While investigating an auto dealership you calculate the following [refer to the IRS’s ATG on Auto Dealerships]: From "window sticker": MSRP $10,000 Destination Charges 400 MSRP Retail Total $10,400 CASH IN CASH OUT Gross receipt $ 5,000,000 Cost of Goods Sold $ 4,900,000 Sch. C Expenses $ 95,000 Sch. C Depr $ 10,000 Meals $ 1,250 Bureau of Labor Statistics data $ 40,000 Cash In $ 5,000,000 Cash Out $ 5,026,250 From Dealer Invoice:

Vehicle Factory Wholesale Price $9,000 Destination Charges 400 Advertising Association 100 1% of MSRP Holdback 300 3% of MSRP Total Invoice Price $9,800 Holdback: coded amount is (300) 3% of MSRP Inventory Cost to the Dealer $9,500

Do you have any thoughts and what questions would you ask?

With the given data, you asked if I have any thoughts and what questions would I ask?

1) My first thought

    Since Journal entry for first case:

     Account receivable A/c Dr $9500

    Hold back receivable A/c Dr $ 300

    To revenue A/c $9,800

    Journal entry for Hold back received:

    Bank A/c Dr $300

     To Hold back A/c $300

    I would ask this question:

    What entry should the dealer make initially and when the hold back is received?

2) My second thought

   Holdback: coded amount is (300) 3% OF MSRP

   question: Should the dealer include the hold back in inventory?

Explanation:

I believe this is the interpretation of the question: and my above answers are based on these data below.

While investigating an auto dealership you calculate the following (refer to the IRS's ATG on Auto Dealerships):

From 'window sticker':

                                       MSRP                                 $10,000

                                        Destination Charges               400

                                       MSRP Retail Total             $10,400

From Dealer Invoice:

                                     Vehicle Factory Wholesale Price     $9,000

                                      Destination Charges                               400

Advertising Association is 100, which is 1% of  MSRP

Holdback is 300, which is 3% of MSRP

Total Invoice Price    $9,800

Holdback: coded amount is (300) 3% OF MSRP

Inventory Cost to the Dealer             $9,500

i would get some file cabnitsits to store all my documents and paper work, then i would make sure to always keep my desk clean and organzed by using sticky notes to mark a stack of papers. and etc. but mainly i would just stay clean and organized because it will make lfe alot eaisier trust me. hope this !

yes the correct answer was

b.the increased supply will create a surplus.