1. You are the chief financial officer of a firm. You determine that when your firm increased prices by 1%, the quantity demanded by your customers decreased by 0.1%. Demand facing your firm must be _________ and you should _________ in order to maximise total revenue.

(a) elastic; increase prices

(b) elastic; decrease prices

(c) inelastic; decrease prices

(d) inelastic; increase prices

(e) unit-elastic; leave prices unchanged

2. In a competitive market where the government has introduced a price floor above the equilibrium price, one might expect:

3. Explain why firms in perfect competition and monopolistic competition markets earn zero economic profits in the long run, while monopoly firms can earn positive economic profits in the long run.

Gym Equipment Manufacturers Ltd (GEM) manufactures and sells gym equipment. It also installs the gym equipment for their customers.

On 1 January 2020, Keeping Fit Gym in Auckland signed a contract to purchase a piece of personalised gym equipment from GEM Ltd. The purchase price in the signed contract is $39,000. GEM Ltd also offers free installation service of the equipment to Keeping Fit.

The selling price of the same type of gym equipment, excluding the free installation, is $36,450. The installation of the equipment can also be done by registered manufacturers at $4,050.

On 10 January 2020, Keeping Fit paid the full amount, and on the same day, the equipment was delivered. The installation of the equipment was performed on the 20 January 2020.

Required:

(a)   Advise GEM Ltd on how to recognise the revenues in accordance with the 5-step model in NZ IFRS 15. (You are required to explain each step in the model with calculations).

(b)   Prepare relevant journal entries to recognise revenue for the above sale in terms of the 5-step model in GEM Ltd’s books.

At January 1, 2021, Tanner Company reported accounts receivable of $262,750 and had an allowance for doubtful accounts with a $13,690 credit balance. During 2021, Tanner Company had sales revenue of $531,250, recoveries of $6,190, cash collections from credit customers of $493,580 (the $493,580 does not include the recovery), and bad debt expense of $20,870. During 2021, Tanner Company wrote-off accounts receivable as being uncollectible (note - the amount of the write-offs has been intentionally omitted from this problem).

At December 31, 2021, Tanner Company prepared the following aging schedule:

Accounts Receivable % Uncollectible

not past due $146,100 3%

1-45 days past due 56,400 9%

46-90 days past due 38,600 11%

91-135 days past due 21,850 ?

over 135 days past due 23,930 40%

Calculate the percentage estimated to be uncollectible for the accounts receivable that are 91-135 days past due.

GGG uses a perpetual inventory system. The company’s beginning inventory of a particular product and its purchases during the months of January and February were as follows:

                                                                                        Quantity                             Unit Cost   

Beginning inventory (Jan. 1)................................................. 50                                         $6.00       

Purchase (Jan. 10)................................................................. 25                                           7.00       

Purchase (Jan. 22)................................................................. 25                                           8.52          

Purchase (Feb. 9)…………………………………………              65                                    11.00       

     Total     ...............................................................................                                                  

On February 25, GGG sells 65 units of this product. The other units remain in inventory at February 25.

a       Determine the cost of goods sold using each of the following flow assumption. SHOW ALL WORK!

         (1) LIFO                                                                                                $_____________

         (2) FIFO                                                                                                $_____________

         (3) Average cost                                                                                    $_____________

b       Determine the cost of the units in ending inventory at February 25 using each of the following flow assumptions. SHOW ALL WORK!

         (1) LIFO                                                                                                $_____________

         (2) FIFO                                                                                                $_____________

         (3) Average cost                                                                                    $_____________

c. Assume that the units are sold to customers at a price of $17 per unit.   Compute the total sales revenue to be recognized upon sale of the product?

Exercise 1 (LO 1, 2) Gross profit: separate firms versus consolidated. Sorel is an 80%-owned subsidiary of Pattern Company. The two affiliates had the following separate income statements for 2015 and 2016.

Sorel sells at the same gross profit percentage to all customers. During 2015, Sorel sold goods Pattern for the first time in the amount of $120,000. $30,000 of these sales remained in Pattern's ending inventory. During 2016, sales to Pattern by Sorel were $150,000, of which $25,000 sales were still in Pattern's December 31, 2016, inventory.

Prepare consolidated income statements including the distribution of income to the controlling and noncontrolling interest for 2015 and 2016.

(iv) On 1 April 2019, GHL entered into a sale and leaseback agreement for its manufacturing plant. The plant was originally acquired by GHL on 31 March 2009 for $8,910,000, at which point the plant had a useful life of 30 years with no residual value. The sale proceeds of plant from the sale and leaseback agreement were $11.25 million, which is higher than the fair value of the plant of $9.0 million. The plant was leased back on a 20-year lease from 1 April 2019 at an annual rental of $1,105,350 to be paid annually in arrears at 31 March 2020. The sale satisfies HKFRS 15 “Revenue from Contracts with Customers”, however, she insisted to account for it as a financing arrangement. The first lease rental is paid and charged to the statement of profit or loss. The sales proceed was treated as a financial liability. The incremental borrowing rate is 15% per annum.

4) what is the requirement of a sale and leaseback transaction from the seller-lessee perspective in accordance with HKFRS 16?

Smooth Blend, Inc., a calendar year company, produces several blends of whiskey. Maturing whiskey is stored for 3 years in a large, dark aromatic warehouse owned by Smooth Blend. Smooth Blend sells the whiskey to Distributor Company at the beginning of the aging process (January 1, 2011). Distributor Company will pick up the whiskey at the end of the aging process (December 31, 2013) and take it to its facilities for bottling. Distributor Company pays the full purchase price to Smooth Blend on January 1, 2011 to protect itself against price increases. When should Smooth Blend recognize revenue? Why? Would your answer change If the quality control manager of Distributor Company had the right to taste the whiskey on December 31, 2013 and receive a full refund if not satisfied with the quality of the liquor? If there was no right of return but Smooth Blend promised to help Distributor Company attract customers? If Smooth Blend acquired a fixed price option from Distributor Company to repurchase the whiskey in 6 months?

Trial Balance Transactions Required: 5 Assets, 2 Liabilities, 2 Equity, 1 Revenue, and 5 Expense accounts Jan 1 Owner invested $10,000 and recorded ownership in the company 2 Company paid current month's rent $500 7 Purchased merchandise to sell to customers on account from vendor TicWick Products $3,000 8 Sold to customer Mary Jones merchandise on account $1,600; cost of merchandise was $1,000 10 Signed a contract with a new supplier 15 Paid advertising from checking $100 17 Purchased a new computer from checking $250 20 Mary Jones paid her account balance in full. Amount deposited to checking account. 22 Paid legal fees $200 23 Purchased store equipment on account from Ace Supply $1,000. 25 Paid utilities $140 28 Paid 3 months of insurance $300 for coverage beginning Feb 1. 31 Paid Ace Supply for amount owed

Transaction 2

TeleCo, a customer of CoAx, entered into a binding written agreement to purchase 1,500 feet of fiber-optical cable for $3 per foot. TeleCo’s shipping terms are freight on board (FOB) shipping point. CoAx collected payment before the order was shipped. Title transfers upon delivery to the carrier, and TeleCo will insure the product while it is in transit. Instead of using a third-party shipper such as FedEx and UPS, CoAx has decided to use its own logistics subsidiary, DeliveryAx, to deliver the cable to TeleCo.

* CoAx acquired 100 percent ownership interest in DeliveryAx in the previous year. DeliveryAx provides an array of shipping services to third-party customers outside the cable industry. Only 2 percent of DeliveryAx’s shipping revenue is expected to be derived from transactions with CoAx in the current year. Case 16-2c: The Cable Guys Page 2 Copyright 2015 Deloitte Development LLC All Rights Reserved.

1. Summarize transaction 2 in bullet points

Problem: In order to do so Starbucks has closed 900 stores and eliminated 34,000 jobs. Strategy: Growth strategy of Starbucks is to have more revenue with lower costs. For strategy identification, let’s take a look at the way Starbucks sells their items, increase in their sales rate, attract more customers and advertise more but spend less. Opportunity: Starbucks is refocusing on some of the areas that decrease risk and up-front investment. This includes expanding foreign stores, with aid of partnerships that share risk and costs, selling VIA instant coffee and other products in retail and convenience stores, and reinvigorating the Seattle’s Best Brand coffee. Evaluation: The strategy was proposed after following a defined process of analysis and drawing inference as all the study and their result is also included in the proposal. Recommendation: As Starbucks is cutting down jobs, they can implement self-ordering interactive screens where users can place their order. please elaborate more on the problem and incorporate more to make it 1-2 pages long.