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A recent annual report issued by The Gap, Inc., revealed the following data:
The company's income statement reported total annual revenue of billion and net income for the year of million.
a. Evaluate The Gap's profitability by computing its net income percentage and its return on equity for the year.
In its first year of operation, Sheridan Company recognizes $30,000 in service revenue,$7,200 of which was an account and still outstanding at year-end. The remaining $22,800 was received in cash from customers.
The company incurred operating expenses of$16,600. Of these expenses, $13,520 were paid in cash;$3,080 was still on account at year-end. In addition, Sheridan prepaid $2,650 for insurance coverage that would not be used until the second year of operations.
Required: Calculate the first year's net earnings under the cash basis of accounting and the first year's set earnings under the accrual basis of accounting.
In late 2010, the unemployment rate was 9.6 percent. Despite the fact that the economy had been growing out of the recession for over a year (real GDP was up 3% by Q2 2010), job growth in 2010 was modest. While the fiscal stimulus package helped, labour was "stuck in the mud." Which of the following factors contributed to the problem and how significant were they? a. Employment and unemployment are always lagging indicators because hiring and firing are difficult in a downturn. b. Productivity has increased significantly over the last decade; people are working harder for less pay—in short, businesses are "mean and lean." c. Construction employment, which has traditionally been a driver of recovery, has stagnated, owing largely to massive overbuilding. d. The United States has minimum wage laws. e. Wages are sticky on the downside, impeding labour market clearing. f. The Census Bureau hired and then fired thousands of workers, causing the data to be skewed. Choose two of these statements and write a brief essay about them. Use data to back up your claims.