Answer: For an explanation, please refer to the explanation section
Explanation:
recording a journal entry for Patel Products selling a delivery van priced at $20,000 with accumulated depreciation totaling $18,000, while receiving $2,000 cash from the buyer, results in:
December 29, 2019
Account title----- Cash----------Debit $2,000
Account title----Accumulated Depreciation-----Debit $18,000.
Account title------Delivery Van ----Credit $20,000
The equipment's book value at the sale was $2,000, reflecting its original cost of $20,000 adjusted by the accrued depreciation of $18,000. Since Patel received the same $2,000 from the sale of the delivery van, there is no profit from the disposal.
Part a. Produce the goods in-house and allow international sales managers to oversee marketing.
Advantages include:
- Complete authority over production processes.
- Simplicity in strategizing and scaling manufacturing.
- Enhanced control over human resources.
- Increased comprehension of European markets by foreign sales agents.
- Reduced exit costs in case of product failure.
Disadvantages consist of:
- Limited knowledge regarding pharmaceutical protocols in Europe.
- Risks to the brand's reputation if not correctly managed by foreign agents.
- Extra expenses in product delivery.
Part b. Produce the items in-house and establish a wholly-owned entity in Europe for marketing.
Pros encompass:
- Full oversight of manufacturing operations.
- Ease in creating strategies and ramping up production.
- Better human resource oversight.
- Protection of brand integrity since marketing is managed internally.
Cons include:
- Increased resource allocation for marketing.
- Insufficient information about pharmaceutical standards in Europe.
- Extra delivery costs.
Part c. Form a strategic partnership with a significant European pharmaceutical entity to manufacture products via a 50/50 joint venture for marketing.
Pros involve:
- Risk-sharing among the enterprises.
- No additional costs for delivery.
- Valuable insights into European regulations and marketing.
Cons involve:
- Diminished control over manufacturing.
- Share profits among partners.
- Moderate exit costs involved.
- Possible brand image damage due to the additional firm.
Answer: Parker Corporation a) Closing Journal Entries: General Journal Description Debit Credit 12/31 Service fees revenue $92,500 Interest income 2,200 Retained earnings 42,700 Income Summary $137,400 to close credit items to the Income Summary. Income Summary $64,700 Salaries expense $41,800 Advertising expense 4,300 Depreciation expense 8,700 Income tax expense 9,900 to close debit items to the Income Summary. b. T-accounts: Debit Credit Service fees revenue $92,500 Adjusted balance $92,500 Income Summary $92,500 Balance $0 Interest income $2,200 Adjusted balance $2,200 Income Summary $2,200 Balance $0 Salaries expense $41,800 Adjusted balance $41,800 Income Summary $41,800 Balance $0 Advertising expense $4,300 Adjusted balance $4,300 Income Summary $4,300 Balance $0 Depreciation expense $8,700 Adjusted balance $8,700 Income Summary $8,700 Balance $0 Income tax expense $9,900 Adjusted balance $9,900 Income Summary $9,900 Balance $0 Retained earnings Adjusted Balance 42,700 Income Summary $42,700 Balance $0 Explanation: a) Data: Parker Corporation Adjusted Account Balances Debit Credit Service fees revenue $92,500 Interest income 2,200 Salaries expense $41,800 Advertising expense 4,300 Depreciation expense 8,700 Income tax expense 9,900 Retained earnings 42,700.
