Pelican Stores

Pelican Stores, a division of National Clothing, is a chain of women’s apparel stores operating throughout the country. The chain recently ran a promotion in which discount coupons were sent to customers of other National Clothing stores. data collected for a sample of 100 in-store credit card transactions at Pelican Stores during one day while the promotion was running are contained in the file named PelicanStores. Table 2.19 shows a portion of the data set. The Proprietary Card method of payment refers to charges made using a National Clothing charge card. Customers who made a purchase using a discount coupon are referred to as promotional customers and customers who made a purchase but did not use a discount coupon are referred to as regular customers. because the promo- tional coupons were not sent to regular Pelican Stores customers, management considers the sales made to people presenting the promotional coupons as sales it would not other- wise make. Of course, Pelican also hopes that the promotional customers will continue to shop at its stores.

Most of the variables shown in Table 2.19 are self-explanatory, but two of the variables require some clarification.

- Items The total number of items purchased

- Net Sales The total amount ($) charged to the credit card

Pelican’s management would like to use this sample data to learn about its customer base and to evaluate the promotion involving discount coupons.

Managerial Report

Use the tabular and graphical methods of descriptive statistics to help management develop a customer profile and to evaluate the promotional campaign. At a minimum, your report should include the following:

1. Percent frequency distribution for key variables.

2. A bar chart or pie chart showing the number of customer purchases attributable to the method of payment.

3. A crosstabulation of type of customer (regular or promotional) versus net sales. Comment on any similarities or differences present.

4. A scatter diagram to explore the relationship between net sales and customer age.

Table 2.19

5.

FuboTV and hulu are two streaming services companies that many consumers are using to eliminate expensive cable-TV services. They offer similar benefits to customers. If the price of the FuboTV service decreases, this will cause a decrease in the _______ for the hulu brand streaming service which would be graphed as _______.

Group of answer choices

quantity demanded, movement up/left along its demand curve

demand, leftward shift of its demand curve

quantity demanded, leftward shift of its demand curve

demand, movement up/left along its demand curve

6.

A minimum wage is an example of a price floor and results in higher rates of unemployment.

Group of answer choices

True

False

7.

Opportunity cost is defined as the value of everything given up when a decision is made or a course of action is followed.

Group of answer choices

True

False

8.

Assume that a firm is considering using another hour of labor at a cost of $20. The marginal product of this additional hour of labor is 15 units. The selling price is $2 per unit. Which of the following correctly identifies what the firm should do and for the correct reason?

Group of answer choices

The firm should not use the additional hour of labor because the MRP is negative.

The firm should use the additional hour of labor because the firm’s total product will increase.

The firm should use the additional hour of labor because the marginal product is positive.

The firm should obtain more information because there is not enough information provided to determine its best course of action.

The firm should not use the additional hour of labor because the marginal product is less than the wage rate.

The firm should use the additional hour of labor because the firm’s MRP is greater than the wage rate.

9,

It is assumed in economics that firms want to maximize _______, and this assumption provides the foundation for the _______.

Group of answer choices

total revenue, law of supply

total revenue, law of demand

total profit, law of supply

total profit, principle of increasing marginal opportunity cost

10.

The cross-price elasticity of demand between two goods is –1.9. This tells us these two goods are _______ and _______.

Group of answer choices

substitutes, used in place of each other

substitutes, used together

complements, used together

complements, used in place of each other

Bruny Island Dairy is a boutique cheese maker on Bruny Island. Over the years, the business has grown firstly by supplying local retailers, and then through exports. In addition, there is a ‘farm-gate’ shop and café located next to the main processing plant on Bruny Island, serving tourists who also visit the other specialist food and wine businesses in the region. Quality control over the cheese manufacturing process and storage of raw materials and finished products at Bruny Island Dairy is extremely high. All members of the business are committed to high product quality because any poor food handling practices which could result in a drop in cheese quality, failed health and safety inspections, or contamination of the products which would ruin the business very quickly. The company has managed to maintain export sales throughout the COVID-19 pandemic. However, revenue from tourists visiting the island has dropped off dramatically. The company has secured government assistance.

The export arm has been built up to become the largest revenue earner for the business by the younger of the two sisters who have run Bruny Island Dairy since it was established. Jane Langley has a natural flair for sales and marketing, but is not so good at completing the associated detailed paperwork. Some of the export deals have been poorly documented and Jane often gives discounts to some customers without consulting her older sister, Melinda, or informing the sales department. Consequently, there are often disputes about invoices and Jane makes frequent adjustments to debtor accounts using credit notes when clients complain about their statements. Jane sometimes falls behind in responding to customer complaints because she is very busy juggling the demands of making export sales and running her other business, Café Consulting, which manages casual staff working at the café business at Bruny Island Dairy.

Required
a. Identify the factors that would affect the preliminary assessment of inherent risk and control risk at Bruny Island Dairy.
b. Explain how these factors would influence your choice between the predominantly substantive approach (where planned detection risk is set at low-medium) and the lower assessed level of control risk approach (where planned detection risk is set at medium -high) for sales, inventory and debtors.

1. purchased on sept 1 a one year insurance policy for 1,200

2. provided services to customers during sept and recieved $30,000 cash

Using the equation, write what category (ie cash, A/R, etc) is increased, decreased or no effect for these sections:

Assets=Liabilities+Stockholder's Equity

2nd part//////

using the same formula, assets=liabilities+stockholder's equity, the company needs to record the following ADJUSTING transactions to update their records AT THE END OF THE MONTH

1. the company did a pysical count of suplies and deteremined 1k of supplies are still on hand. record the use of supplies.

2. te company provided services of 1,000 to the customer paid in advance (previously, they recieved a 5,000 cash advance from a customer for services not yet received which resulted cash +5000, unearned revenue +5000)

3. depreciation expense on equipment of $500 needs to be recorded.

4. record insurance expense for the month of october.

5. record accural of interest expense on note payable for the month of october.

Exercise 5-14 Effect of credit card sales on financial statements LO 5-5

Ultra Day Spa provided $85,050 of services during 2018. All customers paid for the services with credit cards. Ultra submitted the credit card receipts to the credit card company immediately. The credit card company paid Ultra cash in the amount of face value less a 4 percent service charge.

Required

1. Record the credit card sales and the subsequent collection of accounts receivable in a horizontal statements model like the one shown here. In the Cash Flow column, indicate whether the item is an operating activity (OA), investing activity (IA), or financing activity (FA). If an element is not affected by the event, leave the cell blank.
2. Based on this information alone, answer the following questions:

1. (1) What is the amount of total assets at the end of the accounting period?
2. (2) What is the amount of revenue reported on the income statement?
3. (3) What is the amount of cash flow from operating activities reported on the statement of cash flows?

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.