Answer:
a) I used an excel spreadsheet to record the T-accounts
the closing entries would be:
Dr Sales revenue 12,100
Dr Purchase discounts 48
Dr Interest revenue 600
Dr Gain on sale of land 1,500
Cr Income summary 14,248
Dr Income summary 8,512
Cr Cost of goods sold 6,450
Cr Sales returns 1,680
Cr Sales discounts 242
Cr Distribution costs 140
Dr Income summary 5,736
Cr Retained earnings 5,736
b) Redd Company
Income Statement
For the year ended December 31, Year 2
Revenues:
- Sales revenues $12,100
- Sales returns ($1,680)
- Sales discounts ($242) $10,178
Cost of goods sold <u>($6,450)</u>
Gross profit $3,728
Expenses:
- Distribution costs ($140) <u>($140)</u>
Operating income $3,588
Other sources of income:
- Gain on sale of land $1,500
- Interest revenue $600 <u>$2,100</u>
Net income before taxes $5,688
Explanation:
<span>The least important in terms of
priority for Carol’s personal finances is planning an exotic vacation. Having an
exotic vacation is just for pleasure and must be done if there is extra money
from the budget. While, the children’s education fund and emergency fund is
very important because these are considered to be a basic need for her family. Moreover,
paying off credit card debt should also be given allocation for credit scoring
is essential in terms of financial stability.</span>
Answer:
Part a.
If the Congress of country U to clothing insurance gives a preferential tax treatment, and the insurance company agrees to pay 80% of the clothing expenses and the tax subsidizes the insurance premium, it will result in increase in the consumption of clothes, because people will buy clothes as if they were free.
With this change in behavior there will be decline in economic efficiency because purchasing of formal and expensive clothing is not done on a regular basis, with clothing insurance people will buy less costly daily wear clothes at subsidized rates or for free and the price of clothes will decrease.
Part b.
People who can pay for the 20% remaining cost of clothes will buy insurance clothing and those who can pay the premium. Moreover, the rich will over consume than the poor because they are the ones who will give more importance to good clothing.
Part c.
If a person spends $2000 on clothing the clothing, insurance cost will be more than $2000 because higher the probability of claim higher will be the premium charged by the insurance company.
Part d.
This is not a good idea by the Congress of country U because good clothing is something every person would like to have. Like in health insurance, people should be insured for big life threatening health issues and for minor health issues people should pay out of their pockets, because people take health insurance benefits for minor health issues since health is more or less free in the COUNTRY U. The high premium costs and high prices are completely ignored.
Answer:
$25,400
Explanation:
Equity which represents the amount owed to the owners of the business includes retained earnings (which is the accumulation of the net income/loss over the years less dividends paid) and common shares.
The movement in the retained earnings balance may be expressed as
Opening balance + net income - cash dividend paid = closing retained earnings balance
Cash dividend declared - Cash dividend paid = Cash dividend payable
$49,000 - Cash dividend paid = $23,600
Cash dividend paid = $49,000 - $23,600
= $25,400
Answer:
The approximate economic order quantity is 110 units.
Explanation:
A = annual demand = 10,000 units per year
C = unit cost of pot = $1000
S = Ordering cost per order = $150
I = Annual carrying cost (%) = 25% of unit cost
H = Annual carrying cost ($) = 0.25*C
= 0.25*$1000
= $250 per unit per year
Optimal order quantity is obtain from the EOQ formula.
Economic Order Quantity (EOQ) is given as follows:
Q = \sqrt{\frac{2*A*S}{H}}
Q = \sqrt{\frac{2*10,000*150}{250}}
Q = \sqrt{\frac{3000000}{250}}
Q = \sqrt{12000} = 109.545
Q = 110 units per order
Therefore, The approximate economic order quantity is 110 units.
