Experimental economics, summary paper Essay Example | Topics and Well Written Essays - 500 words - 1

Experimental economics, summary paper - Essay Example The winners curse cannot occur if all bidders are rational, thus when the winner curse occurs it is considered a market anomaly. In an auction marketplace in which they are a lot of bidders one must utilized a more aggressive bidding strategy. Another risk associated with auctions in which there are lots of participants is for the winner to overstate the value of the item. In 1983 Max Bazerman and William Samuelson conducted an experiment on MBA students to test the winner’s curve concept. They filled cookie jars with coins and they ask the students to make money bids for the cookie jar full of change. All cookie jars were valued at $8.00, but this variable was unknown to the participants. The results were that the mean winning bid was $10.01 which means that student overestimated the value by $2.01. The winners were cursed with an item that was worth less than what they paid for. Often economic anomalies occur due to the existence of asymmetric information. An industry in whi ch there are often projects that can be worth millions or nothing is the oil business. When companies make bids on oil exploration project the bids are done knowing that there is a possibility of complete failure. Market anomalies offer occur in these types of auctions.

Disraelis second ministry Essay Example for Free

Disraelis second ministry Essay Disraelis second ministry deserves the title a great reforming ministry Discuss how far you agree with this view in relation to Gladstone first Ministry. A great reforming ministry is a government which manages to radically alter the political and social scene, aiming to deal with the most pressing problems and creating a long term legacy whereby later ministries aim to protect and improve what has been achieved instead of trying to alter radically. This is why it becomes clear that Gladstone ministry and not Disraelis should be considered a great reforming ministry. The aims of both ministries were radically different. Gladstones aims for his ministry when he came into power in 1867 were to try and create a more efficient and meritocratic society which removed privileges and advocated individualistic self-reliance. This ideology of beliefs were formed due to Gladstone long held religious beliefs which drove him and in the liberal ideas of equality of opportunity, tolerance and individualism he saw the best system to try and create a society based on Christian morals. Throughout all his legislation Gladstone aimed for the fair and just decision explaining his desire to try and pacify Ireland. This is in contrast to Disraelis aims as Prime Minister from 1874. Disraeli had managed to finally get the conservatives elected after being out of power for over ten years, and he achieved this through radically modernising the Conservative party which was represented in his Tamworth manifesto speech where he proclaimed the aims of the Conservative party were to protect institutions and traditions, strengthen the empire and alleviate the condition of the people. However Disraeli never had a clear agenda of reforms before he came into power instead his main aims were ensuring the continuation of power for the Conservative power, this meant Disraeli aimed not to disrupt his key support base of the middle and upper class and focused on reducing taxes. Additionally although due to his promise of alleviating the condition of the people he was forced to create social legislation to ensure minimal government intervention he aimed to make the acts permissive weaken their impact and focussed on areas which were non-controversial and where mild reforms could be implemented. This contrast reflects the differing impacts the two ministries wanted to achieve. Gladstones ministries reforms had a substantial impact. The 1870 education act with the setting up of board schools to complement the existing structure of voluntary religious schools reflect Gladstones desire to try and create equality of opportunity and to encourage individual self-reliance. This reform became the very foundations of the mixed school system which is present today, reflecting the long term impact this reform had. Additionally Gladstone introduced key reforms to remove privilege and create a more efficient government and army with the 1871 civil service reforms which meant entry to the civil service could only be achieved through examination and the army reforms that were carried out between 1870-1872 whereby the act of purchase was abolished and instead officer class could only be achieved through merit and amount of time privates would have to spend in the army was reduced to encourage higher uptake. This reflects the impact Gladstone was trying to achieve he didnt shy away from attacking key sectors of power within society because he believed it was morally right and fair to remove privilege from the upper classes. This was particularity important for a working class which aimed to be free individuals who wanted the vote and an equal footing. Whilst Disraelis legislation although Important was hampered due to Disraelis desire to minimise the impact of reform and to only focus on non-controversial areas. The 1875 Artisans dwelling act is a clear example of weak legislation, the act meant that councils could compel owners of slums to sell their property and allow the council to knock-down the slums and then sell the land to private building firms. However the legislation was permissive so the council didnt have to ensure slums were removed and it required councils to give compensation to the landowners and so by the end of Disraelis term the act had only been used in 10 councils m aking its impact very mild. Whilst other acts such as the 1875 Agriculture holdings act show Disraeli is unable to make truly effective legislation because he wishes to protect the power base of the upper class. The act should of ensured that tenants that improve their land receive compensation but Disraeli made the act permissive and stated that if there was a condition in contract which stated the landowner didnt have to pay compensation then the landowner didnt have too. Due to this again the impact of the legislation was minor. Other legislation shows Disraelis opportunistic nature and aim to keep power such as the 1875 conspiracy and protection of property act which reformed a piece of Gladstonian legislation which banned peaceful picketing this act allowed peaceful picketing which Disraeli hoped would give the Conservative support from the trade unions, to try and weaken the threat from the Liberal party. Even when Disraeli produced legislation which was aimed at alleviating the condition of the people such as the 1874 Factory Act which meant that by law women and children werent allowed to be made to work more than nine and half hours in a day but deliberately avoided the majority of the working population which was male and although the legislation had the impact of forcing factories to close earlier which effected male working hours as well it wasnt the intention. Overall examining the legislation shows the difference in impact the two different ministries legislation had with Gladstone causing a huge impact whilst Disraelis showing only a very minor effect focusing on refining Gladstone previous legislation or reforming on very specific small issues to try and gain support. However both ministries were flawed though, for all Gladstone large and influential reforms he was voted out in 1874 and although Disraeli aimed not to lose any support he also was voted out in 1880. The reason why Gladstone was voted out were that his legislation was so wide ranging it impact on nearly every sector of society and as such Gladstone also lost his wide spectrum of support. The upper classes disliking his aims of efficiency feeling that they were breaking the traditional power structure of society against their favour. The middle and working classes were effected by Gladstones controversial legislation which was highly unpopular at the time such as the Licensing Act of 1872 and the 1871 Criminal Amendment Act. Both of these act reflects sometimes Gladstone misjudgement on what was beneficial for the people and how to create a fairer society. Also Gladstone failed in one of his key aims which was to pacify Ireland but he was the one of the few politicians who was truly trying to find a workable solution instead of coercion. Whilst Disraeli was voted out not because he had made a massive impact but because he was Prime Minister whilst the economy entered recession, this meant that his mild measure had even less impact and his expensive imperialistic aims were highly controversial. So due to the recession Disraeli failed to alleviate the condition of the people and his other aims meant his government appeared to stall resulting in his popularity dropping. Overall although his legislation was occasionally flawed the overall improvement and effect that Gladstones ministry had on the country reflect a great reforming ministry. Gladstones Liberal beliefs in meritocratic and individual society have become corner stones of British society reflecting the ministries long term impact and legislation such as the licensing act although unpopular at the time has only been amended never removed by later governments as they see the positive impacts of the restriction of alcohol. This reflected against Disraelis achievement of mildly modify Gladstones legislation and avoiding awkward decision domestically or trying to alter the status quo shows that his ministry cannot be considered a great reforming ministry. As such I disagree with the view that Disraelis government was a great reforming government instead arguing that it was his predecessor Gladstone that was clearly the great reforming ministry.

Illy Ground Coffee Marketing Analysis

Illy Ground Coffee Marketing Analysis Nowadays, Illy can be characterised as one of the leading producers of high quality ground coffee in the coffee manufacturing industry. Illy has entered the coffee sector in 1933 by Francesco Illy, and in 1990s had its most important innovation, which began to look for the best coffee in Brazil, Africa, Central America and Asia (italtrade.com, 2010). It is based in Italy with a workforce around 700 people and operates in a wide range of global network (Datamonitor, 2009). Illy ground coffee can be used in all methods of coffee preparation and especially for espresso machines. The product comes in various forms of medium roast, dark roast and decaffeinated. While medium roast is about a smooth flavour mixed with aromatic bits of caramel and chocolate, dark comes to enrich the flavour with notes of cocoa (illy, 2010a). Similarly to medium roast, decaffeinated contains aromatic flavour of caramel and chocolate with reduced caffeine (illy, 2010a). Within the industry, Illy is known as an innovation pioneer, as it focuses on coffee perfection rather than creating something trendy and seductive. Achieving â‚ ¬280 million with net profits of â‚ ¬8 million, Illy succeeded by attaining 54% of total sales through exportation (illy, 2010b) The country and coffee market attractiveness PEST Analysis Regarding Morisson (2006), PEST analysis can assist the business in building up the best possible knowledge of the external environment in which the company is planning to operate in, so as to avoid costly mistakes. Therefore, an analysis has been carried out and can be viewed in Appendix 1 below. Upon reflection, the most important key environmental influences of PEST analysis have been considered and highlighted below: Economic Events: The recent global recession had directly affected the industry where people buy only essentials products, as their incomes have been decreased (Euromonitor, 2010a). Regulations: Legislations that the law establishes can directly affect the industry. Taxes and business regulations are rather heavy, making it hard to conduct business (Euromonitor, 2010a). Globalisation: Globalisation can be characterised as one of the most powerful factors that have changed the conditions and situations of the world economies, and especially for businesses (BBC, 2010). The reduction of national boundaries and the freedom of companies to transport is also important factor of change. Grounds Coffee Market Analysis McLoughlin and Aaker (2010) suggest that an examination of the market can assist to determine its current and future attractiveness. Even in the negative impact of recession, the Turkish coffee industry has shown a positive growth. Statements show that during the last years, ground coffee had a 5% increase in volume sales with the total of 33.6 TL million which is expected for a further 4% increase until the end of 2014 (Euromonitor, 2010a). With Nestle controlling 61% of the markets share and coffee unit prices increasing in recent years, the market has as consequently shown a positive growth (Euromonitor, 2010b). Considering the distribution channels, the market includes various ways of supply such as restaurants, bars, cafes, stores and so on. Competitive Analysis In order to identify the attractiveness of an industry, Johnson et.al (2008) argues that the five forces framework is a helpful tool for such a process. Thus, a Porters five forces Analysis has been carried out in Appendix 2. From the analysis summary, we can see that even with its growing direction, the coffee industry can be defined as an industry where brand loyalty is of major importance to the existence of a business. A strong emphasis is required in order to achieve good customer relationships and market share over the current competitors. In addition, the threat of new entrance is still high even throughout strong competitive conditions that exist in the market. Finally, the threat of substitutes is high as new alternative products can satisfy the need of coffee. Tea and hot chocolate are the major players for substitutes. Buyer Analysis Nowadays, competition has become stronger than other decades. Therefore, creating a good understanding of the potential customers (Buyer Behaviour) can be a vital tool for the company to get one step ahead of the competition. According to Euromonitor (2010a), ground coffee has been punched by the instant coffee where its sales are increasingly becoming much more than ground coffee, with young people preferring the more convenient method of instant coffee. On the other hand, older people insist on the traditional ground coffee. In addition, people try to get a cup of coffee mostly from bars, restaurants and coffee shops rather than to drink at home during every season of the year, while during winter; the consumption of coffee usually has a higher demand. 3) Opportunity Statement Casson and Buckley (2010) defines opportunities as the advantageous position that products, services, raw materials and methods include in order to increase company profits in the new market. 4) Marketing Objectives Brassington and Pettit (2006) suggest that objectives are important drivers of what the companys marketing strategies must be able to achieve. Following SMART concept (Specific, Measurable, Achievable, Realistic, Time able), Illys main business objective is to manufacture and market products in such a way as to create a value that can be continued over the long term from stakeholders (Hollensen, 2010). Another important aspect of marketing objectives is the brands reputation that the company must achieve in the new market. A smart and long-time promotion with the combination of customer satisfaction can lead to the brand awareness and to profitable sales. The company can understand the significance of loyalty where illy must build on that as without loyal customers the company would not exist. As a consequence of customer loyalty, customers are willing to buy more from the same brand/company. Therefore, the company must be prepared to establish a wide range of coffee ground selections (MindTools, 2009). In addition, illy must manage to maintain its promise to follow and respect all applicable local laws in each of its potential markets.

The Invasion of the Florida Everglades Ecosystem by the Brazilian Peppe

The Invasion of the Florida Everglades Ecosystem by the Brazilian Pepper It was as if the class had just stepped out onto the moon the way the limestone craters pockmarked the area's surface. It looked most uninhabitable indeed! Yet, here and there tufts of sawgrass had naturally reseeded and sprung up to reclaim the land. Like the American flag hoisted in place by Neil Armstrong on the moon, the tufts of sawgrass seemed to be saying, â€Å"One small step for sawgrass, one giant leap for the Everglades ecosystem!† Indeed, to witness the success of the Hole-in-the-Donut Restoration Project is like being the captain of a boat lost at sea catching a break in the fog long enough to glimpse a beacon's light before it becomes shrouded again in the mist of politics, economics and bureaucracy. Yet, that brief glimpse of light is enough to encourage even me, an increasingly cynical and apathetic environmentalist, to trudge on. Before this seemingly barren lunar landscape emerged, the first invasive exotic species to colonize what would later be called the Hole-in-the-Donut area were a group of Homosapiens sapiens subsp. agricultis , otherwise known as farmers. After the last of the farmers left in the early 1970s, they left behind a rock-plowed, slightly elevated patch of land pregnant with nutrients otherwise not known in the mesic prairie wetlands that originally occupied this space. Thus, the scene was set for one of the most destructive vegetative invasions seen in the Everglades ecosystem thus far. The army came from Brazil and was crafty enough to get its enemy to use its own resources to advance its invasion. Its weapon: clusters of bright red berries that enticed the likes of Florida 's state bird the mockingbird, cedar wax... ...con. Bot . 32: p. 354. 6) Morton, JF. 1978. Brazilian pepper, its impact on people, animals, and the environment. Econ. Bot . 32: p. 354. 7) Workman, R, ed. 1978. Schinus : Technical proceedings of techniques for control of Schinus in south Florida : A workshop for natural area managers. Tech. report. Sanibel (FL): The Sanibel-Captiva Conservation Foundation, Inc. pg. 1. 8) Workman, R, ed. 1978. Schinus : Technical proceedings of techniques for control of Schinus in south Florida : A workshop for natural area managers. Tech. report. Sanibel (FL): The Sanibel-Captiva Conservation Foundation, Inc. pg. 19. 9) Workman, R, ed. 1978. Schinus : Technical proceedings of techniques for control of Schinus in south Florida : A workshop for natural area managers. Tech. report. Sanibel (FL): The Sanibel-Captiva Conservation Foundation, Inc. pg. 19.

TV is Bad for You

Many people around the world spend tireless hour staring at the TV screen every single day. TV is becoming like a drug, people are addicted to it! TV’s can expose to us the weather forecast, sports and global events. TV’s also can give quality entertainment, education programs and something to look forward to after a harsh day. Though there are advantages, there are also many more disadvantages to watching TV. The passage from ‘Small screen big trouble’ about the crime wave of the Bhutan clearly shows the negative impact from TV. An editorial warns: â€Å"We are seeing for the first time broken families, school dropouts and other negative youth crimes. We are beginning to see crime associated with drug users all over the world –shoplifting, burglary and violence. † This editorial warning was shown after the Bhutan had free access to the TV. Firstly, TV can ‘brainwash’ people, youths especially. The study by the Kaiser Family Foundation shows that children aged between 2-18 years spend an average of 5 hours ? watching TV every day. That’s around a third of the time an average person is awake for. Watching 3 or four hours of TV everyday can develop your mind to abnormal levels of uncertainty. In fact according to a researcher, three in five percent of children in the US were diagnosed with attention â€Å"deficit disorders†, this unnatural level leads to laziness, restless, and impulsiveness. Watching long hours of TV also leads the loss of clear eyesight. Secondly, watching the TV can give negative impacts on children’s behaviour and education. According to a researcher, the children in grade 4 who had a TV in their bedrooms achieved lower scores than children who did not have one. Poor study was also linked to the increasing numbers of aggressive behaviour in children such as bullying. Children often stay up late for late night shows which often have inappropriate themes and can also affect their sleep. Children that are not sleeping well are more likely to feel tired and doze off than being active and concentrating on their studies. During childhood, children are most likely going to gain knowledge by the simple rule: monkeys say, monkey do. This can explain why the Bhutan youths committed such inappropriate actions. Yes, we are seeing some different types of crime, but that just reflects the fact that our society is changing in many ways. A culture as rich and sophisticated as ours can survive trash on TV and people are quite capable of turning off the rubbish, â€Å"says the deputy minister of communications, Leki Dorji. Obesity is a very serious issue today. For children over four years old, watching TV is a lead to obesity. You are basically motionless w hilst you are watching TV and sitting there will make you want to snack on something. The TV is always advertising junk food that a fattening for your bodies, like fries, chips, McDonalds, KFC, calorie soft drinks or even Krispy Kreme doughnuts. Whilst children are sitting there looking at the junk foods, they probably going to get greedy and snack on something innutritious. TV is also preventing people from going outside to get fresh air and exercise. Ultimately, TV is bad for people who watch it in excess. BY all means, watch your favourite show, but switch it off afterwards. People have underestimated the power of TV and all we can do right now is face up to it and try to make things better.

Advance Accounting 1

Joint Venture103 CHAPTER 6 SOLUTIONS TO MULTIPLE CHOICES 6-1: a Assets per Jessica Company- balance sheetP3,550,000 Jessica’s proportionate interest in assets of JV (50%) 1,000,000 Total assets of JessicaP4550,000 6-2: a Total liabilities only of Jenny Co. 6-3: b 6-4: b Investment of Heart P80,000 Profit share: Sales150,800 Cost of sales (150,800 ? 125%)120,640 Gross profit 30,160 Expenses 10,000 Net Profit 20,160 Profit/loss ratio x 40% 8,064 Balance of investment in JVP88,064 6-5: a CashP190,000 Merchandise inventory 29,360 Accounts receivable 150,800 Total assets 370,160Sweet Co’s, proportionate interest x 60% Sweet Company’s share in total assetP222,096 6-6: a Sales7,200 Cost of sales PurchasesP10,000 Merchandise inventory, end (50% of P10,000)__5,000_5,000 Gross profit2,200 Expenses___500 Net profitP  1,700 104Chapter 6 6-7: b Original investment (cash)P10,000 Profit share (P1,700 / 2)___850 Balance of Investment accountP10,850 6-8: a Joint venture account before profit distribution (credit balance)P  9,000 Unsold merchandise__2,500 Joint venture profit before fee to SalasP11,500 Joint venture profit after fee to Salas (P11,500 / 115%)P10,000 6-9: b Fee of Salas (P10,000 x 15%)P  1,500Profit share of Salas (P10,000 x 25%)_2,500 TotalP  4,000 6-10: b SalasSalve Balance before profit distributionP  Ã‚  500 (dr)P  2,000 (cr) Profit share:Sabas (P10,000 x 40%)4,000 Salve (P10,000 x 35%)_______3,500 BalanceP  3,500 (cr)P  5,500 (cr) 6-11: d Joint venture account balance before profit distribution (debit)P   6,000 Joint venture profit (P4,500 x 3)_13,500 Cost of unsold merchandise (inventory) taken by DanteP19,500 6-12: b Edwin Capital: Debits: Balance before profit distributionP14,000 Credits: Profit share__4,500 Due from Edwin (debit balance)P   9,500 Joint Venture105 Settlement to Ferdie (Balance of capital account)Debits:P  Ã‚  Ã¢â‚¬â€œ0– Credits:Balance before profit distributionP16,000 Profit share__4,500_2 0,500 Due to Ferdie (credit balance)P20,500 Settlement to Dante (balance of JV Cash account) Debits:Balance before cash settlementP30,000 Due from Edwin__9,500P39,500 Credits:Due to Ferdie_20,500 BalanceP19,000 6-13: a JV account balance before profit distribution (cr)P  4,600 Unsold merchandise (required dr balance after profit distribution)__2,000 Joint venture profit before fee to JerryP  6,600 Joint venture profit after fee (P6,600 / 110%)__6,000 Fee to JerryP     600 6-14: d Harry CapitalIsaac Capital Balances before profit distribution(P  Ã‚  200)P  1,800Profit distribution: Harry P6,000 x 50%)3,000 Isaac (P6,000 x 20%)1,200 Cash settlementsP  2,800P   3,000 6-15: b SalesP14,000 Cost of sales: Merchandise inventory, beg (contributions)P14,000 Freight300 Purchases__4,000 Goods available for saleP18,300 Merchandise inventory, end (P8,300/2)__4,15014,150 Gross profit (loss)(150) Expenses (P400 + P200)__600 Net profit (loss)P(  Ã‚  750) 6-16: c Contributions to t he Joint Venture (P5,000 + P8,000)P13,000 Loss share (P750 x 50%)(  Ã‚  Ã‚  375) Unsold merchandise taken (withdrawal)(  Ã‚  4,150) Final settlement to jackP   8,475 106Chapter 6 SOLUTIONS TO PROBLEMS Problem 6 – 1 Books of Blanco (Manager)Books of AblanJV Cash100,000Investment in JV90,000 Joint Venture90,000Merchandise inventory90,000 Cash100,000 Ablan Capital90,000 Joint Venture60,000 JV cash60,000 Joint Venture20,000 JV cash20,000 JV cash200,000 Joint Venture200,000 Computation of JV Profit Total debit to JVP170,000 Total credit to JVP200,000 Credit balance (Profit)P   30,000 Distribution Joint Venture30,000Investment in JV15,000 Profit from JV15,000Profit from JV15,000 Ablan capital15,000 Ablan capital105,000Cash105,000 JV cash105,000Investment in JV105,000 Cash155,000 JV cash155,000 Joint Venture107 Problem 6 – 2 Books of the Joint Venture 1. Computer equipment105,000Ella capital60,000 Fabia capital45,000 2. Purchases80,000 Supplies2,000 Diaz capital82,000 3. Expenses9,000 Diaz capital9,000 4. Cash150,000 Sales150,000 5. Expenses30,000 Cash30,000 6. Merchandise inventory20,000 Ella capital20,000 7. Fabia capital10,000 Cash10,000 8. Adjusting and closing entries: (a)Expenses500 Supplies500 (b)Sales150,000 Income summary150,000 Income summary77,500 Merchandise inventory2,500 Purchases80,000 Income summary39,500 Expenses39,500 Distribution of profit: Income summary33,000 Diaz capital11,000 Ella capital11,000 Fabia capital11,000 108Chapter 6 Books of Diaz (1)Investment in Joint Venture82,000Cash82,000 (2)Investment in Joint Venture9,000 Cash9,000 (3)To record profit share: Investment in Joint Venture11,000 Profit from Joint Venture11,000 Books of Ella: (1)Investment in Joint Venture60,000 Computer equipment60,000 (2)Investment in Joint Venture20,000 Merchandise inventory20,000 (3)To record profit share: Investment in Joint Venture11,000 Profit from Joint Venture11,000 Books of Fabia: (1)Investment in Joint Venture45,000 Computer equipmen t45,000 (2)Cash10,000 Investment in Joint Venture10,000 (3)To record profit share: Investment in Joint Venture11,000 Profit from Joint Venture11,000 Joint Venture109 Problem 6 – 3 1)No Separate Set of Joint Venture Books is Used Books of Duran (Manager) May1:Joint Venture12,500 Castro capital12,000 Cash500 7:JV cash10,000 Bueno capital10,000 26:Joint Venture9,500 JV cash9,500 30:JV accounts receivable16,000 Joint Venture16,000 June30:JV cash15,000 JV accounts receivable15,000 27:JV cash9,000 Joint Venture9,000 30:To record unsold merchandise taken by Duran: Merchandise inventory3,000 Joint Venture3,000 To record profit distribution: Joint Venture6,000 Profit from JV2,000 Bueno capital2,000 Castro capital2,000 To record settlements: Bueno capital12,000 Castro capital14,000 JV cash24,500 Cash1,500Accounts receivable1,000 JV accounts receivable1,000 110Chapter 6 Books of Bueno May7:Investment in Joint Venture10,000 Cash10,000 June30:Investment in Joint Venture2,000 Profit from J oint Venture2,000 Cash12,000 Investment in Joint Venture12,000 Books of Castro May1:Investment in Joint Venture12,000 Merchandise inventory12,000 June30:Investment in Joint Venture2,000 Profit from Joint Venture2,000 Cash14,000 Investment in Joint Venture14,000 (2)A Separate Set of Books is used: Books of the Joint Venture May1:Merchandise inventory12,500 Castro capital12,000 Duran capital500 7:Cash10,000 Bueno capital10,000 26:Purchases9,500 Cash9,500 0:Accounts receivable16,000 Sales16,000 June20:Cash15,000 Accounts receivable15,000 27:Cash9,000 Sales9,000 Joint Venture111 June 30:Closing entries: Sales25,000 Income summary25,000 Income summary19,000 Merchandise inventory, end3,000 Merchandise inventory12,500 Purchases9,500 Distribution of profit: Income summary6,000 Bueno capital2,000 Castro capital2,000 Duran capital2,000 Settlements to Venturers: Bueno capital12,000 Castro capital14,000 Duran capital2,500 Merchandise inventory3,000 Accounts receivable1,000 Cash24,500 Books of D uran (Manager/Operator) May1:Investment in Joint Venture500 Cash500 June30:Investment in Joint Venture2,000Profit from Joint Venture2,000 Cash2,500 Investment in Joint Venture2,500 Books of Bueno and Castro (Same as in No. 1 requirement) 112Chapter 6 Problem 6 – 4 (1)Books of Seiko (Manager/Operator) April1:JV Cash102,000 Notes payable – PNB34,000 Roles capital34,000 Timex capital34,000 May:Joint venture64,100 Cash16,300 Rolex capital7,800 June:Rolex capital30,000 JV cash30,000 Joint venture111,400 Cash37,400 Rolex capital64,700 Timex capital9,300 July:Cash40,000 Rolex capital15,000 Timex capital10,000 JV cash65,000 Joint venture55,770 Cash13,970 Rolex capital31,240 Timex capital10,560 August:Cash45,000 Rolex capital67,000Timex capital13,500 JV cash125,500 Joint venture30,600 Cash9,730 Rolex capital16,560 Timex capital4,310 To record sales: JV cash (P421,000 x 96%)404,160 Joint venture404,160 Joint Venture113 To record payment of loan to PNB: Notes payable – PNB 34,000 Rolex capital34,000 Timex capital34,000 Joint venture (Interest expense)8,000 JV cash110,000 To record distribution of profit: Joint venture134,290 Gain from JV (30%)40,287 Rolex capital (60%)80,574 Timex capital (10%)13,429 Computed as follows: Total debits tot he JV accountP269,870 Total credits to the JV account_404,160 Gain (credit balance)P134,290 To record settlement: Cash32,687Rolex capital128,874 Times capital14,099 JV cash175,660 Computations: Settlement to Rolex – Balance of capital account: Debits:JuneP30,000 July15,000 August67,000 Payment of note payable_34,000P146,000 Credits:April 1P34,000 May47,800 June64,700 July31,240 August16,560 Profit share_80,574__274,874 Credit balanceP 128,874 114Chapter 6 Settlement to timex – Balance of capital account Debits:JulyP  10,000 August13,500 Payment of loan__34,000P  57,500 Credits:April 1P  34,000 June9,300 July10,560 August4,310 Profit share__13,429_71,599 Credit balanceP  14,099 Settlement to Seiko – Balance of JV cash account Debits:April 1P102,000Loan proceeds_404,160P506,160 Credits:JuneP  30,000 July65,000 August125,500 Payment of loan_110,000_330,500 Balance of JV cash175,660 Less:Settlement to RolexP128,874 Settlement to Timex__14,099_142,973 Settlement to SeikoP   32,687 (2)Partial Balance Sheet June 30, 2008 Books of Seiko (Manager/operator) Current assets: Investment in joint Venture: Joint Venture assets: CashP  72,000 Joint Venture_175,500P247,500 Less:Equity of other venturers (P116,500 + P43,300)_159,80087,700 Current liabilities: Notes payable – PNB34,000 Joint Venture115 Computation of balances as of June 30, 2008: JV CashJoint Venture April 1P102,000P30,000JuneMayP   64,100BalanceP   72,000June_111,400 BalanceP175,500 Notes PayableRolex capital P34,000AprilJuneP  30,000P  34,000April 1 47,800May _________64,700June P  30,000P146,500 P116,500 Timex capital P34,000April __9,000June P43,300 Problem 6 – 5 Consolidated Balance S heet CashP  61,000 Receivables122,000 Inventory102,500 Other assets__40,500 Total assetsP326,000 Accounts payableP  61,000 Other liabilities96,500 Capital stock50,000 Retained earnings_118,500 Total liabilities and stockholders' equityP326,000 Consolidated Income Statement SalesP246,750 Cost of sales_124,750 Gross profit122,000 Operating expenses__58,250 Consolidated net incomeP   63,750 16Chapter 6 Problem 6 –6 (a)Journal entries on venture books June 15:Cash1,000,000 MacDo1,000,000 Initial contribution at 6% July 1:Land2,400,000 Mortgage payable1,650,000 Cash 750,000 Purchased land for cash and 6% mortgage. Aug 1:Cash1,100,000 MacDo1,100,000 Additional contribution at 6%. Land 950,000 Cash 950,000 Paid for improvements. Sept 30:Mortgage payable 250,000 Interest expense- Mortgage 3,750 Cash 253,750 Reduced mortgage and paid interest. Oct 31:Mortgage payable 400,000 Interest expense- Mortgage 8,000 Cash 408,000 Reduced mortgage and paid interest. Nov 30:Mortgage payable 300,000Interest expense- Mortgage 7,500 Cash 307,500 Reduced mortgage and paid interest. Dec 31:Mortgage payable 200,000 Interest expense- Mortgage 21,000 Cash 221,000 Reduced mortgage and make semi-annual interest payment. Joint Venture117 31:Cash2,600,000 Sales2,600,000 Sales to date. 31:Commissions 130,000 Cash 130,000 P2,600,000 x 5% 31:Expenses 628,100 Cash 628,100 Paid expenses 31:Interest expense- Venturer 60,000 MacDo 60,000 6% on P1,000,000 from June 15 to December 31, and on P1,100,000 from August 1 to December 31. 31:Sales2,600,000 Land (cost of land sold)1,145,000 Expenses 628,100 Commissions 130,000Interest expense- mortgage 40,250 Interest- venturer 60,000 Income summary 596,650 To close income and expense accounts. 31:Income summary 596,650 MacDo 596,650 MacEn 238,660 To divide gain, 60:40. 31:MacDo 801,650 Cash 801,650 Payment on account. (b)Journal entries on MacDo’s books: June 15:Investment in Joint Venture1,000,000 Cash1,000,000 Initial contribution. Aug 1:Investment in Joint Venture1,100,000 Cash1,100,000 Additional contribution. 118Chapter 6 Dec 31:Investment in Joint Venture 60,000 Interest income 60,000 Interest earned on cash advanced. 31:Investment in Joint Venture 357,990Gain on Joint Venture 357,990 60% of gain on venture. 31:Cash 801,650 Investment in Joint Venture 801,650 Repayment in part of advances. (c)MacDo and MacEn Joint Venture Income Statement For the period from June 15 to December 31, 2008 SalesP2,600,000 Cost of land sold: LandP2,400,000 Improvements 950,000 TotalP3,350,000 Unsold land 2,205,000 1,145,000 Gross profit 1,455,000 Expenses: Advertising and office expensesP 628,100 Interest on mortgage 40,250 Interest on advances 60,000 Commissions 130,000 858,350 Net gainP 596,650 Distributions: MacDo (P596,650 x 60%)P 357,990 MacEn (P596,650 x 40%) 238,660Mac Do and MacEn Joint Venture Balance Sheet December 31, 2008 Assets CashP 250,000 Land 2,205,000 Total AssetsP2,455,000 Liabilities and equity: Mortgage payabl eP 500,000 MacDo 1,716,340 MacEn 238,660 Total liabilities and equityP2,455,000 Joint Venture119 Venturers equity (interest) MacDoMacEnTotal InvestedP2,100,000P2,100,000 Shares: GainP 357,990P238,660P 596,650 Interest on advances 60,000 60,000 Commissions 130,000 130,000 Total 417,990 368,660 786,650 Balances 2,517,990 368,660 2,886,650 Withdrawn (801,650) (130,000) (931,650) Equity (interests)P1,716,340P238,660P1,955,000