Question

A. Each Friday, Loco pays employees for the current week's work. The amount of the weekly payroll is $8,000 for a five-day workweek. This year December 31 falls on a Thursday. Loco will pay its employees on January 1.

b. On January 1 of the current year, Loco purchases an insurance policy that covers two years, $4.000.
c. The beginning balance of Office Supplies was $3,400, During the year, Loco purchased office supplies for $5,800, and at December 31 the office supplies on hand total $3,000.
d. During December, Loco designed a landscape plan and the client prepaid $4,000. Loco recorded this amount as Unearned Revenue. The job will take several months to complete, and Loco estimates that the company has earned 50% of the total revenue during the current year.
e. At December 31, Loco had earned $5,000 for landscape services completed for Antique Attic
Appliances. Antique Attic has stated that it will pay Loco on January 10.
f. Depreciation for the current year includes Equipment, $3,900; and Trucks, $2,200.
g. Loco has incurred $700 of interest expense on a $1,150 interest payment due on January 15.

Answer 1

To determine if Eryn's legal practice would be profitable, we need to calculate implicit costs and compare them to the revenue. Without more information, we cannot determine the profitability.

Step-by-step explanation:

To determine whether Eryn's legal practice would be profitable, we need to consider implicit costs. Implicit costs are the opportunity costs of using resources in a particular way. In this case, the implicit costs would be the foregone salary Eryn would receive if she continued working at the corporate law firm.

To calculate the implicit costs, we subtract the explicit costs from the revenue. The explicit costs in this case would be the office rental and the law clerk's salary. If the revenue is higher than the explicit and implicit costs, then Eryn's legal practice would be profitable. Otherwise, it would not.

If the revenue of $200,000 is higher than the explicit costs of $85,000 (office rental + law clerk's salary), then Eryn's legal practice would be profitable. However, without more information about the implicit costs, we cannot determine whether it would actually be profitable.