ABC Company had the following transactions during 2019:

May 1: Received $6000 cash in advance for services to be provided over the coming 10 months.

August 5: Sold Merchandise for $7560 including 8% sales tax.

September 1: Borrowed $20000 from FNB bank by issuing 6 months, 6% interest bearing note.

October 10: Sold merchandise on account for $6000 plus 10% sales tax.

December 31: Prepare the adjusting entry to record the service revenue earned.

December 31: Prepare the adjusting entry to record the accrued interest to FNB bank.

December 31: Remitted the sales taxes to the government.

Answer the below questions related to the above transactions:

1) The entry of May 1 transaction should include a: *

a) Service Revenue $6,000

b) Accounts Receivable $6,000

c) Account Payable $6,000

d) Unearned Service Revenue $6,000

2) The Sales Revenue amount of the August 5 transaction is: *

a) $560

b) $604.8

c) $7,000

d) $7,560

3) The entry of August 5 transaction will include: *

a) Debit Cash $7,000

b) Debit Cash $7,560

c) Debit Accounts Receivable $7,000

d) Debit Accounts Receivable $7,560

4) The entry of September 1 transaction is: *

a) Debit Cash and Credit Notes Payable of $20,000

b) Debit Cash and Credit Notes Payable of $21,200

c) Debit Cash and Credit Notes Payable of $15,000

d) Debit Cash and Credit Accounts Payable of $15,000

5) The entry of October 10 will include a credit of: *

a) Sales Revenue $6,000

b) Sales Revenue $6,600

c) Sales Taxes Payable $6,000

d) Sales Taxes Expense $600

6) The entry of October 10 will include a debit of: *

a) Accounts Receivable $6,000

b) Cash $6,000

c) Accounts Receivable $6,600

d) Cash $6,600

7) The earned amount of the service revenue on December 31 is" *

a) $3,500

b) $4,800

c) $4,500

d) $5,000

8) The remaining balance of the Unearned Service Revenue after December 31 is: *

a) Zero

b) 1,200

c) $3,000

d) $4,000

9) The accrued interest amount on December 31 on the borrowed amount from FNB Bank is: *

a) $300

b) $400

c) $500

d) None of the above

10) The amount of Taxes Payable remitted to the government on December 31 is: *

a) $560

b) $1,160

c) $1,720

d) $1,820

Currently, Katie White (retail customers manager) and Jules De Martino (corporate customers manager) have their performance assessed based on how much profit/loss is made with their customers' loans and savings activities, but this has led to many disagreements. Based on figures from the previous year, the corporate customers' loans and savings activities have generated a profit of $124 million whereas the retail customers' loans and savings activities have generated a loss of $84 million. Jules is very happy with this outcome, but Katie argues Jules is lending money from her retail customers to his corporate customers.

Table 5 – RRB loans and savings activities

Values in million dollars Assets

Loans to customers Liabilities

Deposit from customers Interest income

Loans (8%) Interest expense

Deposits (6%)
Profit/Loss with customers

Retail Customers $75 $1,500 $6 $90

($84)

Corporate Customers $ 1,925 $500 $154 $30

$124

All Customers $2,000 $2,000 $ 160 $ 120

$40

RRB board is discussing implementing fund transfer pricing (FTP) for addressing Katie’s concern about her customers funding Jules’ activities. However, Jules argues implementing an arbitrary FTP rate will make the retail and customer managers performance evaluation too subjective. There has been some discussion in RRB board regarding implementing a Balanced Scorecard (BSC).

Required

1. a) Based on the figures from the previous year, what would be the adjusted profit/loss with retail customers and corporate customers if RRB set an FTP rate of 8% and which manager would benefit from this decision and why? (FTP2, 10 marks)

Pilgrim Bank (A): Customer Profitability

How much do profits vary across customers?

Are online customers more profitable than offline customers?

What is the role of customer demographics in comparing online and offline profitability?

What is your recommendation to the senior management team in terms of Pilgrim Bank’s online channel pricing strategy?

Should the bank charge fees, offer rebates, or do nothing in regards to pricing for online channel use? Why?

A company began work in 2020 on a contract for $7,800. Other data are as follows:

If the company uses the percentage-of-completion method, for the journal entry that records construction revenue, construction expense, and gross profit for 2020, how much will be recorded for Construction in Process?

A company began work in 2020 on a contract for $7,800. Other data are as follows:

                                                   2020                         2021

Costs incurred to date                 $3,000 $5,600

Estimated costs to complete         2,000       —

Billings to date    4,400                   7,800

Collections to date                       2,000                      4,800

If the company uses the percentage-of-completion method, for the journal entry that records construction revenue, construction expense, and gross profit for 2020, how much will be recorded for Construction in Process?

t beginning of this year, XYZ Company has a machine worth 1000k, cash 30k, account receivable 200k, inventory 100k, account payable 50k, and notes payable 80k. During this year, XYZ had sold 75k of inventory, which brought in 120k in revenue (with half cash and half credit). In addition, the company also paid down 37.5% of the notes payable. What is the change of NWC this year?

Decentralized Activities

Differential Analysis and Product Pricing. Decentralized Operations is when decision making and authority is transferred to subunits of the company. This is the difference in revenue and expenses between different products. Please choose a company which produces more than one product. Take at least two of these products and discuss the different costs between these two products which may make one more profitable than the other.

Table 1

The following table shows output per hour produced by the different units of labor.

Table 1

The marginal revenue product of a resource is equal to the product of the marginal product of an input and marginal revenue.

     8.   According to Table 1, if the wage rate is $9 per hour, how many workers should this firm hire?

     9. According to Table 1, the marginal-revenue product of the:

   10.   According to Table 1, if the wage rate is $6 per hour, how many workers should this firm hire?

   11.   Refer to Table 1. If both the wage rate and the price of the good falls to $2, how many workers would the firm hire?

12.­ The structure of the product market as described by Table 1 is: