A review of the ledger of Baylor Company at December 31, 2017, produces the following data pertaining to the preparation of annu
al adjusting entries. Salaries and Wages Payable $0. There are eight employees. Salaries and wages are paid every Friday for the current week. Five employees receive $700 each per week, and three employees earn $600 each per week. December 31 is a Tuesday. Employees do not work weekends. All employee worked the last 2 days of December. Unearned Rent Revenue $429,000. The company began subleasing office space in its new building on November 1. Each tenant is required to make a $5,000 security deposit that is not refundable until occupancy is terminated. At December 31, the company had the following rental contracts that are paid in full for the entire term of the lease. Prepaid Advertising $13, 200. This balance consists of payments on two advertising contracts. The contracts provide for monthly advertising in two trade magazines. The terms of the contracts are as shown below. The first advertisement runs m the month in which the contract is signed. Notes Payable $60,000. This balance consists of a note for one year at an annual interest rate of 12%, dated June 1. Prepare the adjusting entries at I December 31, 2017. (Show all computations).
1 answer:
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Answer:
The correct answer is C.
Explanation:
Supposing that more is preferred to less, Maria would never choose a point where she's below her budget line. That is, Maria will spend all of her rent.
Therefore we can already discard possibilities like:
- A. Because
⇒ $33<$36
The individual is not maximizing utility is she were to choose this bundle.
- B. Because
⇒ $42>$36
This bundle is beyond what Maria can afford.
Further, assuming that Maria has convex preferences, she'll choose a point where she buys more of both goods rather than specializing in the consumption of one of them. That leaves bundle D aside over bundle C because even though both bundles satisfy her budget condition M=$36, bundle C provides more utility to Maria than bundle D for being located in a more centric solution along her budget line.