PROBLEMS 1. Below is an annual income statement of Julian's Online Clothing Store. Julian is already working full time in the store and P300,000 of his money has been used (invested) to buy the store and stock it with merchandise. Julian just turned down a job offer to manage a store that will pay him P250,000 per year. He did not pay himself a salary in 2019. According to the data: A. Is Julian's Online Clothing Store generating a positive, zero, or negative accounting profit for 2019? Show supporting calculations. B. What do you think are Julian's implicit costs (i.e., what are these benefits Julian is willing to forego)? C. Assume that the interest was 12% annually in the money/funds market recalculate Joe's total opportunity costs. D. What was the economic profit (or loss of Julian's Online Clothing Store in 2019? E. Evaluate the business performance based on economic profit. Revenues Costs Sales Inventory Adjustment Total Revenues P550,000 20,000 Wholesale clothing Equipment Labor Utilities and insurance P570,000 Total Costs P300,000 20,000 150,000 10,000 $480,000
PROBLEMS 1. Below is an annual income statement of Julian's Online Clothing Store. Julian is already working full time in the store and P300,000 of his money has been used (invested) to buy the store and stock it with merchandise. Julian just turned down a job offer to manage a store that will pay him P250,000 per year. He did not pay himself a salary in 2019. According to the data: A. Is Julian's Online Clothing Store generating a positive, zero, or negative accounting profit for 2019? Show supporting calculations. B. What do you think are Julian's implicit costs (i.e., what are these benefits Julian is willing to forego)? C. Assume that the interest was 12% annually in the money/funds market recalculate Joe's total opportunity costs. D. What was the economic profit (or loss of Julian's Online Clothing Store in 2019? E. Evaluate the business performance based on economic profit. Revenues Costs Sales Inventory Adjustment Total Revenues P550,000 20,000 Wholesale clothing Equipment Labor Utilities and insurance P570,000 Total Costs P300,000 20,000 150,000 10,000 $480,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
100%
PLEASE ANSWER LETTER D AND E ONLY. THANK YOU :)
Transcribed Image Text:PROBLEMS
1. Below is an annual income statement of Julian's Online Clothing Store. Julian is already
working full time in the store and P300,000 of his money has been used (invested) to buy
the store and stock it with merchandise. Julian just turned down a job offer to manage a
store that will pay him P250,000 per year. He did not pay himself a salary in 2019.
According to the data:
A. Is Julian's Online Clothing Store generating a positive, zero, or negative accounting
profit for 2019? Show supporting calculations.
B. What do you think are Julian's implicit costs (i.e., what are these benefits Julian is
willing to forego)?
C. Assume that the interest was 12% annually in the money/funds market recalculate
Joe's total opportunity costs.
D. What was the economic profit (or loss of Julian's Online Clothing Store in 2019?
E. Evaluate the business performance based on economic profit.
Revenues
Costs
Sales
Inventory Adjustment
Total Revenues
P550,000
20,000
Wholesale clothing
Equipment
Labor
Utilities and insurance
P570,000 Total Costs
P300,000
20,000
150,000
10,000
$480,000
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education