Question Facts Marina, a programmer, earned S30,000 in 2010, but in 2011, she op

Question

Question Facts Marina, a programmer, earned S30,000 in 2010, but in 2011, she opened a custom woodworking business. After one year, she submitted the information on the right to her accountant The accountant recorded the depreciation on Marina's cottage during 2007 as She stopped renting out her cottage for $4,500 a year and used it as her woodworking shop. The market value of the cottage increased from S72,000 to $81,000 S7,000 According to the accountant, Marina's profit is OA. $6.200 She spent $25,000 on materials, phone, utilities. etc. B. $13,200 O c. $28,000 O D. $67,500 OE. $35,000 ili She leased machines for S8,000 a year iv She paid $7,500 in wages v She used $20,000 from her savings account, which earns 4 percent a year interest. She borrowed $50,000 at 10 percent a year from the bank vi vii She sold $120,000 worth of furniture. vili Normal profit is $35,000 a year

Explanation / Answer

Ans:

1) Option D

Computation of accounting profit

2) Computation of quantity supplied in the market = 300 + 300

= 600 mincemeat tarts per week

Particulars Amount Sales $120,000 Less: Cost materials ($25000) lease rent ($8000) wages ($7500) Interest on borrowings($50,000 * 10%) ($5000) depreciation ($7000) Profit $67,500

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