Some of the transactions of Sheffield Company during August are listed below. Sheffield uses the periodic inventory method. August 10 Purchased merchandise on account, $10,200, terms 2/10, n/30.
13 Returned part of the purchase of August 10, $1,400, and received credit on account.
15 Purchased merchandise on account, $14,500, terms 1/10, n/60.
25 Purchased merchandise on account, $17,900, terms 2/10, n/30.
28 Paid invoice of August 15 in full.

1. Assuming that purchases are recorded at gross amounts and that discounts are to be recorded when taken:

a. Prepare general journal entries to record the transactions.
b. Describe how the various items would be shown in the financial statements.

2. Assuming that purchases are recorded at net amounts and that discounts lost are treated as financial expenses:

a. Prepare general journal entries to enter the transactions.
b. Prepare the adjusting entry necessary on August 31 if financial statements are to be prepared at that time.
c. Describe how the various items would be shown in the financial statements.

3.
Which of the two methods do you prefer and why?

Aprice ceiling is “binding” if the price ceiling is set below the equilibrium price. suppose that the equilibrium price is $5. if a price ceiling is set at $6, this will not affect the market in any way since $5 remains a legally allowable price (since $5 < $6). a price ceiling of $6 is called a “non-binding” price ceiling. on the other hand, if the price ceiling is set at $4, the price ceiling is “binding” because the natural equilibrium price is $5 but that is no longer allowed. what happens when there is a binding price ceiling? at a price below the equilibrium price, quantity demanded exceeds quantity supplied. there is a shortage. normally, price increases eliminate shortages by increasing quantity supplied and decreasing quantity demanded. in this case, however, price increases are not allowed past the price ceiling. we therefore predict that the observed market price will be right at the price ceiling and there will be a permanent shortage. the observed quantity bought and sold will be dictated by the quantity supplied at the price ceiling. although consumers would like to buy more, there are no more units for sale

Choose the statement that is incorrect. a. search activity occurs only in markets where there is a shortage. b. when a price is regulated and there is a shortage, search activity increases. c. the time spent looking for someone with whom to do business is called search activity. d. the opportunity cost of a good is equal to its price plus the value of the search time spent finding the good.

Consider the following information on stocks a, b, c and their returns (in decimals) in each state: state prob. of state a b c boom 20% 0.27 0.22 0.16 good 45% 0.16 0.09 0.07 poor 25% 0.03 0 0.03 bust 10% -0.08 -0.04 -0.02 if your portfolio is invested 25% in a, 40% in b, and 35% in c, what is the standard deviation of the portfolio in percent? answer to two decimals, carry intermediate calcs. to at least four decimals.