Consider the strategic form game depicted below. Each of two countries must simu
ID: 2422646 • Letter: C
Question
Consider the strategic form game depicted below. Each of two countries must simultaneously decide on a course of action. Country 1 must decide whether to keep its weapons or to destroy them. Country 2 must decide whether to spy on country 1 or not. It would be an international scandal for country 1 if country 2 could prove that country 1 was keeping its weapons. The payoff matrix is as follows. Does either player have a strictly dominant strategy? Does either player have a weakly dominant strategy? Find a Nash equilibrium in which neither player employs a weakly dominant strategy.Explanation / Answer
a)Balance in Retained Earnings account as of january 2015:
In the given question after closing balance of retained earnings of $ 19800 was given which appears on balance sheet.
While preparing for financial statements the closing balances of previous year will become opening balances for the current year.
So, as on 01st January, 2015 the balance will become the closing balance of previous year i.e, 31st December, 2014 as $ 19800
b) Balance in the temporary accounts as on 01st January, 2014
Meaning of temporary account:
A temporary account is a general ledger account that begins each accounting year with a zero balance. At the end of the accounting year any balance in the account will be transferred to another account. This is referred to as closing the account. An example of a temporary account is the Sales account. The Sales account is used to keep a log of the sales occurring only in the current accounting year. After the sales for the year have been reported, the balance in the Sales account will be transferred or closed to another account thereby returning the account balance to zero.
So balances in temporary accounts as on 01st January,2014 will begin with zero balances and in the question transactions were given for during the year.
For the transactions incurred during the year are
1) Cash a/c Dr $15,900
To Revenue a/c $ 15,900
2) Expenses a/c Dr $ 9,600
To Cash a/c $ 9,600
3) Dividend paid a/c Dr $ 1,900
To Cash a/c $ 1,900
The balances in these accounts shoud be closed and transferred to income summary and from income summary to retained earnings.But the balance in temporary accounts on 01st January,2014 is zero.