Question

Suppose that Freedonia and Sylvania agree to trade. Each country focuses its resources on producing only the good in which it has a comparative advantage. The countries decide to exchange 12 million pounds of potatoes for 12 million pounds of coffee. This ratio of goods is known as the price of trade between Freedonia and Sylvania.

Answer 1

Debit ($) Credit ($) 151100 Date Account Tittle Jan-09 Cash Account receivable To Service Revenue 60700 211800 53200 Feb-12 Cash To Account receivable 53200 14600 Apr-25 Cash To Deferred Revenue 14600 12600 May-06 Supplies To Account payable 12600 10200 Jul-15 Property Tax Expense To Cash 10200 13100 Sep-10 Account payable To Cash 13100 140600 Oct-31 Salaries Expense To Cash 140600 44000 Nov-20 Cash To Common stock 44000 4500 Dec-30 Dividend To Cash 4500

Adjusting entries Dec-31 Insurance Expesne To prepaid insurance 8700 8700 8000 Dec-31 Supplies Expense To supplies (12600-4600) 8000 13500 Dec-31 Deferred Revenue To Service Revenue 13500

Credit ($) 7900 Zips Storage Adjusted Trial Balance December 31,2021 Account Tittle Debit ($) Cash 120800 Account Receivable 24600 Supplies 4600 Prepaid Insurance 6700 Land 165000 Account Payable Property Tax Expense 10200 Common Stock Retained Earning Dividend 4500 Service Revenue Salaries Expense 140600 Deferred Revenue Insurance Expense 8700 Supplies Expense 8000 Total 493700 204000 47900 225300 8600 493700

Zips Storage Income Statement For the year ended December 31,2021 Amount ($) Amount ($) Revenue Service Revenue 225300 Expense Salaries Expense Insurance Expense Supplies Expense Property Tax Expense Total Expense 140600 8700 8000 10200 167500 Net Income 57800 Zips Storage Statement of Retained Earnings For the year ended December 31,2021 Begining Balance Net Income Less : Dividend Ending Balance Amount ($) 47900 57800 (4500) 101200

Zips Storage Balance sheet For the year ended December 31,2021 Asset Amount (S) Amount ($) Current Asset Cash 120800 Account Receivable 24600 Supplies 4600 Prepaid Insurance 6700 Total Current asset 156700 Land 165000 Equipment Less : Accumulated Depreciation - Equipment Total Assets 321700 Liabilities and Stockholders' Equity Current Liabilities Account Payable 7900 Deferred Revenue 8600 Total Current Liabilities 16500 Stockholders' Equity Common Stock 204000 Retained Earning 101200 Total stockholders' equity 305200 Total liabilities and stockholders' equity 321700

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