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slega [8]
3 years ago
15

The competitive equilibrium rent in the city of Lowell is currently​ $1,000 per month. The government decides to enact rent cont

rol and to establish a price ceiling for apartments of​ $750 per month. Briefly explain whether rent control is likely to make each of the following people better or worse off.
Someone is currently renting an apartment in lowell
Someone who will be moving to Lowell next year and who intends to rent an apartment
A landlord who intends to abide by the rent control law
A landlord who intends to ignore the law and illegally charge the highest rent possible for his apartments
Business
1 answer:
Zarrin [17]3 years ago
3 0

Answer:

The answers are:

  1. For someone who is currently renting an apartment, he or she should be better off with rent control as long as they keep renting the same apartment. They will pay a lower price.
  2. For someone who is moving to Lowell, he or she will be worse off because the quantity supplied for apartments on Lowell will decrease (price ceilings always decrease the quantity supplied). So it will be very hard for him to find a suitable apartment.
  3. For the landlord that abides by the law, he will be worse off because he will lose money. He should be earning more money but due to the rent control, his earnings decrease.
  4. For the landlord that decides to ignore the, he will eventually be worse off by his actions, since illegal activities always have a sour ending. He will eventually be caught and will probably have to pay a fine of some sort.

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Exercise 7-4A Effect of recognizing uncollectible accounts expense on financial statements: Percent of revenue allowance method
vfiekz [6]

Answer:

Rosie Dry Cleaning

a. Organization of the transaction data in accounts under an accounting equation:

Year 1:

The accounting equation is Assets = Liabilities + Equity.

1) Provided $29,940 of cleaning services on account.

Assets (Accounts Receivable) increases by $29,940; Equity (Retained Earnings) increases by $29,940.  So, Assets + $29,940 = Liabilities + Equity + $29,940.

2) Collected $23,952 cash from accounts receivable.

Assets (Cash) increases by $23,952 and Assets (Accounts Receivable) decreases by $23,952.  So, Assets + $23,952 and - $23,952 = Liabilities + Equity.

3) Adjusted the accounting records to reflect the estimate that uncollectible accounts expense would be 1 percent of the cleaning revenue on account.

Assets (Accounts Receivable) reduces by $59.88 and Equity (Retained Earnings) reduces by $59.88.  So, Assets - $59.88 = Liabilities + Equity - $59.88.

Year 2:

1. Wrote off a $225 account receivable that was determined to be uncollectible.

Assets (Accounts Receivable) decreases by $225 and Equity (Retained Earnings) decreases by $225.  So, Assets - $225 = Liabilities + Equity - $225.

2. Provided $34,940 of cleaning services on account.

Assets (Accounts Receivable) increases by $34,940 and Equity (Retained Earnings) increases by $34,940.  So, Assets + $34,940 = Liabilities + Equity + $34,940.

3. Collected $30,922 cash from accounts receivable.

Assets (Cash) increases by $30,922 and Assets (Accounts Receivable) decreases by $30,922.  So, Assets + $30,922 - $30,922 = Liabilities + Equity.

4. Adjusted the accounting records to reflect the estimate that uncollectible accounts expense would be 1 percent of the cleaning revenue on account.

Assets (Accounts Receivable) decreases by $37.93 ($97.81 - $59.88) and Equity (Retained Earnings) decreases by $37.93.  So, Assets - $37.93 = Liabilities + Equity - $37.93.

b. 1) Net Income for Year 1:

Sales = $29,940

less Allowance for uncollectible = $59.88)

Total = $29,880.12

2) Net Cash Flows from operating activities for Year 1 = $23,952.

3) Balance of Accounts Receivable at the end of Year 1:

Sales = $29,940

Less Cash Receipt = $23,952

Balance = $5,988

4) Net Realizable value of accounts receivable at the end of Year 1.

Accounts Balance = $5,988

less Allowance for Uncollectible = $59.88

Net Realizable = $5,928.12

c 1) Net Income for Year 1:

Sales = $34,940

less Bad Debts Expense = $262.93 ($37.93 + $225)

Total = $34,677.07

2) Net Cash Flows from operating activities for Year 1 = $30,922.

3) Balance of Accounts Receivable at the end of Year 1:

Beginning balance = $5,988

Sales = $34,940

Less Bad Debts Expense = $225

Less Cash Receipt = $30,922

Balance = $9,781

4) Net Realizable value of accounts receivable at the end of Year 1.

Accounts Balance = $9,781

less Allowance for Uncollectible = $97.81

Net Realizable = $9,683.19

Explanation:

The accounting equation states that Assets equal Liabilities plus Equity.  Any change in one side of the equation affects the other.  Sometimes, a transaction or event affects one side only by increasing one account and decreasing another account on the same side of the equation.  Examples are demonstrated in the answer above.

When an uncollectible is deemed bad, it reduces the Accounts Receivable and increases the bad debt expense.  The overall effect on the accounting equation is a reduction in Assets and Equity respectively.

8 0
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If a egg need 5 mins to cook how many mins 7 eggs need to cook
denis23 [38]

35 its just 5 x 7 you multiply the number of eggs by how many minutes.

6 0
3 years ago
Type the correct answer in the box. Spell all words correctly.
Alika [10]

Answer:

its to easy

Explanation:

i know it

7 0
2 years ago
The _______________ on Lay's potato chips informs customers that the chips received the "Best Taste Award" among leading classic
MA_775_DIABLO [31]

Answer:

seal

Explanation:

Based on the information provided within the question it can be said that this information is found of the seal of the Lay's potato chips bag. This is is a type of award symbol that demonstrates excellence in a certain area for the product in question. Which in this scenario refers to the "Best Taste Award" that was given to the company by the American Culinary Institute.

4 0
3 years ago
Taylor is negotiating to buy some land. Under the first option, Taylor will give Ella $150,000 and assume her mortgage on the la
Anna11 [10]

Answer:

The cost basis for the land is equal under both options.

Explanation:

If Taylor pays Ella $150,000 in cash and assumes the mortgage of $100,000, the cost basis of the land will be $250,000 (= $150,000 + $100,000). If he decides to pay Ella the full amount of $250,000, that will also be the cost basis of the land.

The only real difference is that if Taylor decides to assume the mortgage, he will need a smaller initial cash flow ($150,000).

8 0
3 years ago
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