The recent recession seems to be ending, the number of people with jobs is expan

Question

The recent recession seems to be ending, the number of people with jobs is expanding, and it appears that wage levels are beginning to increase.

Against that background, assume that you own a perfectly competitive company that makes a popular line of informal clothing. Your company has cost and revenue curves similar to those of the book’s Figure 9.1b (it’s on page 191 of the 11th edition), and operates in a market similar to that pictured in Figure 9.1a. In 75-150 words, please address the following points:

What change would you expect in the market’s demand and/or supply curves, and why?

Based on market changes, what changes would you anticipate experiencing in your firm’s revenue and cost curves, and why?

How would you alter your firm’s operations on the basis of these developments, and why?

Explanation / Answer

Topic: Use Journal Entries to Record Transactions – Numerical calculations required               

LO: 1, 2

2. Prepare journal entries to record each of the following transactions (a through k).

Britt’s Bike’s began operations in May 2009 and had the following transactions.

a) Owner invested $20,000 cash and a truck worth $6,000 in exchange for stock.

b) Paid rent expense of $4,000.

c) Purchased $50,000 of bicycle inventory on credit.

d) Sold bicycles for cash of $84,500. The cost of the bikes sold was $30,000.

e) Sold and invoiced bicycles to a client for $15,900. The cost of the bikes sold was $8,000.

f) Bought promotional materials and plane tickets for Tour de France, for $15,000 in cash and recorded the entire amount as Advertising expense.

g) Paid $4,000 in cash for supplies to do bike repairs.

h) Collected $10,000 from accounts receivable

i) Paid for bikes purchased on credit in c above

j) Paid cash dividends of $500.

k) Recorded revenue for $1,000 received from customer.

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.