Answer:
Debit Salaries Expense $400 and Credit Salaries payable $400.
Explanation:
Consider, we are told the company pays each of its two office employees, meaning, the 2 employees combine will earn $200 a day.
Furthermore, we are told that even though the monthly accounting period ends on Tuesday the two employees work on Monday and Tuesday, meaning, the adjusting entry to record at the month-end will be a summation of the amount earned by the two employees on the two days. That is, = $200 × 2 days = $400 (which is a salaryexpense).
Therefore, going by the rule of double-entry, we are obliged to debit salaries expense account and credit salaries payable account.
Elasticity of demand measures the responsiveness of quantity demanded to a change in the price of the good.
a. Perfectly elastic - The good is perfectly elastic when the consumer is ready to buy any quantity at a fixed price.
b. Perfectly inelastic- The good is perfectly inelastic when the change in the price of the good has not effect on its demand, that is when quantity demanded is same at whatever price.
So, because here Gus is ready to buy any units of cupcakes at a fixed price of $10, the demand for cupcakes should be perfectly elastic.
Markdown policy
Going-rate policy
Penetration policy
Answer:
The correct answer is letter "D": Penetration policy.
Explanation:
Penetration pricing refers to a strategy by which firms introduce their products at a price lower than the average in the market in an attempt of attracting the greater quantity of consumers possible and wiping out competitors. After the competition is removed, the entity plans to set the price of its good higher since it has the control of the market now assuming customers would not have found a substitute.
Answer:
Explanation:
The journal entry is shown below:
Cash A/c Dr $3,700
To Treasury Stock A/c $3,500
To Additional Paid in Capital A/c $200
(Being the reissued shares are recorded)
The computation is shown below:
For cash account:
= 100 shares × $37 per share
= $3,700
For Treasury Stock Account
= 100 shares × $35 per share
= $3,500
And, for Additional Paid in Capital Account
= $3,700 - $3,500
= $200
For reissued shares, we debited the cash account and credited the treasury stock and Additional Paid-in Capital account
Answer:
$30,000
Explanation:
Fair value of equity = Fair value of Assets - Fair value of liabilities
Fair value of equity = $150,000 - $50,000
Fair value of equity = $100,000
Holmes Company pays $75,000 to acquire 75% of Equity
Holmes Company pays $15,000 for 75% of goodwill
Non controlling interest = 25% of Equity + 25% of Goodwill
Non controlling interest = 0.25*($100,000) + 0.25*($20000)
Non controlling interest = $25,000 + $5,000
Non controlling interest = $30,000
Answer:
1. Using a method similar to that used to calculate the consumer price index, the percentage change in the overall price level is;
Value of market basket of the good in 2017
= (50 * 2) + (5 * 6)
= $130
Value of market basket of the good in 2018
= (70 * 2) + (6 * 6)
= $176
CPI in 2017
= 130/ 130 * 100
= 100
CPI in 2018
= 176 / 130 * 100
= 135.38
Percentage change
= (135.38 - 100)/100
= 35.38%.
2. Using a method similar to that used to calculate the GDP deflator, the percentage change of the overall price level is ;
Nominal GDP in 2017
= (50 * 20) + (5 * 60)
= $1,300
Nominal GDP in 2018
= (70 * 21) + (6 * 80)
= $1,950
Real GDP using 2017 prices
Real GDP in 2017
= (50 * 20) + (5 * 60)
= $1,300
Real GDP in 2018
= (50 * 21) + (5 * 80)
= $1,450
GDP deflator in 2017
= (Nominal GDP in 2020 / Real GDP in 2020) * 100
= (1,300 / 1,300) * 100
= 100
GDP deflator in 2021
= (Nominal GDP in 2021 / Real GDP in 2021) * 100
= (1,950 / 1,450) * 100
= 134.48
Percentage Change
= [(134.48 - 100) / 100] * 100
= 34.48%
3. Which of the following statements is correct
a. The inflation rate in 2018 is not the same using the two methods.
b. The GDP deflator allows the basket of goods and services to change.
The inflation rate calculated using a method similar to the consumer price index is 35.38%, while the rate calculated using a method similar to the GDP deflator is 50%. These reports indicate a significant rise in prices in this nation.
To calculate the percentage change in the overall price level using a method similar to the consumer price index or CPI, you first establish a 'basket' of goods, in this case, 2 karaoke machines and 6 CDs. We then need to calculate the total cost of this basket for the two years in question. In 2017, the total cost was (2 karaoke machines * $50) + (6 CDs * $5) = $100 + $30 = $130. In 2018, the total cost was (2 karaoke machines * $70) + (6 CDs * $6) = $140 + $36 = $176.
The percentage increase is: ((176-130) / 130) * 100% = 35.38%, so the inflation rate as measured by a CPI-like method is 35.38%.
The GDP deflator method, by contrast, measures the price of everything produced in an economy, rather than a fixed basket of goods. In 2017, the nation produced 20 karaoke machines at $50 each and 60 CDs at $5 each, so the total GDP was ($1000 + $300) = $1300. In 2018, they produced 21 karaoke machines at $70 each and 80 CDs at $6 each, so the total GDP was ($1470 + $480) = $1950. Therefore, the percentage increase in prices according to the GDP deflator method is ((1950-1300) / 1300) * 100% = 50%, so inflation as measured by a GDP deflator-like method is 50%.
Either inflation measure could be meaningful, depending on the situation, but it's clear that prices are rising significantly in this small nation.
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Answer:
B. 2,600 to 2,000.
Explanation:
tax revenue = units x tax rate
units = tax revenue / tax rate = 6,000/3 = 2,000
2,000 will be the quantity after taxes.
6000 goverment revenue - 3900 consumer surplus - 3000 producer surplus
900 deathweight loss
(tax x ↓unit)/2 = deathweight loss
(3 x ↓unit)/2 = 900
(3 x ↓unit) = 900 *2
↓unit = 1800/3 = 600
It decrease to 2000 from 2600
A $3 per unit tax creates a wedge between the price paid by consumers and the price received by producers, representing a production cost increase. This results in a leftward shifted supply curve, with reduced consumer and producer surplus. The burden of the tax is shared, decreasing the equilibrium quantity of goods.
When a $3 per unit tax is imposed on a good, the government creates a wedge between the price paid by consumers and the price received by producers. The distance between these prices equals the tax rate.
The new market price is the price paid by consumers, but sellers receive less per unit sold as they pay the difference (tax) to the government. This tax is akin to an increase in production cost, symbolized by a leftward shift of the supply curve. The new supply curve intercepts the demand at the new quantity.
The tax revenue is found by multiplying the tax per unit by the total quantity sold. The tax incidence, or burden, is shared by both consumers and sellers. In this case, the consumers' surplus decreased by $3,900 and the producers' surplus decreased by $3,000, causing a total tax revenue of $6,000 and a decrease in the equilibrium quantity of goods.
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