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jek_recluse [69]
3 years ago
5

Karolina owns a small diner, where she works full-time in the kitchen. Her total revenue last year was $100,000, and her rent wa

s $3,000 per month. She pays her one employee $2,000 per month, and the cost of ingredients and overhead averages $500 per month. Karolina could earn $35,000 per year as the manager of a competing diner nearby. Her total economic profit last year was: Choose one: A. $65,000. C. –$1,000. D. $20,000.
Business
1 answer:
jasenka [17]3 years ago
3 0

Answer:

Option c

Explanation:

Given:

Total revenue = $ 100,000

Rent for one month = $ 3,000

Total Rent paid in the year = $ 3000 × 12=$ 36,000

Amount paid to the employee per month = $ 2,000

Total amount paid to the employee in the year = $ 2,000 × 12 = $ 24,000

Per month cost of ingredient and overhead = $ 500

The total ingredient and overhead for the year = $ 500 × 12 = $ 6,000

Implicit cost for the year = $ 35,000

Therefore,

The total expenses = $ 36,000 + $ 24,000 + $ 6,000 = $ 66,000

Thus,

The economic Profit = Total Revenue - expenses - Implicit Costs

or

= $ 100,000 - $ 66,000 - $ 35,000

or

= - $ 1000

hence, the correct answer is option C

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The following trial balance was taken from the books of Sheridan Corporation on December 31, 2020.
Leokris [45]

Answer:

Sheridan Corporation

a. Adjusting Journal Entries on December 31, 2020:

a. Debit Insurance Expense $2,000

Credit Prepaid Insurance $2,000

To record the insurance expense for the year.

b. Debit Bad Debts Expense $2,680

Credit Accounts Receivable $2,680

To record bad debts written off.

c. Debit Depreciation Expense - Equipment $12,260

Credit Accumulated Depreciation - Equipment $12,260

To record the depreciation expense for the year.

d. Debit Interest Receivable $672

Credit Interest Revenue $672

To record interest revenue receivable on the note.

e. Debit Rent Prepaid $5,400

Credit Rent Expense $5,400

To record rent prepaid, previously recorded as an expense.

f. Debit Salaries and Wages Expense $5,800

Credit Salaries Payable $5,800

To record accrued salaries.

b. Closing Journal Entries on December 31, 2020:

Debit Sales Revenue $268,000

Interest Revenue $672

Credit Income Summary $268,672

To close the revenue accounts to the income summary.

Debit Income Summary $202,040

Credit:

Cost of Goods Sold                 123,900

Salaries and Wages Expense  54,400

Rent Expense                             6,800

Bad debts Expense                   2,680

Insurance Expense                   2,000

Depreciation Expense             12,260

To close the expense accounts to the income summary.

Explanation:

a) Data and Calculations:

Sheridan Corporation

Unadjusted Trial Balance as of December 31, 2020:

Account Titles                               Debit     Credit

Cash                                             $8,500

Accounts Receivable                   40,700

Notes Receivable                          11,200

Allowance for Doubtful Accounts               $1,870

Inventory                                     35,300

Prepaid Insurance                         4,720

Equipment                                 122,600

Accumulated Depreciation--Equip.             14,100

Accounts Payable                                        10,100

Common Stock                                           49,100

Retained Earnings                                     64,550

Sales Revenue                                        268,000

Cost of Goods Sold                 123,900

Salaries and Wages Expense  48,600

Rent Expense                           12,200

Totals                                   $407,720 $407,720

Adjustments:

a. Insurance Expense $2,000 Prepaid Insurance $2,000

b. Bad Debts Expense $2,680 Accounts Receivable $2,680 (1% of $268,000)

c. Depreciation Expense - Equipment $12,260 Accumulated Depreciation - Equipment $12,260 (10% of $122,600)

d. Interest Receivable $672 Interest Revenue $672 (6% of $11,200)

e. Rent Prepaid $5,400 Rent Expense $5,400

f. Salaries and Wages Expense $5,800 Salaries Payable $5,800

Sheridan Corporation

Adjusted Trial Balance as of December 31, 2020:

Account Titles                               Debit     Credit

Cash                                             $8,500

Accounts Receivable                   38,020

Notes Receivable                          11,200

Interest Receivable                           672

Allowance for Doubtful Accounts               $1,870

Inventory                                     35,300

Prepaid Insurance                         2,720

Prepaid Rent                                 5,400

Equipment                                 122,600

Accumulated Depreciation--Equip.           26,360

Accounts Payable                                        10,100

Salaries Payable                                           5,800

Common Stock                                           49,100

Retained Earnings                                     64,550

Sales Revenue                                        268,000

Interest Revenue                                            672

Cost of Goods Sold                 123,900

Salaries and Wages Expense  54,400

Rent Expense                             6,800

Bad debts Expense                   2,680

Insurance Expense                   2,000

Depreciation Expense            12,260

Totals                                   $426,452 $426,452

8 0
3 years ago
Consider the following items: (f) Gain on the sale of equipment (g) Depreciation expense (h) Payment of dividends () Decrease in
Scrat [10]

Answer:

D) 4

Explanation:

There’re 3 section in an cash flow statement: Operating, Financing, and Investing

These items to be allocated in the section of cash flow as followings:

a) Decrease in accounts receivable: Operating (added)

(b) Issuance of common stock : Financing

(c) Increase in interest receivable: Operating (subtracted)

(d) Purchase of land : Investing

(e) Decrease in accounts payable: Operating (subtracted)

(f) Gain on the sale of equipment Investing

(g) Depreciation expense: Operating (added)

(h) Payment of dividends: Financing

(i) Decrease in utilities payable: Operating (subtracted)

j) Increase in inventory: Operating (subtracted)

There’re 06 items in Operating as above, in which only 04  are to be subtracted from net income from operating cash flow

5 0
3 years ago
Which of the following is NOT a real option?a. The option to buy shares of stock if its price goes up.b. The option to expand in
Dimas [21]

Answer: A. The option to buy shares of stock if its price goes up.

Explanation: Among the above options the less real option is " to buy shares of stock if its price goes up". It is advisable by brokers to buy shares of stock when the prices are down and sell when the prices are up in order to make profit.

The other options are more real, because expansion of a business in a new geographic region will yield more profits. Abandoning a failed business project is advisable and switching from one type of fuel to another is done based on preference and cost.

8 0
3 years ago
Shankar Company uses a perpetual system to record inventory transactions. The company purchases inventory on account on February
Ksenya-84 [330]

Answer:

                                      Dr.             Cr.

February 2, 2012

Inventory                    $30,000

Account Payable                          $30,000

February 10, 2012

Account Payable       $30,000

Discount received                        $600

Cash                                              $29,400

Explanation:

Term 2/10, n/30 means there is a cash settlement discount of 2% is available if the payment is made within 10 days after the purchase of goods. Net credit period is 30 days. Purchases were made on February 2 and Payment was made on February 10 within the discount period, so Shankar Company is entitled to claim the discount of 2%. Cash will be paid net of discount.

Discount = $30,000 x 2% = $600

Cash Payment = $30,000 - $600 = $29,400

6 0
3 years ago
What do the personal financial choices you have made show a bank (who is considering you for a loan?)
professor190 [17]
Sorry bro just need pints for my exam
7 0
3 years ago
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