SELECT A OR B FOR EACH QUESTION BELOW AND GIVE REASONING WHY. ALSO, CREATE JOURNAL ENTRIES FOR EACH QUESTION.

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QUESTION 2:

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QUESTION 5:

Congratulations, New Hire. Welcome to the team! We are running at full capacity right now as such, the Controller has entrusted you to make the following business decisions as well as the applicable accounting that follows. Specifically, your instructions are: 1.To make the final call on 5 important business decisions 2.To attempt the corresponding journal entries (note: we use a perpetual based inventory system) New Hire, it is also important to keep in mind the following internal benchmarks and bank covenants: 1. Current Ratio must remain above 2.5x at month end 2. Minimum Cash Balance must be above $10,000 at month end PS: You may find the previous month's financial report helpful in your decision making. If so, refer to the appendix below for the May month-end report. APPENDIX DEF Co. Balance Sheet DRAFT: Assets Current assets Cash Accounts receivable Inventory Prepaid insurance Total Current Assets ENTER --> Balance 31 May CLOSED $ 15,201 $ 2,102 $ 1,021 $ 1,500 $ 19,824 $ 301 Non-Current Assets Long-Term Investments Property, plant, and equipment Land Buildings Less: Accumulated depreciation buildings Equipment Less: Accumulated depreciation equipment Total Non-Current Assets $ $ $ $ $ $ 175,000 50,102 10,301 5,201 1,201 219.102 TOTAL ASSETS s 238,926 Liabilities and Owner's Equity Current liabilities Accounts payable Salaries payable Total Current Liabilities $ $ s 5,000 1,301 6,301 Non-Current Liabilities Mortgage payable Non-Current Liabilities $ S 125,000 125,000 Owner's Equity Owner, Capital Total Owner's Equity $ s 107,625 107,625 Owner's Equity Owner, Capital Total Owner's Equity $ 107,625 $ 107,625 TOTAL LIABILITIES & OWNER'S EQUITY $ 238,926 DEF Co. Income Statement DRAFT: CLOSED Month ending 31-May $ 25,000 Sales revenue Sales revenue Cost of goods sold $ 7,500 GROSS PROFIT S 17,500 Operating expenses Administrative General Depreciation Expense Insurance Expense Repairs & Maintenance Salaries & Wages Total Operating Expenses $ $ $ $ $ $ 400 259 1,050 7,000 3,500 12,209 PROFIT $ 5,291 A supplier has sent an email proposing the following deal to you: 14: To buy the usual 500 units on account for $1,250; or 1B: To buy the usual 500 units but with cash and receive a 20% discount Select one: A B The Company has the opportunity to make a huge (and rare) sale: 2A: To sell the unit for $10,000 but the customer wants to pay only 20% cash and the remaining 80% on account; or 2B: To sell the unit for $5,000 cash Note: The inventory had cost the Company $1,250. Select one: A B A repeat VIP customer has approached the Company requesting an express order: 34: The Company's supplier will only rush the order with a 30% markup paid in full with cash. This will cost the Company $15,000 and the customer cannot pay until next month when the unit is delivered (note: revenue criteria not met until delivered). They are offering $50,000 cash for all the trouble; or 3B: Kindly reject the VIP customer's offer risking the business relationship altogether. Select one: A B A replacement part for an employee's laptop was purchased for $1,200 cash. This is expected to extend the useful life of the laptop by an additional 3 years. You are conflicted by your coworkers' opinions but must choose one of the following: 4A: To agree with Bob who believes this purchase is an asset as it extends the life of the laptop 4B: To agree with Amy who believes its an expense as the amount is nominal Select one: A B An invoice was received for repair work done last week costing $3,500: 5A: To pay the invoice within 3 days of receipt taking advantage of the 2% discount available 5B: To delay payment of the invoice until next month, when due, however no discount will be applied Select one: A B