Comprehensive Problem Mulberry Services sells electronic data processing services to firms too small to own their own computing equipment. Mulberry had the following accounts and account balances as of January 1, 2022: Accounts Payable $ 14,000 Accounts Receivable 130,000 Cash 6,000 Common Shares 114,000 Interest Payable 8,000 Notes Payable (Long Term) 80,000 Prepaid Rent (Short Term) 96,000 Retained Earnings, 12/31/2021 16,000 During 2022, the following transactions occurred (the events described below are aggregations of many individual events): During 2022, Mulberry sold $690,000 of computing services, all on credit. Mulberry collected $570,000 from the credit sales in transaction a and an additional $129,000 from the accounts receivable outstanding at the beginning of the year. Mulberry paid the interest payable of $8,000. Wages of $379,000 were paid in cash. Repairs and maintenance of $9,000 were incurred and paid. The prepaid rent at the beginning of the year was used in 2022. In addition, $28,000 of computer rental costs were incurred and paid. There is no prepaid rent or rent payable at year-end. Mulberry purchased computer paper for $13,000 cash in late December. None of the paper was used by year-end. Advertising expense of $26,000 was incurred and paid. Income tax of $10,300 was incurred and paid in 2022. Interest of $5,000 was paid on the long-term loan. Required: 1. Establish T-accounts for the accounts listed above and enter the beginning balances. Use a chart of accounts to order the T-accounts. 3. Post your journal entries to the T-accounts. If a balance is zero, enter zero ("0"). 2. Analyze each transaction. Journalize as appropriate. (Note: Ignore the date because these events are aggregations of individual events.) For a compound transaction, for those boxes in which no entry is required, leave the box blank. 4. Use the ending balances in the T-accounts to prepare a trial balance. For those boxes in which no entry is required, leave the box blank.
Risk and return
Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary.
Capital Asset Pricing Model
Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.
Comprehensive Problem
Mulberry Services sells electronic data processing services to firms too small to own their own computing equipment. Mulberry had the following accounts and account balances as of January 1, 2022:
| Accounts Payable | $ 14,000 |
| 130,000 | |
| Cash | 6,000 |
| Common Shares | 114,000 |
| Interest Payable | 8,000 |
| Notes Payable (Long Term) | 80,000 |
| Prepaid Rent (Short Term) | 96,000 |
| 16,000 |
During 2022, the following transactions occurred (the events described below are aggregations of many individual events):
- During 2022, Mulberry sold $690,000 of computing services, all on credit.
- Mulberry collected $570,000 from the credit sales in transaction a and an additional $129,000 from the accounts receivable outstanding at the beginning of the year.
- Mulberry paid the interest payable of $8,000.
- Wages of $379,000 were paid in cash.
- Repairs and maintenance of $9,000 were incurred and paid.
- The prepaid rent at the beginning of the year was used in 2022. In addition, $28,000 of computer rental costs were incurred and paid. There is no prepaid rent or rent payable at year-end.
- Mulberry purchased computer paper for $13,000 cash in late December. None of the paper was used by year-end.
- Advertising expense of $26,000 was incurred and paid.
- Income tax of $10,300 was incurred and paid in 2022.
- Interest of $5,000 was paid on the long-term loan.
Required:
1. Establish T-accounts for the accounts listed above and enter the beginning balances. Use a chart of accounts to order the T-accounts.
3.
2. Analyze each transaction. Journalize as appropriate. (Note: Ignore the date because these events are aggregations of individual events.) For a compound transaction, for those boxes in which no entry is required, leave the box blank.
4. Use the ending balances in the T-accounts to prepare a
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