Answer:
The reversing entries are outlined below
Explanation:
The accountant should reverse the entries made for salaries payable and interest receivable accruals.
December 31, 2021 (To document interest receivable)
DEBIT CREDIT
Interest receivable [$115,000*8%*3/12] 2300
Interest revenue 2300
December 31, 2021 (To document salaries payable)
DEBIT CREDIT
Salaries expense 7550
Salaries payable 7550
January 1, 2022 (To reverse entry from December 31, 2021)
DEBIT CREDIT
Interest revenue 2300
Interest receivable 2300
January 1, 2022 (To reverse entry from December 31, 2021)
DEBIT CREDIT
Salaries payable 7550
Salaries expense 7550
Answer:
The question lacks completeness; the following addition would enhance it:
"If Realtors require a 5 percent commission on the sale price and every Realtor faces opportunity costs of $2,000 to negotiate a sale, will Carlos opt to hire a Realtor? If he does, how will the overall economic surplus change?"
The result is that the total economic surplus rose from $20,000 to $248,000.
Explanation:
It is essential to grasp the concepts of marginal cost, marginal benefit, and asymmetric information. Marginal cost refers to the additional cost incurred from utilizing one more unit of a resource, while marginal benefit signifies the advantage gained from that investment. Asymmetric information arises when one side in a transaction possesses more information than the other.
Carlos's reservation price stands at $130,000. He intends to sell for $140,000 to Whitney, whose reservation price is $150,000. Thus, Carlos enjoys a surplus of 140,000 - 130,000 = $10,000, and Whitney has a surplus of 150,000 - 140,000 = $10,000. Consequently, the total economic surplus amounts to $20,000.
Should Carlos enlist a realtor, who charges 5% if the property is sold for $300,000 to someone with a reservation price of $350,000, the surplus would be calculated as:
5% × 300,000 - 2000 = $13,000.
Here, the surplus equals 300,000 - 130,000 + 15,000 = $185,000.
Hence, the buyer's surplus is:
350,000 - 300,000 = $50,000.
Thus, the total economic surplus has increased from $20,000 to $248,000.
a. Determine the initial investment tied to replacing the current grinder with the new one.
Initial investment = cost of the new grinder + installation costs of the new grinder - after-tax revenue from selling the old grinder + increase in net working capital.
Cost of the new grinder = $105,000.
Cost to install the new grinder = $5,000.
After-tax revenue from the old grinder = $70,000 - ($70,000 - {$60,000 x (1 - 52%)] x 40%} = $70,000 - $16,480 = $53,520.
Increase in net working capital = $40,000 + $30,000 - $58,000 = $12,000.
Thus, initial investment = $105,000 + $5,000 - $53,520 + $12,000 = $68,480.
b. Assess the incremental operating cash inflows related to the new grinder installation. (Remember to factor in depreciation in year 6.)
New grinder cash flows:
Year 1 = [($43,000 - $22,000) x (1 - 40%)] + $22,000 = $34,600.
Year 2 = [($43,000 - $35,200) x (1 - 40%)] + $35,200 = $39,880.
Year 3 = [($43,000 - $21,120) x (1 - 40%)] + $21,120 = $34,248.
Year 4 = [($43,000 - $12,672) x (1 - 40%)] + $12,672 = $30,868.80.
Year 5 = [($43,000 - $12,672) x (1 - 40%)] + $12,672 + $18,000 (NWC) + $19,934.40 (after-tax salvage value) = $68,803.20.
Old grinder cash flows:
Year 1 = [($26,000 - $11,520) x (1 - 40%)] + $11,520 = $20,208.
Year 2 = [($24,000 - $6,912) x (1 - 40%)] + $6,912 = $15,964.80.
Year 3 = [($22,000 - $6,912) x (1 - 40%)] + $6,912 = $15,964.80.
Year 4 = [($20,000 - $3,456) x (1 - 40%)] + $3,456 = $13,382.40.
Year 5 = $18,000 x (1 - 40%) = $10,800.
Incremental cash flows:
Year 1 = $34,600 - $20,208 = $14,392.
Year 2 = $39,880 - $15,964.80 = $23,915.20.
Year 3 = $34,248 - $15,964.80 = $18,283.20.
Year 4 = $30,868.80 - $13,382.40 = $17,486.40.
Year 5 = $68,803.20 - $10,800 = $58,003.20.
c. Determine the expected terminal cash flow at the end of year 5 from the grinder replacement.
Terminal cash flow = regaining net working capital + after-tax salvage value = $18,000 + $19,934.40 = $37,934.40.
d. Show a timeline displaying the relevant cash flows for the proposed grinder replacement decision.
Year 0 = -$68,480.
Year 1 = $34,600.
Year 2 = $39,880.
Year 3 = $34,248.
Year 4 = $30,868.80.
Year 5 = $68,803.20.
Response:
There will be an increase in equilibrium quantity, but the impact on equilibrium price remains uncertain.
Note:
Due to the scientists' discovery, demand for oranges will rise, as will the price.
Additionally, the introduction of new fertilizers will boost the supply of oranges, leading to a price decrease.
Taking both of these factors into account indicates that there will be a rise in equilibrium quantity, while the effect on equilibrium price cannot be determined.
Without control, wrongdoings can escalate rapidly, as there are no checks in place to monitor activities, allowing misconduct to go unnoticed by management. Control is crucial for analyzing misdeeds against established standards. Thus, without control, understanding the scope of wrongdoings in the organization becomes challenging.
