Accounting Answers

On the 15 March X6 Company X decides to make effective the following profit distribution corresponding to the X5 profit which was €860,000.

• Compensation for losses from previous years of €320,000.
• Legal reserve to comply with the Spanish legal requirement.
• Statutory reserves of €72,000.
• Dividend of €0.3 per share that will be made effective (paid) on the 15 April.
• The rest will be classified as voluntary reserves.
• The equity of Company X at that date includes: share capital of €1,200,000 (120,000 shares of €10 par value each), legal reserve of €200,000, and a voluntary reserve of €80,000.
• We also know that on the 15 November X5 and due to the promising performance of the company during the year, a dividend was distributed and paid of €0.2 per share.
• Dividend withholding tax is 21%.
• Required:
• Can you record the entry corresponding to the profit distribution on the 15 March and the entry corresponding to the dividend payment on the 15 April?
  

4. (Coase’s Theorem): Consider a beekeeper that is deciding how much honey to produce. The beekeeper gains a benefit from producing honey, represented by the marginal benefit function and which is given by: MB = 300 - 6Q

where Q is barrels of honey. In addition, she has a marginal cost function, which reflects her cost of producing honey; this is given by:

MC = 40 + 4Q

The more honey the beekeeper produces, the more bees there are to pollenate a neighboring apple orchard. And, thus, in addition to the private benefit accruing to the beekeeper herself, there is also an external marginal benefit to the apple orchard, which is given by: EMB = 100 - 2Q

a. Find an expression for social marginal benefits (SMB) in this case, defined as you think appropriate. Calculate the level of honey production that will arise if the beekeeper acts in her self-interest only. Calculate the socially efficient level of honey production as well.

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b. Suppose that the beekeeper and the owner of the apple orchard enter into negotiations. The orchard owner wants to offer a payment to the beekeeper to change honey production from her self-interested production level to the socially efficient level (all at once). What is the maximum total payment that the orchard owner would be willing to pay for this overall change? What is the minimum total payment that the beekeeper would require before making this overall change?

c. Assume that, if a deal is reached, each party must pay $35 in legal fees to finalize it. If there are no additional transaction costs, will the socially efficient quantity be reached? Explain.

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d. Irrespective of your answer to the previous part, assume that the beekeeper and the orchard owner come to a private agreement to set honey production at the socially efficient quantity. However, now suppose that a policymaker reads somewhere that honey production provides a positive externality to apple orchards, and therefore decides that the beekeeper should be provided with a production subsidy for each unit of honey that the beekeeper is willing to produce. With this subsidy in place, the beekeeper decides to increase production by an additional 5 barrels. Calculate the associated efficiency loss. If honey is good to eat and bees are good for trees, why is there such a thing as too much honey?

Debit Accounts Payable

Credit Accounts Receivable

What does this journal entry mean?

When you credit an Expense? What does this mean?

Debit Inventory

Credit COGS

• What does this journal entry mean?
• I know it means that the inventory you sold is returned. So, I know inventory is an asset, so we are getting back our inventory, so how is it an increase if someone returns our product.
• Credit COGS - You are giving the payment back to the customer, so expenses decreases.

Please correct me if needed. Thank you.

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