Required:

Prepare necessary journal entries.

Compute the balance of Investment in Shares account

Problem 2

Chain Company had the following transactions:

2019

Aug. 1 Purchased 1,000 shares of Moon Company for P100,000

Oct. 1 Purchased 8,000 shares of Moon Company for P560,000

2020

July 1 Purchased 6,000 shares of Star Company for P480,000

Aug. 1 Sold 5,000 shares of Star Company for P500,000.

2021

Feb. 1 Received 50,000 share dividend.

Nov. 1 Received share rights to purchase one new share at P60 for every 5 rights tendered. On this date, the right is quotes at P10.

Dec. 1 Sold all share rights P15 per right.

Required: Prepare journal entries to record the transactions using average and FIFO. Assume that the share rights are accounted for separately.

Problem 3

Omega Company acquired 20,000 shares of Zion Company on January 1, 2019 at P150 per share. Zion Company had 80,000 shares outstanding with a carrying amount of P8,000,000. The difference between the carrying amount and fair value of Zion Company on January 1, 2019 is attributable to building .

Zion Company recorded earnings of P3,600,000 and P3,900,000 for 2019 and 2020, respectively, and a per-share dividend of P16 in 2019 and P20 in 2020. Omega Company has a 10-year straight line depreciation policy for building.

Required:

Compute for the percentage of ownership.

Compute the investment income for 2019.

Compute for the investment income for 2020.

Compute for the dividend income for 2019 and 2020.

Compute for the caring amount of Investment in Associates at the end of 2020.

Problem 4

On January 1, Forest Company acquired 30% interest in an investee at a cost of P3,200,000. The equity of the investee on the date of acquisition was P6,000,000, consisting of P4,000,000 share capital and P2,000,000 retained earnings.

All the identifiable assets and liabilities of the investee were recorded at fair value except for an equipment with a fair value of P3,000,000 greater than carrying amount. The remaining useful life of the equipment is 5 years.

On July 1, 2019, the investee sold and equipment for P900,000 to Forest Company. The carrying amount of the equipment is P500,000 at the time of sale. Forest Company applies a 10% straight line depreciation.

On December 31, 2019, Forest Company had inventory costing P2,000,000 on hand which had been purchased from the investee. A profit of P600,000 had been made on the sale.

During the current year, the investee reported net income of P4,000,000 and paid dividend of P1,500,000.

The equity of the investee on December 31, 2019 showed the following:

Share capital 4,000,000

Retained earnings 3,500,000

Retained earning appropriated 1,000,000

Revaluation surplus 3,000,000

The revaluation surplus arose from a revaluation of land made on December 31, 2019. The retained earnings appropriated arose from a transfer of unappropriated retained earnings to retained earnings appropriated for contingencies.

Required:

Determine the goodwill arising from the acquisition.

Determine the investment income from the current year.

Prepare journal entries for the current year.

Determine the carrying amount of the Investment in Associate at the end of 2019

3.(a)(i)State and explain FOUR factors which affect a consumer's demand schedule, other than the price of a good itself.(ii)Explain the economic rationale for assuming that a person's demand curve for a normal good slopes downward.(30 marks)(b)For something to be considered an economic good, it must possess certain characteristics.State and explain THREE of these characteristics.(20 marks)(c)Aconsumerspendsallincomeontwogoods,GoodAandGoodB.Bothgoodsarenormal goods but they are not complementary goods.The price of Good A is reduced and the price of Good B remains unchanged.The consumer continues to spend all income on the two goods.Distinguishbetweenthesubstitutioneffectandtheincomeeffectofthepricereductionin Good A.(25 marks)[75 marks]4.(a)Define each of the following:(i)Supply price of a factor of production.(ii)Transfer earnings.(iii)Economic Rent.(20 marks)(b)AprincipalfactorinfluencingthedemandforlaborbyanindividualfirmistheMarginal Revenue Productivity of Labor (MRP).(i)Explain what is meant by the underlined term.(ii)Discussthefactors,otherthanMRP,whichinfluencethedemandforlaborbyan individual firm.(30 marks)(c)The diagram below represents the supply curve of labor to a particular firm.?Supply Curve Wage rateSupply of Explainabletheeffectwhicheachofthefollowingdevelopmentsmayhaveonthissupplycurve.Illustrate each answer by means of a diagram.(i)The workers shift their preference towards increased leisure time.(ii)The workers' trade union negotiates a minimum wage.

(a) Complete the Table above (show the last column only) and determine the equilibrium real output of the private, open economy. Clearly show your steps and calculations. (b) If full-employment GDP for the open economy is $350 billion, will there be an inflationary expenditure gap or a recessionary expenditure gap in the economy? Why? Explain the consequence of this expenditure gap on the economy's real output and employment, if any. (c) Discuss the application of Keynesian macroeconomic theory to a major modern macroeconomic disturbance, such as the United States' Great Recession of 2007-2009. Your discussion should include the macroeconomic problems encountered and the Keynesian policies applied to address the problems.Lie concept of GDP in relation to population. Question 10 (5 points) Which of the following is true of an open economy, like that of the United States? Open economies tend to grow very slowly. Open economies do not engage in international trade. )Open economies tend to lack efficiency and productivity. Open economies are major players in international trade and tend to grow fast. Open economies lack access to technology.Open Economy. (2 points) Suppose there are two large open economies in the World - the US and Japan. Suppose also that, unlike in the standard model for large open economies you saw in lectures, now savings in both countries are positively affected by the real interest rate. 1. (0.5 points) Assume that initially the US runs trade deficit, while Japan - trade sur- plus. Draw the graphs for these two large open economies and show the equilibrium world interest rate r as well as capital inflows and outflows for these economies. 2. (0.5 points) Now, assume that the chances of a military conflict in the East Asia in- creases and the Japanese government increases expenditures for national defense and directs these extra expenditures entirely on purchasing a ballistic missile de- fense system from the US. How will this affect the world interest rate r", capital flows between the US and Japan and the real exchange rate of Japan? Illustrate you answer with graphs.SM) 4. Extending the standard macroeconomic model of Example 7.2.1 for an economy open to interna- tional trade gives: (1) Y = C+7+X - M; (ii) C = f(Y), with 0