Sometimes, estimating market areas by assigning areas to their nearest center will create some unrealistic market areas. This occurred in our case study, in which an existing team was estimated to have an unrealistically small market area population of 1.8 million. Which team was it?

The options for this question are the following:

a. Baltimore Orioles

b. Texas Rangers

c. Seattle Mariners

d. St. Louis Cardinals

e. San Francisco Giants

The correct answer is e. San Francisco Giants.

Explanation:

The market, even though it is not something real and palpable, but a concept that encompasses those who could be clients of the company, can be calculated through various techniques. One of the most direct is the one presented below, step by step.

Step 1. Calculate primary demand. Primary demand is the market size for a product category, for example covered shoes or parking. In general, it is the one that is interested in sizing in the first place who starts a new business.

Step 2. Know demographic data. Once the consumer's profile has been established and the area where it is located has been determined, it is necessary to obtain or estimate the corresponding demographic data. The first source is data from published censuses, reports from local and national secretariats (tourism, industry, commerce, etc.) and those issued by different chambers and associations. Often these data are outdated or too general, and creativity and good judgment must be used to make a sound estimate. For example, when it comes to opening a children's ballplayer, you may be interested in the number of children residing in the area, but only find the data for the total population of the city. In this case, you can consult the national population pyramid and apply the same proportion of children on the data that you have.

Step 3. Apply the calculation method. Taking the above data, the size of the market is determined as: the number of consumers in the market, multiplied by the amount of average product purchased annually, multiplied by the average price of the unit.

Step 4. Interpret the results. The data derived from the general market calculation is the starting point for a particular analysis, which must take into account the plans and expectations of the estimator. In the previous step, for example, the primary demand for the landscaping service for the area in question was established.

Given that,

At the end of the current year,

$17,555 of fees have been earned but have not been billed to clients.

The Journal entry is as follows:

Account receivable A/c  Dr. $17,555

To Fees earned A/c                            $17,555

(To record the accrued fees)

The above is the adjusting entry for the accrued fees that has not been billed to clients.