Information for Scandinavian Products at the End of Year 4

question 25

Essay

Information for Scandinavian Products at the end of Year 4 follows. $\begin{array}{lr}\text { Current Assets } & \$ 900,000 \\\text { Current Liabilities } & 400,000 \\\text { Fixed Assets, Net } & 600,000 \\\text { Investments } & 100,000 \\\text { Long-Term Debt } & 500,000 \\\text { Dividends Declared on Common Stock during the Year } & 50,000 \\\text { Rncome Summary (income) } & 225,000 \\\text { Retained Earnings, January 1, Year 4 } & ? \\\text { CommonStock } & 150,000\\\text { Premium an Common Stack }&250,000\end{array}$

Required:
a.Find the ending balance in Retained Earnings as of December 31,Year 4.
b.Find the beginning balance in Retained Earnings as of January 1,Year 4.

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Definitions:

Diseconomies of Scale

The phenomenon where, as a firm or industry grows beyond a certain point, per unit costs start increasing due to inefficiencies.

Economies of Scale

Cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output decreasing with increasing scale.

Diminishing Marginal Returns

The principle that as additional units of a factor of production are added, the increase in output will eventually decrease, holding other factors constant.

Constant Returns to Scale

A situation where increasing all inputs by a certain factor results in output increasing by the same factor, indicating proportionate scalability of production.