Answer:
FV= $94,228.26
Explanation:
Giving the following information:
Present Value= $3,000
Interest rate= 9% compounded annually
Number of years= 63 - 23= 40 years
To calculate the future value, we need to use the following formula:
FV= PV*(1+i)^n
FV= 3,000*(1.09^40)
FV= $94,228.26
Suppose that on August 14, 2019, an antique woven rug handmade in Canada is priced at CAD 1,100. The approximate U.S. dollar price of the rug would be
Answer:
USD 825.95Explanation:
Step one:
To tackle this problem we need data from historical chart.
From historical chart, on August 14, 2019, 1 USD is equivalent to CAD 1.3318
Step two:
From the historical data we need to perform conversion on the data to get the USD equivalent of the CAD given in the problem
Hence
if 1 USD = CAD 1.3318 then
x USD = CAD 1,100
by cross multiplying we have
x USD= 1,100/ 1.3318
x USD= 825.95
Hence as at August 14, 2019 CAD 1,100 is USD 825.95
Discounted payback period. Given the following two projects and their cash flows, LOADING..., calculate the discounted payback period with a discount rate of %, %, and %. What do you notice about the payback period as the discount rate rises? Explain this relationship. With a discount rate of %, the cash outflow for project A is:
Answer:
the numbers are missing, so I looked for a similar question:
Cash Flow A B
Cost $10,000 $105,000
Cash flow year 1 $3,571 $21,000
Cash flow year 2 $3,571 $10,500
Cash flow year 3 $3,571 $42,000
Cash flow year 4 $3,571 $31,500
Cash flow year 5 $3,571 $5,250
Cash flow year 6 $3,571 $0
With a discount rate of 5%, 10% & 15%
Discounted cash flows for project A:
5% 10% 15%
Cost $10,000
Cash flow year 1 $3,571 $3,401 $3,246 $3,105
Cash flow year 2 $3,571 $3,239 $2,951 $2,700
Cash flow year 3 $3,571 $3,085 $2,683 $2,348
Cash flow year 4 $3,571 $2,938 $2,439 $2,042
Cash flow year 5 $3,571 $2,798 $2,217 $1,775
Cash flow year 6 $3,571 $2,665 $2,016 $1,544
discounted payback period:
5% = 3.09 years
10% = 3.46 years
15% = 3.9 years
The higher the discount rate, the longer the discounted payback period.
Discounted cash flows for project B:
5% 10% 15%
Cost $105,000
Cash flow year 1 $21,000 $20,000 $19,091 $18,261
Cash flow year 2 $10,500 $9,524 $8,678 $7,940
Cash flow year 3 $42,000 $36,281 $31,555 $27,616
Cash flow year 4 $31,500 $25,915 $21,515 $18,010
Cash flow year 5 $5,250 $4,114 $3,260 $2,610
discounted payback period:
5% = more than 5 years, the project's NPV is negative -$9,166.37
10% = more than 5 years, the project's NPV is negative -$20,901.42
15% = more than 5 years, the project's NPV is negative -$30,563.54
2. Roth retirement funds require you to pay taxes on your investment dollars up-front, while
traditional IRAs allow you to pay taxes only when you withdraw your investment at age 59.5 or
older. What are the pros and cons of each option?
(10 points: 5 for at least one pro and 5 for at least con)
Answer:
The Pros and Cons of Roth IRA and the Traditional IRA or 401(K):
Roth IRA is not advantageous to those, who are starting to save late in their career. It favors the younger worker, who is starting out with low-paying jobs at lower-paying tax rates, who will later be earning more.
With Roth IRA, you suffer the tax burden upfront when you are active and while making your contributions, so that you can enjoy your retirement benefits tax-free. This is why the younger worker benefits more. In the prime of life with little responsibilities, you can settle the taxman so that you can be free of him later in older age. But, if you are in the high tax bracket, this category is not funny for you, anyway. The IRS has an income limit for this category, therefore, you must go for the traditional IRA.
The traditional IRA saves you the tax burden initially, but you can never be free of the IRS. It must take its share later, having allowed you to enjoy tax-free contributions. When the net is filled, the IRS cuts its percentage off.
You will never feel bad then, because your tax rate will surely be reduced in comparison with when you are making the contributions. So, it is just and right to allow the IRS, who generously helped you to grow the nest in the first place to take its just and lawful cut. It does not bleed too much then, afterall you are drying up with life's responsibilities, including reduced tax bracket, and many of your children have started answering to the IRS independently. This is the better time to deal with IRS, anyway.
Explanation:
The question has the explanation: ROTH IRAs are retirement funds that allow you to pay taxes on your investments into retirement funds as you are making the contributions, so that you are free to make your withdrawals after at least 5 years without paying additional taxes.
The traditional IRAs or the 401(K) encourage you to make your retirement contributions without paying taxes on them so that you can contribute more. Then the IRS will bounce on you to pay the taxes when you are making withdrawals having grown the investments.
IRAs mean Individual Retirement Accounts which individuals use to save and accumulate their retirement funds.
In answering the question "Which customers are most likely to click on my online ads and purchase my goods?" you are most likely to use which of the following analytic applications?A) customer profitabilityB) propensity to buyC) customer attritionD) channel optimization
Answer:
B) Propensity to buy.
Explanation:
In answering the question "Which customers are most likely to click on my online ads and purchase my goods?" you are most likely to use the propensity to buy.
Propensity to buy in marketing is a predictive model, which is used to measure or determine the chances of a customer being willing to buy a particular product.
In this scenario, to determine the likelihood of a customer clicking on an online advert and purchasing a seller's goods, after visiting a website or receiving promotional information about, it is ideal to use the propensity to buy analytic approach.
n the _____stage of team development, team members often become intensely loyal to one another and feel mutual accountability for team successes and failures.
Answer:
Performing.
Explanation:
In other to get to this stage of team development, you must have passed through the certain other three stages where you are been formed as a group and also stormed before performance.
Group seen to have made it to their performing stage are seen to displays a level of competence experience and also trust that is less apparent in the earlier stages of group development. Cohesion is seen to be the vital driver in this stage of team development. Also strong relationships is maintained amongst its members facilitating smooth flow of work; and can certainly work without supervision too.
The Bob Buckham Senior Center, a not-for-profit entity, serves a hot meal to senior citizens every Friday evening. All the food is donated by a local supermarket. All the food preparation and serving is done by local volunteers. If the Center had to pay for the food, it would need to spend $10,000 a year. If it had to pay for the food preparation and service, it would need to spend $12,000 a year. How should it report these contributions in its financial statements?
Food | Food preparation and service
a. Disclose in the notes | Disclose in the notes
b. Disclose in the notes | Report $12,000 revenue and expense
c. Report $10,000 revenue and expense | Disclose in the notes
d. Report $10,000 revenue and expense | Report $12,000 revenue and expense
Answer:
c. Report $10,000 revenue and expense | Disclose in the notes
Explanation:
Not-for-profit entities must report the fair value of all the goods they receive as donations. in this case, they would have to report the $10,000 worth of food received from a local supermarket. But they are not required to report the value of volunteer work, they only have to disclose it on the footnotes of their financial statements.
This is where what I call a deviant comes in. Every team needs a deviant, someone who can help the team by challenging the tendency to want too much homogeneity, which can stifle creativity and learning. Deviants are the ones who stand back and say, ‘Well, wait a minute, why are we even doing this at all? What if we looked at the thing backwards or turned it inside out?’ That’s when people say, ‘Oh, no, no, no, that’s ridiculous,’ and so the discussion about what’s ridiculous comes up. Unlike the CFO I mentioned before, who derailed the team by shutting down discussions, the deviant opens up more ideas, and that gets you a lot more originality. In our research, we’ve looked carefully at both teams that produced something original and those that were merely average, where nothing really sparkled. It turned out that the teams with deviants outperformed teams without them. In many cases, deviant thinking is a source of great innovation."According to Hackman, a deviant may help a group consider _______, but if the deviant has a strong personality and limits the input of others, the problem of ________ , may arise.
Answer:
According to Hackman, a deviant may help a group consider out-of-box thinking, but if the deviant has a strong personality and limits the input of others, the problem of complacency, may arise.
Explanation:
It's from the book "Leading Teams" of J. Richard Hackman, the Edgar Pierce Professor of Social and Organizational Psychology at Harvard University and a leading expert on teams.
A cloth manufacturing firm is deciding whether or not to invest in new machinery. The machinery costs $45,000 and is expected to increase cash flows in the first year by $25,000 and in the second year by $30,000. The firm’s current fixed costs are $9,000 and current marginal cost are $15. The firm currently charges $18 per unit.
Required:
If the interest rate is 5% then. what is the present value of the cash flows?
Answer:
$51,020.40
Explanation:
We use the formula PV = FV * (1 + r)^n for finding the present value
There are two cash flows, one that occur in year 1 at $25,000 and second that occur in year 2 at $30,000.
Find the PV of this cash flow at r = 5% and n = 1 and 2 =
25000(1+5%)^-1 + 30000(1 + 5%)^-2
25,000(1+0.05)^-1 + 30,000(1 + 0.05)^-2
25,000(1.05^)-1 + 30,000(1.05)^-2
25,000(0.952381) + 30,000(0.907029)
23,809.525 + 27,210.87
=$51,020.40
Thus, the present value of the cash flows is $51,020.40
A trader maintains a position in a small capitalization stock that has low trading volume. The trader has a high level of which of the following risks?
A) MarketB) LiquidityC) BusinessD) Inflation
Answer:
B) Liquidity
Explanation:
Liquidity is the ability of quickly buy or sell a stock without any price change.
Liquidity in a small-capitalization stock that has low trading volume is generally low that causes a problem for traders. It is so because in small capitalization, traders are unable to understand potential pitfalls and blindly invest in small-capitalization stocks which do not give profit as expected and the liquidity becomes low.
Hence, the correct answer is B) Liquidity.
You want to make a one-time deposit today that will increase in value to $100 at the end of this year. Which rate of interest will allow you to deposit the least amount today to reach this goal
Answer:
The rate of interest is 11.111%
The Deposit should be $90 today.
The future value at the end of this year will be $100.
Explanation:
Future value of $100
Present value of $100 at 11.111% = $100/11.111 = $90
The future value of a deposit today is the value after a period of one year or so periods. The rate of interest produces the discount factor that can calculate the present value of $100. To make a one-time deposit of $90 today will increase in value to $100 using an interest rate of 11.111%.
A customer wishes to purchase $100,000 face amount of municipal bonds that the broker-dealer does not have in inventory. Under MSRB rules, the firm should:
Answer:
contact enough dealers so that a reasonable market quote is obtained . when a municipal dealer acts in an agency capacity, the price charged must be representative of the market for that type of security. There is no requirement to obtain a pre-set number of quotes (as a contrast, FINRA requires that a minimum of 3 quotes be obtained for non-NASDAQ OTC issues, meaning OTCBB or Pink Sheet issues), nor is there a requirement to direct the customer to a dealer that physically has those bonds. The dealer would not sell short the bonds to the customer, since short covering is very difficult in the thinly traded municipal market.
A large furniture and appliance rental business is considering sponsorship options. It has brought together vice-presidents from the various functional areas of the company to determine which sponsorships will most effectively reach the rental company's prospective customers. The rental company has established a:
a. cross-functional team
b. horizontally-organized team
c. vertically-organized team
d. problem-resolution team
e. project committee
Answer:
a. cross-functional team
Explanation:
In this case, the most appropriate is the use of a cross-functional team.
This team is formed by several professionals with knowledge, techniques, skills and resources to help the company achieve its goals and objectives.
The benefits of forming a cross-functional team is to aggregate the potential of each member in a common objective, which ensures greater flexibility of ideas, greater innovation, greater exchange of experiences, which guarantees greater team engagement, greater possibility of designing solutions and greater efficiency in organizational processes.
iv. What is the essential tool (and subtypes) for seeing the big picture and revealing large information about the data series
Answer:
Ms Excel
Explanation:
This software is popular among businesses today, which they use in performing data analysis. Often called a spreadsheet application, Ms (Microsoft) Excel allows businesses to see the bigger picture and revealing large information about the data series.
For example, by using Ms Excel, a business can look up the percentage differences in its revenue turnover for a period time (quarterly, monthly or yearly), by simply imputing their data series.
In recent years, industries with high four- and eight-firm concentration ratios include cars, cereal breakfast foods, and farm machinery.
a) true
b) false
Answer: True
Explanation:
The Four-Firm Concentration Ratio simply measures aggregate market share of the four biggest firms that are in a particular industry while the Eight-Firm Concentration Ratio measures that of the eight biggest firms.
It is true that in recent years, industries with high four- and eight-firm concentration ratios include cars, cereal breakfast foods, and farm machinery.
Expected return and standard deviation. Use the following information to answer the questions: LOADING.... a. What is the expected return of each asset? b. What is the variance of each asset? c. What is the standard deviation of each asset? Hint: Make sure to round all intermediate calculations to at least seven (7) decimal places. The input instructions, phrases in parenthesis after each answer box, only apply for the answers you will type. a. What is the expected return of asset A?
Answer and Explanation:
a. The computation of expected return of each assets is shown below:-
Expected Return on Asset A in state is
= 0.39 × 0.02 + 0.45 × 0.02 + 0.16 × 0.02
= 0.02
Expected Return on Asset B in state is
= 0.39 × 0.25 + 0.45 × 0.06 + 0.16 × -0.04
= 0.1181
Expected Return on Asset C in state is
= 0.39 × 0.35 + 0.45 × 0.19 + 0.16 × -0.22
= 0.1868
b. The computation of variance of each asset is shown below:-
Variance of Assets A is
= 0.39 × (0.02 - 0.020)^2 + 0.45 × (0.02 - 0.020)^2 + 0.16 × (0.02 - 0.020)^2
= 0
Variance of Assets B is
= 0.39 × (0.25 - 0.1181)^2 + 0.45 × (0.06 - 0.1181)^2 + 0.16 × (-0.04 - 0.1181)^2
= 0.0123
Variance of Assets C is
= 0.39 × (0.35 - 0.1868)^2 + 0.45 × (0.19 - 0.1868)^2 + 0.16 × (-0.22 - 0.1868)^2
= 0.0369
c. The computation of standard deviation of each asset is shown below:-
Standard Deviation of A is
= (0.39 × (0.02 - 0.020)^2 + 0.45 × (0.02 - 0.020)^2 + 0.16 × (0.02 - 0.020)^2)^0.5
= 0
Standard Deviation of B is
= (0.39 × (0.25 - 0.1181)^2 + 0.45 × (0.06 - 0.1181)^2 + 0.16 × (-0.04 - 0.1181)^2)^0.5
= 0.1109
Standard Deviation of C is
= (0.39 × (0.35 - 0.1868)^2 + 0.45 × (0.19 - 0.1868)^2 + 0.16 × (-0.22 - 0.1868)^2)^0.5
= 0.1920
The federal government has the legal authority to prevent a company from adding products through acquisitions if the acquisition threatens to lessen competition.
A. True
B. False
Answer:
True
Explanation:
One way of determining if acquisitions would lessen competition is through the calculation of the HHI. if the HHI of the industry is more than 1500 before the acquisition and the HHI changes by more than 50 after the acquisition, the government would challenge the merger
The following transactions occurred during March 2016 for the Wainwright Corporation. The company owns and operates a wholesale warehouse.
1. Issued 30,000 shares of capital stock in exchange for $300,000 in cash.
2. Purchased equipment at a cost of $40,000. $10,000 cash was paid and a note payable was signed for the balance owed.
3. Purchased inventory on account at a cost of $90,000. The company uses the perpetual inventory system.
4. Credit sales for the month totaled $120,000. The cost of the goods sold was $70,000.
5. Paid $5,000 in rent on the warehouse building for the month of March.
6. Paid $6,000 to an insurance company for fire and liability insurance for a one-year period beginning April 1, 2016.
7. Paid $70,000 on account for the merchandise purchased in 3.
8. Collected $55,000 from customers on account.
9. Recorded depreciation expense of $1,000 for the month on the equipment.
Required:
Analyze each transaction and classify each as a financing, investing, and/or operating activity (a transaction can represent more than one type of activity). In doing so, also indicate the cash effect of each. (Amounts to be deducted should be indicated with a minus sign. If there is no cash effect, leave cell blank.)
Answer:
1. Financing Activity : $300,000
2.Investing Activity : $10,000 and Non-cash Financing and Investing Activity : $30,000
3.Operating Activity : - $90,000
4.Operating Activity : $50,000
5.Operating Activity : -$5,000
6.Operating Activity : -$6,000
7.Operating Activity : -$70,000
8.Operating Activity : $55,000
9.Operating Activity : $1,000
Explanation:
Operating Activities involves the entity`s trading operation in ordinary course of business.
Investing Activities involves the entity`s sale or purchase of Investments.
Financing Activities involves the entity`s acquisition and sale of funds.
A company can shorten its cash cycle by: __________
a. Reducing inventory turnover
b. Reducing account payables
c. Reducing days receivable
d. None of the above
Answer:
None of the above
Explanation:
Companies can shorten their cash cycles by turning over their inventory faster. The quicker a company sells its goods, the sooner it takes in cash from cash and credit card sales and begins its accounts receivable aging. Inventory turnover has no impact on the cash cycles of service companies with no inventory.
Answer:
C is the answer (I think)
People had been expecting the price level to be 140 but it turns out to be 138. Johnson Family Restaurants increases the number of workers it employs. What could explain this
Answer:
neither sticky wage theory nor sticky price theory
Explanation:
People had been expecting the price level to be 140 but it turns out to be 138. Johnson Family Restaurants increases the number of workers it employs. Sticky wage theory nor sticky price theory could explain this.
What makes wages and prices sticky?Sticky wages are a result of a number of factors, including the minimum wage, employee contracts, labor unions, the efficiency wage theory, and the expense of hiring and terminating employees. It is challenging to exit a recession when wages and prices are stuck, creating a vicious cycle.
A theoretical market condition known as "stickiness" occurs when a certain nominal price resists change. Stickiness, also known as price stickiness, is a term that is frequently used to describe market prices even though it frequently refers to wages.
Many economists think that prices are "sticky" and that they change gradually. According to them, this stickiness indicates that changes in the money supply have an effect on the real economy, causing changes in investment, employment, output, and consumption. Policymakers can take advantage of this effect.
Learn more about stickiness here:
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A short margin account with the only position being 100 shares of ABC stock, shows the following:
Credit Balance: $18,000
Short Mkt Value: $12,000
Equity: $6,000
If ABC pays a dividend of $2.00 per share, the result will be an adjusted:__________
Answer:
1.1'00
Explanation:
Which group would advertisers want to target and with what type of advertisement immediately before a holiday, as opposed to during a non-holiday time
Answer:
in graph it shows that the highest effect is w low content/low motivation/low knowledge
-only tend to be persuaded for a short time and would need the advertisement right before target date
b) group would be persuaded by high content argument but will remain persuaded so do not need to be advertised immediately before the holiday
Explanation:
Consider the following information on large-company stocks for a period of years. Series Arithmetic Mean Large-company stocks 12.1 % Inflation 3.4A. What was the arithmetic average annual return on large-company stocks in nominal terms?
B. What was the arithmetic average annual return on large-company stocks in real terms?
Answer:
a. 12.1 %
b. 8.41%
Explanation:
a. The arithmetic average annual return on large-company stocks in nominal terms is already stated in the table as 12.1%.
This is because it was not yet adjusted for inflation making it nominal.
b. The arithmetic average annual return on large-company stocks in real terms can be expressed by;
Real Return = [(1 + Nominal rate) / (1 + Inflation rate)] - 1
= (( 1 + 12.1%) / ( 1 + 3.4%)) - 1
= (1.121/1.034) - 1
= 1.0841 - 1
= 8.41%
White says, “We live in a world where success is defined by income.” Do you agree with this statement? Discuss examples in your life that support or negate this idea.
Answer:
yes i agree coz nowadays even in my family, the outsiders give more respect and praise my big brother as he earns big income
The decision that could be made regarding the statement that "In the modern world, income has turned equivalent to success" would be:
Yes.
The reason to agree with this statement is due to the increased importance that the modern world has provided to money.For example, a person is considered successful only when he earns a handsome amount while a person with a lower or average income but greater satisfaction level is considered unsuccessful. However, there is also a saying that "money can't buy happiness" which suggests that people can be sad even after having money and vice versa.Thus, it depends on the individual's perception and the way they equate success with happiness or material possessions.Learn more about "Income" here:
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BangBang Percussion Company tried to implement a flextime system. However, after only a few months, they abandoned the new system. Which of the following is the most likely reason BangBang would drop its flextime plan?
A. The employees resented being required to come to work early or stay late.
B. It caused an increase in traffic congestion.
C. Workers tend to be less productive when they have to work longer hours in a single day.
D. It often made communication among employees more difficult.
Answer: It often made communication among employees more difficult.
Explanation:
Flextime is a way of redesigning the traditional work schedules in such a way that the workers will work at the hours that's convenient for them and flexible rather than working based on normal office schedule or timing.
The most likely reason BangBang would drop its flextime plan is when communication among employees becomes difficult.
Barnes and Noble sells online through its website, while also selling through physical store locations. This type of retailing is referred to as
i really think its b i could be wrong
Which of the following statements regarding fiscal policy are true according to the macroeconomic consensus in the United States?
a. Congress, not the Federal Reserve, should be in charge of monetary policy.
b. Expansionary monetary policies should be used to keep unemployment below its natural rate.
c. Monetary policy should focus on price stability.
Answer: Monetary policy should focus on price stability.
Explanation:
The statements regarding fiscal policy that is true according to the macroeconomic consensus in the United States is that monetary policy should focus on price stability.
The statements that Congress, not the Federal Reserve, should be in charge of monetary policy and that Expansionary monetary policies should be used to keep unemployment below its natural rate are both wrong.
Hampton Company reports the following information for its recent calendar year.
Income Statement Data Selected Year-End Balance Sheet Data
Sales $ 160,000 Accounts receivable increase 10,000
Expenses Inventory decrease 16,000
Cost of goods sold 100,000 Salaries payable increase 1,000
Salaries expense 24,000
Depreciation expense 12,000
Net income $ 24,000
Required:
Prepare the operating activities section of the statement of cash flows for Hampton Company using the indirect method.
Answer:
Cash Flow from Operating Activities
Net Income $24,000
Adjustments for Non-Cash items :
Depreciation expense $12,000
Adjustments for Changes in Working Capital :
Increase in Accounts receivable ($10,000)
Decrease in Inventory $16,000
Increase in Salaries payable $1,000
Net Cash from Operating Activities $43,000
Explanation:
The Indirect method reconciles the Operating Profit to Operating Cash Flow by adjusting the Operating Cash flow with the following items :
Non-cash items previously deducted or added to Operating Profit.Changes in Working Capital.Cash Flow from Operating Activities
Net Income $24,000
Adjustments for Non-Cash items :
Depreciation expense $12,000
Adjustments for Changes in Working Capital :
Increase in Accounts receivable ($10,000)
Decrease in Inventory $16,000
Increase in Salaries payable $1,000
Net Cash from Operating Activities $43,000
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Which of the following do you NOT include when calculating the closing balance of PP&E?
a) Cash capital expenditures
b) PP&E acquired through acquisitions
c) PP&E acquired under capital or financing leases
d) Changes in working capital
Answer:
d) Changes in working capital
Explanation:
the formula used for calculating net PP&E is:
Net PP&E = gross PP&E + capital expenditures - accumulated depreciation
PP&E represents fixed assets (plant, property, and equipment).
On the other hand, working capital involves current assets and liabilities such as cash, accounts receivables, accounts payable, inventories, taxes payable, etc.
Lake Incorporated purchased all of the outstanding stock of Huron Company, paying $1,000,000 cash. Lake assumed all of the liabilities. Book values and fair values of acquired assets and liabilities were: Book Value Fair Value Current assets (net) $ 190,000 $ 125,000 Property, plant, equip. (net) 650,000 765,000 Liabilities 255,000 255,000 Lake would record goodwill of
Answer:
Lake would record goodwill of $365,000
Explanation:
Fair value of net assets = Fair value of current asset + Fair value of property, plant and equipment
Fair value of net assets = $125,000 + $765,000
Fair value of net assets = $890,000
Fair market value = Fair value of net assets - Liabilities assumed
Fair market value = $890,000 - 255,000
Fair market value = $635,000
Goodwill = Consideration - Fair market value
= $1,000,000 - $635,000
= $365,000
Hence, the amount of goodwill is $365,000.
During August, Boxer Company sells $348,000 in merchandise that has a one year warranty. Experience shows that warranty expenses average about 5% of the selling price. The warranty liability account has a credit balance of $11,000 before adjustment. Customers returned merchandise for warranty repairs during the month that used $7,600 in parts for repairs. The entry to record the estimated warranty expense for the month is:
Answer:
Dr Estimated Warranty Liability $8,600
Cr Spare Parts Inventory $8,600
Explanation:
The estimated warranty claim is worth $7,600 which means that the warranty claim must be debited by this amount as it was previously forecasted to be at $11,000 and in this month, the claim was worth $7,600. So decrease in warranty liability is necessary. Furthermore, the Spare Parts Inventory would be credited as the Spare parts would be used to fix the inventory which must be of $7,600 in value.
The double entry to record Warranty Repairs would be as under:
Dr Estimated Warranty Liability $8,600
Cr Spare Parts Inventory $8,600
