1. Accounting Problem:

(Activities over the month of March):

i) Capital stock issued: $20,000

ii) Office equipment bought (and paid for in cash): $1,500

iii) Production consumables purchased in cash: $1,200

iv) Raw material purchased (on credit): $3,000

v) Production machinery purchased L/T Note: $8,000

vi) Sale of finished goods (in cash) $8,700

vii) Sale of finished goods (on credit) $3,100

viii) Utilities (paid in cash): $1,200

ix) Wages and salaries paid in cash to employees: $2,500

x) Part payment to supplier (toward transaction iv) $1,000

You are required to:

(a) Summarize and post the above transactions.

(b) Prepare an income statement for the transactions during the month of March.

(c) Prepare a balance sheet as on March 31.

2. (a) What is the definition of breakeven? (b) Please give an example.

3. (a) What is the relationship between the price of a commodity and the quantity demanded? (b) What is the difference between highly elastic and inelastic demand?

4. (a) What is net present value of money? (b) Compute how much $100 will be in two years if the cost of capital is 6%?