There a couple risks for this money making strategy. Two of the most prominent are
1. The housing market doesn't increase and the value of the home either stays the same or decreases.
2. That the house you are investing in doesn't sell quickly enough or at all.
Both of these situations could cause financial loss.
Advertising is money spent by companies to sell goods and services.
Contractionary Fiscal Policy
There are two methods used to control the economy one which is a monetary policy which has to do with the federal reserve and then there is a fiscal policy which certain parts of government have control of. So since the question states government is the one responsible we know that it has to be a type of fiscal policy. Because the economy is moving too fast and they may want to slow it down to prevent inflation or a future recession, they will use contractionary fiscal policy to slow down growth by increasing taxes or decreasing spending.
Based on the transactions that occurred on Aug. 15 and Oct. 25 the appropriate journal entries for Newton Company are:
Aug. 15
Debit Cash $14,550
($15,000×97%)
Debit Service Charge Expense $450
($15,000×3%)
Credit Accounts Receivable $15000
Oct. 25
Debit Cash $784
($800×98%)
Debit Service Charge Expense $16
($15,000×2%)
Credit Sales Revenue $800
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