas-Q Company produces and sells barbeque grills. Texas-Q sells three models: a small portable gas grill, a larger stationary gas grill, and the specialty smoker. In the coming year, Texas-Q expects to sell 21,200 portable grills, 58,300 stationary grills, and 5,300 smokers. Information on the three models is as follows:

Total fixed cost is $2,358,760.

Required:

1. What is the sales mix of portable grills to stationary grills to smokers?

2. Compute the break-even quantity of each product.

3. Prepare an income statement for Texas-Q for the coming year. What is the overall contribution margin ratio? Use the contribution margin ratio to compute overall break-even sales revenue. Enter the contribution margin ratio as a percentage rounded to two decimal places; round the break-even sales revenue to the nearest dollar.

4. Compute the margin of safety for the coming year.

Lakeview Company completed the following two transactions. The annual accounting period ends December 31.

1. On December 31, calculated the payroll, which indicates gross earnings for wages ($68,000), payroll deductions for income tax ($6,800), payroll deductions for FICA ($5,100), payroll deductions for American Cancer Society ($2,550), employer contributions for FICA (matching), and state and federal unemployment taxes ($595). Employees were paid in cash, but payments for the corresponding payroll deductions have not yet been made and employer taxes have not yet been recorded.
2. Collected rent revenue of $5,775 on December 10 for office space that Lakeview rented to another business. The rent collected was for 30 days from December 12 to January 10 and was credited in full to Deferred Revenue.

Required:

1. 1. & 2. Prepare the journal entries to record payroll on December 31, the collection of rent on December 10 and adjusting journal entry on December 31.
2. 3. Show how any of the liabilities related to these items should be reported on the company’s balance sheet at December 31.

The accountant for Mystique Company, a medical services consulting firm, mistakenly omitted adjusting entries for (a) unearned revenue earned during the year , $21,950; and (b) accrued wages, $6,100.

Lakeview Company completed the following two transactions. The annual accounting period ends December 31.

On December 31, calculated the payroll, which indicates gross earnings for wages ($100,000), payroll deductions for income tax ($10,000), payroll deductions for FICA ($7,500), payroll deductions for American Cancer Society ($3,750), employer contributions for FICA (matching), and state and federal unemployment taxes ($875). Employees were paid in cash, but payments for the corresponding payroll deductions have not yet been made and employer taxes have not yet been recorded.

Collected rent revenue of $6,375 on December 10 for office space that Lakeview rented to another business. The rent collected was for 30 days from December 12 to January 10 and was credited in full to Deferred Revenue.

Required:

1. & 2. Prepare the journal entries to record payroll on December 31, the collection of rent on December 10 and adjusting journal entry on December 31.

3. Show how any of the liabilities related to these items should be reported on the company’s balance sheet at December 31.

Sandler Company completed the following two transactions. The annual accounting period ends December 31.

1. On December 31, calculated the payroll, which indicates gross earnings for wages ($390,000), payroll deductions for income tax ($41,000), payroll deductions for FICA ($33,000), payroll deductions for United Way ($5,300), employer contributions for FICA (matching), and state and federal unemployment taxes ($3,300). Employees were paid in cash, but payments for the corresponding payroll deductions have not been made and employer taxes have not yet been recorded.
2. Collected rent revenue of $1,890 on December 10 for office space that Sandler rented to another business. The rent collected was for 30 days from December 12 to January 10 and was credited in full to Deferred Revenue.

Required:

1. 1. & 2. Prepare the entries required on December 31 to record payroll, the collection of rent on December 10 and adjusting journal entry on December 31.
2. 3. Show how any liabilities related to these items should be reported on the company’s balance sheet at December 31.

Texas-Q Company produces and sells barbeque grills. Texas-Q sells three models: a small portable gas grill, a larger stationary gas grill, and the specialty smoker. In the coming year, Texas-Q expects to sell 16,200 portable grills, 59,400 stationary grills, and 5,400 smokers. Information on the three models is as follows:

Total fixed cost is $2,078,310.

Texas-Q Company produces and sells barbeque grills. Texas-Q sells three models: a small portable gas grill, a larger stationary gas grill, and the specialty smoker. In the coming year, Texas-Q expects to sell 19,200 portable grills, 43,200 stationary grills, and 4,800 smokers. Information on the three models is as follows:

Total fixed cost is $2,175,120.

3. Use relevant diagrams to answer the following:

(Assume a closed economy unless stated otherwise)

a. The stock market just crashed; the Dow Jones Industrial Average fell by 750 points. How does this impact the goods market equilibrium interest rate, savings and investment?

b. Suppose your company is in equilibrium, with its capital stock at its desired level. A permanent decline in the expected real interest rate now has what effect on your desired capital stock?

c. If consumers foresee future taxes completely, what would be the impact of reduction in taxes this year that is accompanied by an offsetting increase in future taxes, on the goods market equilibrium. (Assumes that taxes don’t impact investment decisions and also assume consumption smoothing)

d. The tax code changes so that business firms face higher tax rates on their revenue (offset by other lump-sum tax changes so there's no overall change in tax revenue). What happens to saving, investment, real interest rate and current account balance in a small open economy.

Texas-Q Company produces and sells barbeque grills. Texas-Q sells three models: a small portable gas grill, a larger stationary gas grill, and the specialty smoker. In the coming year, Texas-Q expects to sell 13,800 portable grills, 50,600 stationary grills, and 4,600 smokers. Information on the three models is as follows:

Total fixed cost is $2,163,490.

Texas-Q Company produces and sells barbeque grills. Texas-Q sells three models: a small portable gas grill, a larger stationary gas grill, and the specialty smoker. In the coming year, Texas-Q expects to sell 15,900 portable grills, 53,000 stationary grills, and 5,300 smokers. Information on the three models is as follows:

Total fixed cost is $2,016,120.