16 September, 10:42

# Samantha has been working for a law firm and earning an annual salary of \$80,000. She decides to open her own practice. Her annual expenses will include \$15,000 for office rent, \$3,000 for equipment rental, \$1,000 for supplies, \$1,200 for utilities, and a \$35,000 salary for a secretary/bookkeeper. Samantha will cover her start-up expenses by cashing in a \$20,000 certificate of deposit on which she was earning annual interest of \$500.Refer to Scenario 13-5. According to Samantha's accountant, which of the following revenue totals will yield her business \$50,000 in profits?a. \$55200b. \$105200c. \$185700d. \$132500e. \$130000

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1. 16 September, 11:20
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The correct answer is option b.

Explanation:

Samantha was earning a salary of \$80,000 while working for a law firm.

She decides to open her own practice.

Her annual expenses will include \$15,000 for office rent, \$3,000 for equipment rental, \$1,000 for supplies, \$1,200 for utilities, and a \$35,000 salary for a secretary/bookkeeper.

The total accounting or explicit costs

= \$15,000 + \$3,000 + \$1,000 + \$1,200 + \$35,000

= \$55,200

Accounting profit = Total revenue - Accounting costs

\$50,000 = Total revenue - \$55,200

Total revenue = \$50,000 + \$55,200

Total revenue = \$105,200