Answer and Explanation:
The adjusting entry is
Bad Debts expense ($22,500 ×10% - $550) $1,700
To Allowance for uncollectible accounts $1,700
(Being adjustment for Allowance for Uncollectible Accounts is recorded)
Here bad debt expense is debited as it increased the expense and credited the allowance as it reduced the assets
QUESTION 10
Branch Corp.'s total assets at the end of last year were $315,000 and its net income after taxes was $22,750. What was its return on total assets?
a.
7.22%
b.
8.78%
c.
7.96%
d.
8.36%
e.
7.58%
Answer:
a. 7.22%
Explanation:
The computation of the return on total assets is shown below:
= Net income after taxes ÷ total assets at the end of the last year
= $22,750 ÷ $315,000 × 100
= 7.22%
Hence, the return on total assets is 7.22%
Therefore the correct option is a.
you are a consultant to a firm evaluating an expansion of its current business. The cash flow forecasts (in millions of dollar) for the project as follows: on the basis of the behavior of the firm's stock, you believe that the beta of the firm is 1.30. Assuming that the rate of return available on risk-free investments is 5% and that the expected rate of return on the market portfolio is 15% what is the net present value of the project
Question
you are a consultant to a firm evaluating an expansion of its current business. The cash flow forecasts (in millions of dollar) for the project as follows:
Year cashflow
0 -100
1-10 15
0n the basis of the behavior of the firm's stock, you believe that the beta of the firm is 1.30. Assuming that the rate of return available on risk-free investments is 5% and that the expected rate of return on the market portfolio is 15% what is the net present value of the project
Answer:
NPV= -$32.58
Explanation:
The net present value of the investment is the cash inflow from the investment discounted at required rate of return. The required rate of return can be determined using the the formula below:
Ke= Rf +β(Rm-Rf)
Ke =? , Rf- 5%,, Rm-15%, β- 1.30
Ke=5% + 1.30× (15-5)= 18%
The NPV = Present value of cash inflow - initial cost
= A×(1-(1+r)^(-10)/r - initial cost
A- 15, r-18%
NPV = 15× (1-1.18^(-10)/0.18 - 100= -32.58
NPV = -$32.58
A municipal power plant uses natural gas from an existing pipeline at an annual cost of $10,000 per year. A new pipeline would initially cost $35,000, but it would reduce the annual cost to $4000 per year. Assume an analysis period of 20 years and no salvage value for either pipeline. The interest rate is 7%. Using the equivalent uniform annual cost (EUAC), should the new pipeline be built
Answer: EUAC of new pipeline of $7,303.75 is less than the $10,000 of old pipeline so new pipeline should be built.
Explanation:
Equivalent Uniform Annual cost can be calculated as:
= Reduction in annual cost + (Initial Cost/ Present value interest factor of annuity, 7%, 20 years)
= 4,000 + (35,000 / 10.5940)
= 4,000 + 3,303.75
= $7,303.75
North Company has completed all of its operating budgets. The sales budget for the year shows 50,900 units and total sales of $2,301,800. The total unit cost of making one unit of sales is $23. Selling and administrative expenses are expected to be $303,800. Interest is estimated to be $11,820. Income taxes are estimated to be $200,800. Prepare a budgeted multiple-step income statement for the year ending December 31, 2020.
Answer:
North Company
Budgeted multiple-step income statement for the year ending December 31, 2020
Sales $2,301,800
Less Cost of Goods Sold (50,900 units x $23) ($1,170,700)
Gross Profit $1,131,100
Less Expenses
Operating Expenses
Selling and administrative expenses $303,800
Operating Profit $827,300
Non Operating Expenses
Interest $11,820
Income taxes $200,800
Net Income (Loss) $614,680
Explanation:
North Company budgeted multiple-step income statement for the year ending December 31, 2020 is prepared above.
Zeibart Company purchases equipment for $225,000 on July 1, 2016, with an estimated useful life of 10 years and expected salvage value of $25,000. Straight-line depreciation is used. On July 1, 2020, economic factors cause the market value of the equipment to decline to $90,000. On this date, Zeibart examines the equipment for impairment and estimates $125,000 in future cash inflows related to use of this equipment.
Required:
a. Is the equipment impaired at July 1, 2020?
b. If the equipment is impaired on July I, 2020, compute the impairment loss and prepare a journal entry to record the loss.
Answer:
a. Yes, the equipment is impaired at July 1, 2020.
b. Impairment loss is $20,000. And the journal entries are as follows:
Debit Impairment loss for $20,000
Debit Accumulated depreciation for $80,000
Credit Equipment for $100,000
Explanation:
a. Is the equipment impaired at July 1, 2020?
This can be determined as follows:
Annual depreciation = (Cost - Salvage value) / Estimated useful life = ($225,000 - $25,000) / 10 = $20,000
Accumulated depreciation till July 1, 2020 = Annual depreciation * Number of years from July 1, 2016 to July 1, 2000 = $20,000 * 4 = $80,000
Net book value at July 1, 2020 = Cost - Accumulated depreciation till July 1, 2020 = $225,000 - $80,000 = $145,000
Equipment recoverable amount = Estimated future cash inflows related to use of the equipment = $125,000
Since the net book value of $145,000 is greater than the recoverable amount of the equipment of $125,000, this implies that the equipment is impaired at July 1, 2020.
b. If the equipment is impaired on July I, 2020, compute the impairment loss and prepare a journal entry to record the loss.
Accumulated depreciation till July 1, 2020 = $80,000
Estimated future cash inflows related to use of the equipment = $125,000
Fair market value = $90,000
Recoverable amount = Higher of estimated future cash inflows related to use of the equipment or Fair market value = $125,000
Net book value at July 1, 2020 = $145,000
Impairment loss = Net book value at July 1, 2020 - Recoverable amount = $145,000 - $125,000 = $20,000
The journal entries will then look as follows:
Date Details Debit ($) Credit ($)
01 Jul 2020 Impairment loss 20,000
Accumulated depreciation 80,000
Equipment 100,000
(To record impairment loss.)
Wildhorse Co. is a full-service manufacturer of surveillance equipment. Customers can purchase any combination of equipment, installation services, and training as part of Wildhorse’s security services. Thus, each of these performance obligations are separate with individual standalone selling prices. Laplante Inc. purchased cameras, installation, and training at a total price of $88,100. Estimated standalone selling prices of the equipment, installation, and training are $81,000, $6,300, and $2,700, respectively. How should the transaction price be allocated to the equipment, installation, and training?
WeAnswer:
Equipment $79,290
Installation $6,167
Training $2,643
Explanation:
Calculation to determine How should the transaction price be allocated to the equipment, installation, and training
First step is to calculate the total estimated fair value
Total estimated fair value = $81,000+$6,300+$2,700
Total estimated fair value =$90,000
Now let calculate How should the transaction price be allocated
Equipment= ($81,000 ÷ $90,000)*$88,100
Equipment= 90%*$88,100
Equipment=$79,290
Installation=($6,300 ÷ $90,000)* $88,100
Installation= 7%*$88,100
Installation=$6,167
Training=($2,700 ÷ $90,000)*$88,100
Training= 3%*$88,100
Training=$2,643
TOTAL
Equipment=$81,000
Installation=$6,300
Training=$2,700
Total $90,000
Equipment=$79,290
Installation=$6,167
Training=$2,643
Total $88,100
Equipment=90%
Installation=7%
Training=3%
Total 100%
Therefore the transaction price that should be allocated to the equipment, installation, and training are :
Equipment $79,290
Installation $6,167
Training $2,643
Diamond Company has three product lines, A, B, and C. The following financial information is available:
Item Product Line A Product Line B Product Line C
Sales $70,000 $145,000 $32,000
Variable costs $42,000 $77,000 $20,000
Contribution margin $28,000 $68,000 $12,000
Fixed costs:
Avoidable $6,300 $19,000 $8,950
Unavoidable $5,000 $14,500 $4,000
Pre-tax operating
income $16,700 $34,500 $(-950 )
Assuming that Product Line C is discontinued and the manufacturing space formerly devoted to this line is rented for $6,000 per year, operating income for the company will likely:
a. Increase by $7,200.
b. Increase by $3,300.
c. Increase by some other amount.
,Answer:
See below
Explanation:
A B C
Sales revenue
$70,000 $145,000 $32,000
Variable costs
($42,000) ($77,000) ($20,000)
Contribution margin
$28,000 $68,000 $12,000
Fixed costs
Operating income loss
The total operating income is
= $16,700 + $34,500 + ($950)
= $50,250
Should the fixed cost of C be eliminated, the operating income/(loss) of C
= $6,000 - $950
= $5,050
This is the net increase in the total operating income
Assume a small nation has the following statistics: its consumption expenditure is $15 million, investment is $2 million, government expenditure on goods and services is $1 million, exports of goods and services to foreigners is $1 million, and imports of goods and services from foreigners is $1.5 million. Calculate this nation's GDP
Answer:
GDP= $17,500,000
Explanation:
Giving the following information:
(C) Consumption expenditure is $15 million
(I) Investment is $2 million
(G) Government expenditure on goods and services is $1 million
(X) Exports of goods and services to foreigners is $1 million
(N) Imports of goods and services from foreigners is $1.5 million
To calculate the GDP, we need to use the following formula:
GDP= C + I + G + (X - N)
GDP= 15 + 2 + 1 + 1 - 1.5
GDP= $17,500,000
The Sheridan Acres Inn is trying to determine its break-even point during its off-peak season. The inn has 50 rooms that it rents at $36 a night. Operating costs are as follows:
Salaries $4,000 per month
Utilities $1,500 per month
Depreciation $1,300 per month
Maintenance $832 per month
Maid service $6 per room
Other costs $12 per room
Required:
a. Determine the inn's break-even point in number of rented rooms per month.
b. Determine the inn's break-even point in dollars.
Answer:
Results are below.
Explanation:
First, we need to calculate the unitary variable cost and the fixed costs:
Unitary variable cost= 6 + 12= $18
Total fixed costs= 4,000 + 1,500 + 1,300 + 832
Total fixed costs= $7,632
Now, to calculate the break-even point both in units and dollars, we need to use the following formulas:
Break-even point in units= fixed costs/ contribution margin per unit
Break-even point in units= 7,632 / (36 - 18)
Break-even point in units= 424 per month
Break-even point (dollars)= fixed costs/ contribution margin ratio
Break-even point (dollars)= 7,632 / (18/36)
Break-even point (dollars)= $15,264
Jaffa Company prepared its annual financial statements dated December 31 of the current year. The company applies the FIFO inventory costing method; however, the company neglected to apply lower of cost or net realizable value to the ending inventory. The preliminary current year income statement follows:
Sales revenue $294,000
Cost of goods sold
Beginning inventory $34,400
Purchases 198,000
Goods available for sale 232,400
Ending inventory (FIFO cost) 63,364
Cost of goods sold 169,036
Gross profit 124,964
Operating expenses 63,400
Pretax income 61,564
Income tax expense (40%) 24,626
Net income $36,938
Required:
Prepare the income statement to reflect lower of cost or net realizable value valuation of the current year ending inventory.
Complete Question:
The ending inventory includes 15,841 units purchased at $4 each. The current market price is $3.00
Answer:
Jaffa Company
Income Statement, reflecting the lower of cost or net realizable value:
Sales revenue $294,000
Cost of goods sold
Beginning inventory $34,400
Purchases 198,000
Goods available for sale 232,400
Ending inventory (FIFO cost) 47,523
Cost of goods sold 184,877
Gross profit 109,123
Operating expenses 63,400
Pretax income 45,723
Income tax expense (40%) 18,289
Net income $27,434
Explanation:
a) Data and Calculations:
Ending inventory at LCNRV = 15,841 * $3.00 = $47,523
Sales revenue $294,000
Cost of goods sold
Beginning inventory $34,400
Purchases 198,000
Goods available for sale 232,400
Ending inventory (FIFO cost) 63,364
Cost of goods sold 169,036
Gross profit 124,964
Operating expenses 63,400
Pretax income 61,564
Income tax expense (40%) 24,626
Net income $36,938
On average, your firm receives 65 checks a day from customers. These checks, on average, are worth $39.90 each and clear the bank in 1.5 days. In addition, your firm disburses 38 checks a day with an average amount of $89.50. These checks clear your bank in 2 days. What is the average amount of the collection float? $2,473.80 $3,401.00 $3,890.25 $5,101.50 $6,802.00
Answer:
$3,890.25
Explanation:
Calculation to determine the average amount of the collection float
Using this formula
Collection float =Average Checks received ×Average checks worth×Bank checks clearing numbers of days
Let plug in the formula
Collection float =65 x $39.90 x 1.5 days
Collection float = $3,890.25
Therefore the average amount of the collection float will be $3,890.25
Marigold Company sells one product. Presented below is information for January for Marigold Company.
Jan. 1 Inventory 104 units at $5 each
4 Sale 79 units at $8 each
11 Purchase 145 units at $6 each
13 Sale 115 units at $9 each
20 Purchase 162 units at $6 each
27 Sale 107 units at $10 each
Marigold uses the FIFO cost flow assumption. All purchases and sales are on account.
Assume Marigold uses a periodic system. Prepare all necessary journal entries, including the end-of-month closing entry to record cost of goods sold. A physical count indicates that the ending inventory for January is 110 units. (If no entry is required, select "No entry" for the account titles and enter for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually)
Answer:
Jan 4
Dr Accounts Receivable 632
Cr Sales Revenue 632
Jan 11
Dr Purchases 870
Cr Accounts payable 870
Jan 13
Dr Accounts Receivable 1,035
Cr Sales Revenue 1,035
Jan 20
Dr Purchases 972
Cr Accounts payable 972
Jan 27
Dr Accounts receivable 1,070
Cr Sales Revenue 1,070
Jan. 31
Dr Inventory $660
Dr Cost of Goods Sold $1,702
Cr Purchases $1,842
Cr Inventory $520
Explanation:
Preparation of all the necessary journal entries, including the end-of-month closing entry to record cost of goods sold.
Jan 4
Dr Accounts Receivable 632
Cr Sales Revenue(79*8) 632
(to record Cost of Goods Sold)
Jan 11
Dr Purchases (145*6) 870
Cr Accounts payable 870
( to record the purchase)
Jan 13
Dr Accounts Receivable 1,035
Cr Sales Revenue(115*9) 1,035
(to record the cost of Goods Sold)
Jan 20
Dr Purchases(162*6) 972
Cr Accounts payable 972
( to record the purchase)
Jan 27
Dr Accounts receivable 1,070
Cr Sales Revenue(107*10) 1,070
( to record the cost of Goods Sold)
Preparation of the journal entry assuming the physical count indicates that the ending inventory for January is 110 units
Jan. 31
Dr Inventory $660
($6* 110)
Dr Cost of Goods Sold $1,702
($520+$1,842-$660)
Cr Purchases $1,842
($870 + $972)
Cr Inventory $520
(104* $5)
The purpose of preparing a direct materials budget is to ________. multiple choice 1 allocate the cost of raw materials to production departments estimate the manufacturing overhead estimate the quantity of raw materials to be purchased estimate the unit cost of direct materials to be purchased Knowledge Check 02 In a direct materials budget, the desired ending raw materials inventory for the year is equal to the ________. multiple choice 2 beginning balance of accounts payable desired ending raw materials inventory for the last period total merchandise purchased during the year value of raw material used during the year
Answer:
1. estimate the quantity of raw materials to be purchased.
2. ending raw materials inventory for the last period.
Explanation:
A budget is a financial plan used for the estimation of revenue and expenditures of an individual, organization or government for a specified period of time, often one year. Budgets are usually compiled, analyzed and re-evaluated on periodic basis.
The first step of the budgeting process is to prepare a list of each type of income and expense that will be part of the budget.
The final step by the management of an organization in the financial decision making process is making necessary adjustments to the budget.
The benefits of having a budget is that it aids in setting goals, earmarking revenues and resources, measuring outcomes and planning against contingencies.
1. The purpose of preparing a direct materials budget is to estimate the quantity of raw materials to be purchased. This includes the raw materials that would be used for the manufacturing of finished goods.
2. In a direct materials budget, the desired ending raw materials inventory for the year is equal to the ending raw materials inventory for the last period.
Chuck Wagon Grills, Inc., makes a single productâa handmade specialty barbecue grill that it sells for $210. Data for last yearâs operations follow:
Units in beginning inventory 0
Units produced 20,000
Units sold 19,000
Units in ending inventory 1,000
Variable costs per unit:
Direct materials $ 50
Direct labor 80
Variable manufacturing overhead 20
Variable selling and administrative 10
Total variable cost per unit $ 160
Fixed costs:
Fixed manufacturing overhead $ 700,000
Fixed selling and administrative 285,000
Total fixed costs $ 985,000
Required:
1. Assume that the company uses absorption costing. Compute the unit product cost for one barbecue grill.
2. Assume that the company uses absorption costing. Prepare an income statement.
1. The computation of the unit product cost for one barbecue grill for Chuk Wagon Grills, Inc., using absorption costing, is $185.
2. The preparation of the income statement for Chuk Wagon Grills, Inc., using absorption costing, is as follows:
Chuk Wagon Grills, Inc.
Income StatementFor the year ended December 31,
Sales revenue $3,990,000
Cost of goods sold 3,515,000
Gross profit $475,000
Selling and Admin. Costs:
Variable 190,000
Fixed 285,000 $475,000
Net income $0
What is absorption costing?The absorption costing method captures the total cost of production, including direct and indirect costs.
The costs of selling and administration, whether variable or fixed, are treated as period costs and not assigned to products.
Data and Calculations:Selling price per unit = $210
Total sales revenue = $3,990,000 ($210 x 19,000)
Beginning inventory = 0 units
Units produced = 20,000
Units sold = 19,000
Ending inventory = 1,000
Variable costs per unit:Direct materials $ 50
Direct labor 80
Variable manufacturing overhead 20
Variable selling and administrative 10
Total variable cost per unit $ 160
Fixed costs:Fixed manufacturing overhead $ 700,000
Fixed selling and administrative 285,000
Total fixed costs $ 985,000
Absorption Costing:Direct materials $ 50
Direct labor 80
Variable manufacturing overhead 20
Total variable production cost per unit = $150
Total variable production cost = $3,000,000 ($150 x 20,000)
Fixed manufacturing overhead $ 700,000
Total manufacturing costs = $3,700,000 ($3,000,000 + $700,000)
Unit product cost = $185 ($3,700,000/20,000)
Cost of goods sold = $3,515,000 ($185 x 19,000)
Cost of ending inventory = $185,000 ($185 x 1,000)
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Actual sales revenue in dollars is 3.5% higher than budgeted, actual sales price is 10% lower than budgeted, actual sales volume in units is 15% higher than budgeted, actual input prices are 5% lower than budgeted, and actual input quantities per unit are 5% lower than budgeted. Characterize input price and input efficiency variances as favorable (F) or unfavorable (U):
Answer:
Input price and input efficiency variances are:
Favorable.
Explanation:
The input price is the cost of production. When the actual cost of production (input price) is 5% lower than budgeted, it is a favorable outcome. Similarly, when the input efficiency (that is the quantity of input) is 5% lower than budgeted, it shows a favorable outcome. Therefore, the variances of these input elements (price and efficiency) are all together favorable.
Which of the following scenarios are macroeconomic in nature? Select all that apply. Group of answer choices A firm is trying to decide whether it should expand into another state. Microsoft is considering buying another firm to help it expand its social media presence. The GDP of France has fallen to an inflation adjusted low. The U.S. unemployment rate falls to 8.5% in December. The central bank of the United States increased interest rates by 0.5%. A town passes a law to make it illegal for homeowners to burn leaves.
Answer:
The GDP of France has fallen to an inflation adjusted low.
The U.S. unemployment rate falls to 8.5% in December.
The central bank of the United States increased interest rates by 0.5%.
Explanation:
Economics encompasses how people use scarce resources.
Macroeconomics is commonly defined as the act of distributing or allocating the resources of an entire economy to achieve an aggregate economic goals. participants. The three scenarios above aim to achieve economic goals. The study of how groups of individuals choose to allocate the scarce resources available to them is very important in an economy.
We are evaluating a project that costs $660,000, has a five-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 69,000 units per year. Price per unit is $58, variable cost per unit is $38, and fixed costs are $660,000 per year. The tax rate is 35 percent, and we require a return of 12 percent on this project. a. Calculate the accounting break-even poin
Answer:
39600
Explanation:
Breakeven quantity are the number of units produced and sold at which net income is zero
Breakeven quantity = fixed cost / price – variable cost per unit
Fixed cost = cost of machine + depreciation expense
Straight line depreciation expense = (Cost of asset - Salvage value) / useful life
$660,000 / 5 = $132,000
total fixed cost $660,000 + $132,000 = $792,000
$792,000 / ($58 - $38) = 39,600
Methods analysis is particularly valuable when it is used on jobs that: (I) are high in labor content. (II) are done frequently. (III) involve a high degree of automation and mechanization. (IV) are unsafe, tiring, unpleasant, and/or noisy. A. I, II, III, and IV B. I, II, and IV only C. II and III only D. II and IV only E. I and III only
Answer:
B. I, II, and IV only
Explanation:
Job specialization can be defined as a strategic process which typically involves the ability of employees working in an organization to develop specific skills, knowledge, great expertise or professionalism and experience to perform their duties, tasks or job functions effectively and efficiently.
In order to gain the requisite skills, expertise and knowledge for job specialization, it is very important for the employees to have undergone an extensive training and a good number of years in work experience.
The primary purpose of job specialization is to increase efficiency and productivity because the employees are able to specialize in the use of specific tools (equipments) to accomplish their tasks, as well as limit the level of error or mistakes in the production process.
In Business management, method analysis can be defined as the study of the detailed process for the performance of a job i.e how a job is done. Thus, method analysis gives a detailed report on the tasks involved in the performance of a job and how they are to be done.
Basically, methods analysis is particularly valuable when it is used on jobs that:
1. Are high in labor content.
2. Are done frequently.
3. Are unsafe, tiring, unpleasant, and/or noisy.
The price index was 150 in the first year, 142.5 in the second year, and 138.2 in the third year. The economy experienced:________
a. 5.0 percent deflation between the first and second years, and 3.0 percent deflation between the second and third years.
b. 7.5 percent deflation between the first and second years, and 4.3 percent deflation between the second and third years.
c. 5.3 percent inflation between the first and second years, and 4.1 percent inflation between the second and third years.
d. 7.5 percent inflation between the first and second years, and 4.3 percent inflation between the second and third years.
Answer:
The correct answer is:
5.0 percent deflation between the first and second years, and 3.0 percent deflation between the second and third years. (a)
Explanation:
to calculate the percentage deflation, we will simply calculate the percentage change in price between the years stated. This is calculated as follows:
% change = [tex]\%\ change = \frac{P_2 - P_1}{P_1} \times 100\\where:\\P_1 = initial\ price\ index\\P_2 = New\ price\ index\\for\ first\ and\ second\ years\\\therefore \%\ change = \frac{142.5 - 150}{150} = \frac{-7.5}{150}= -0.05 \times 100 = -5\%\\[/tex]
Note that the negative sign shows a deflation.
if you use the same method for years two and three, you should get -3%, using P₁ as 142.5 and p₂ as 138.2. Hence option 'a' is correct.
Exercise 5-10 (Algo) Multiproduct Break-Even Analysis [LO5-9] Lucido Products markets two computer games: Claimjumper and Makeover. A contribution format income statement for a recent month for the two games appears below: Claimjumper Makeover Total Sales $ 112,000 $ 56,000 $ 168,000 Variable expenses 41,320 9,080 50,400 Contribution margin $ 70,680 $ 46,920 117,600 Fixed expenses 81,060 Net operating income $ 36,540 Required: 1. What is the overall contribution margin (CM) ratio for the company
Answer:
Contribution margin ratio= 0.7
Explanation:
Giving the following information:
Total
Sales $168,000
Variable expenses 50,400
To calculate the contribution margin ratio, we need to use the following formula:
Contribution margin ratio= (sales - total variable cost) / sales
Contribution margin ratio= (168,000 - 50,400) / 168,000
Contribution margin ratio= 0.7
Suppose that the Federal Reserve decides to decrease the money supply with a $300 purchases of Treasury bills. Complete the tables that represent the financial position of the Federal Reserve and commercial banks after this open-market operation. Be sure to use a negative sign for reduced values.
Federal Reserves Assest Liabilities
Commercial Reserves Assets Liabilities
For the Federal Reserve, what are assets? What are liabilities?
a. Monetary base; Reserves
b. Monetary base; Treasury bills
c. Treasury bills; Reserves
d. Reserves; Treasury bill
e. Treasury bills; Monetary base
Answer:
1. Federal Reserves:
Assets : $300
The Fed purchased these T-bills so they will form part of the Fed's assets as they are now owned by the Fed.
Liabilities: $300
Liabilities of the Fed will increase by $300 because the banks will deposit the money they got from the purchase in the Fed.
Commercial Banks:
Treasury Bills: -$300
The Treasury bills will reduce by $300 to reflect that the Fed purchased $300 worth of T-bills from the banks.
Reserves: $300
Reserves will increase because the banks would have made money from selling the T-bills to the Fed.
2. e. Treasury bills; Monetary base
Treasury bills are assets to the Fed in this case because as explained, they own these T-bills now after purchasing them.
The monetary base however, is a liability because it represents commercial bank reserves held in the Fed. They owe the banks this money thereby making it a liability.
International trade theory attempts to explain why nations trade and to help predict the direction, composition, and volume of goods that will be traded A variety of different theories have been proposed over the past several centuries to help explain the existence of trade between nations and to help predict whether trade will occur, what products or services will be traded, the direction of this trade, and the volume of this trade. Understanding the differences between these theories helps managers and policy makers to understand whether and how to pursue trade opportunities internationally
Drag each of the general characteristics listed to the international trade theory that it is most associated with:
International Trade Theory
General Characteristics
Government stimulates trade by means of protectionism
Mercantilism Factors that can drive competitive advantage for one economy over another
Absolute Advantage Trade influenced by relative income levels
Comparative Advantage Trade materials that are abundant
Trade most efficiently produced goods
Differences in Resource Endowments
Overlapping Demand
Trade goods and services at a lower opportunity cost than others
Diamond Model of National Competitive Advantage
Answer:
International Trade Theory - General Characteristics:
1. Absolute Advantage Trade influenced by relative income levels
2. Comparative Advantage Trade materials that are abundant Trade most efficiently produced goods.
Explanation:
The international trade theory is a part of economics that deals oh aspects of international trade that include exports and imports. Was described by adam smith as welfare economics. As the countries having an absolute advantage and comparative advantages in the products they sold in the global markets. According to the Ricardian model the factors endowments were related to land, capital, and labor.A business must decide whether to open a new office in China. If it opens the
branch, it will increase its chances of selling a high volume of its products in
China. On the other hand, the business will have to spend a lot of money to
make the branch operational.
What would be an opportunity cost for the business if it chooses not to open
the new branch in China?
O A. The business would increase its marginal benefits on each
product it makes
O B. The business would lose the chance to make more money in
China.
O C. The business would have to open a new branch in a different
country
O D. The business would be able to use the money it saves on other
projects.
Coronado Industries had 309000 shares of common stock issued and outstanding at December 31, 2020. No common stock was issued during 2021. On January 1, 2021, Coronado issued 195000 shares of nonconvertible preferred stock. During 2021, Coronado declared and paid $92000 cash dividends on the common stock and $80000 on the preferred stock. Net income for the year ended December 31, 2021 was $621000. What should be Coronado's 2021 earnings per common share
Answer: $1.75
Explanation:
Number of shares issued = 309000
Net income = $621,000
Cash dividend paid on preferred stock = $80000
Coronado's 2021 earnings per common share will then be:
= (Net income - Cash dividend) / Shares issued
= (621000 - 80000) / 309000
= 541000/309000
= $1.75
The basic economic problem is that consumers have too many products and services to choose from.
a. True
b. False
You just decided to begin saving for retirement. You will make deposits of $1,000 per month into a retirement account that earns 8.00% p.a. The first deposit is made today and the last deposit will be made when you retire exactly 30 years from today. (Note: you make 361 total monthly deposits into your retirement account.) You will begin to make withdrawals from the account the first month after you retire. If you plan to live an additional 25 years and leave $900,000 to your heirs, you will be able to withdraw $_____ each month. (Note: you make 300 total monthly withdrawals from your retirement account.)
Answer:
Monthly withdraw= $4,752.01
Explanation:
Giving the following information:
Monthly deposit= $1,000
Number of perios= 361 months
Interest rate= 0.08/12= 0.0067
First, we need to calculate the Future Value at the moment of retirement:
FV= {A*[(1+i)^n-1]}/i
A= monthly deposit
FV= {1,000*[(1.0067^361) - 1]} / 0.0067
FV= $1,513,584.37
Now, we can calculate the monthly withdraw:
PV= 1,513,584.37 - 900,000= $613,584.27
Monthly withdraw= (FV*i) / [1 - (1+i)^(-n)]
Monthly withdraw= (613,584.37*0.0067) / [1 - (1.0067^-300)]
Monthly withdraw= $4,752.01
Bramble Corporation is a small wholesaler of gourmet food products. Data regarding the store's operations follow:
Sales are budgeted at $280,000 for November, $260,000 for December, and $250,000 for January.
Collections are expected to be 45% in the month of sale and 55% in the month following the sale.
The cost of goods sold is 80% of sales.
The company would like to maintain ending merchandise inventories equal to 70% of the next month's cost of goods sold. Payment for merchandise is made in the month following the purchase.
Other monthly expenses to be paid in cash are $23,400.
Monthly depreciation is $14,400.
Ignore taxes.
Balance Sheet
October 31
Assets
Cash $ 21,800
Accounts receivable 71,800
Merchandise inventory 156,800
Property, plant and equipment, net of $573,800 accumulated depreciation 1,095,800
Total assets $ 1,346,200
Liabilities and Stockholders' Equity
Accounts payable $ 255,800
Common stock 821,800
Retained earnings 268,600
Total liabilities and stockholders' equity $ 1,346,200
The cost of December merchandise purchases would be:
Answer:
$202,400
Explanation:
Calculation for what The cost of December merchandise purchases would be:
December merchandise purchases:
November December January
Sales $280,000 $260,000 $250,000
Cost of goods sold (80% of sales)
$224,000 $208,000 $200,000
(80%*$280,000=$224,000)
(80%*$260,000=$208,000)
(80%*$250,000=$200,000)
Add desired ending merchandise inventory(70% of next month's COGS) $145,600 $140,000
(70%*$208,000=$145,600)
(70%*$200,000=$140,000)
Total needs $369,600 $348,000
($224,000+$145,600=$359,600)
($208,000+$140,000=$348,000)
Less beginning merchandise inventory(70% of this month's COGS)
$156,800 $145,600
(70%*$224,000=$156,800)
(70%*$208,000=$145,600)
Required purchases$212,800 $202,400
($369,600-$156,800=$212,800)
($348,000-$145,600=$202,400)
Therefore The cost of December merchandise purchases would be:$202,400
An investment has the following characteristics: ATIRRP: After-tax IRR on total investment in the property: 9.0% BTIRRE: Before-tax IRR on equity invested: 17% BTIRRP: Before-tax IRR on total investment in the property: 12% t: Marginal tax rate: 0.40 What would be the break-even interest rate (BEIR), at which the use of leverage is neither favorable nor unfavorable
Answer:
15%
Explanation:
Calculation to determine would be the break-even interest rate (BEIR)
Using this formula
Break-even interest rate (BEIR)= After tax IRR on total investment / (1- Tax rate)
Let plug in the formula
Break-even interest rate (BEIR)=9% / (1-0.40)
Break-even interest rate (BEIR)=9%/0.60
Break-even interest rate (BEIR)= 15%
Therefore would be the break-even interest rate (BEIR), at which the use of leverage is neither favorable nor unfavorable is 15%
All of the following lead people to be credit constrained except a person's credit history. savings. collateral. banking regulations. b. The most important consequence of credit constraints on individuals is difficulty in obtaining gainful employment. an ability to retire at an earlier age. lower interest rates on bank loans. an inability to smooth consumption.
Answer:
Banking regulations Lower interest rates on bank loans.Explanation:
Being credit constrained means that one is unable to borrow because the lenders do not think the individual is capable of paying back.
A person's credit history, savings level and collateral are all very useful in determining if they have the ability to pay back debt. Banking regulations do not directly lead to a credit constraint.
Lower interests on bank loans is only given to more creditworthy entities whom the bank feels will be able to pay back. A credit constrained person is risky and will therefore draw a higher rate from banks to balance that risk.
Credit constraints mean the inability of a person to borrow money from the market. the banking regulations and lower interest rates are the exceptions for persons credit-constrained.
What is credit constrained?It is the inability of a borrower to borrow more money from the lender because, in the opinion of the lender, the borrower does not have the creditworthiness that he/she would pay the debt in time.
The following are the exception to persons being credit-constrained :
The Banking regulationsBank loan with lower interest rate.Therefore, it can be said the above option aptly explains the exception that leads to persons being credit-constrained :
Learn more about credit-constrained here:
https://brainly.com/question/22366823
Which of the following statements are true regarding owners' equity and ownership rights held in noncorporate entities?
a. Owners' equity for proprietorships and partnerships is usually referred to as capital.
b. No distinction is made between invested capital and retained earnings for a proprietorship or a partnership.
c. Neither proprietorships or partnerships issue stock.
Answer: A. Owners' equity for proprietorships and partnerships is usually referred to as capital.
B. No distinction is made between invested capital and retained earnings for a proprietorship or a partnership.
C. Neither proprietorships or partnerships issue stock.
Explanation:
The statements that are true regarding owners' equity and ownership rights held in noncorporate entities include:
• No distinction is made between invested capital and retained earnings for a proprietorship or a partnership.
• Neither proprietorships or partnerships issue stock.
• Owners' equity for proprietorships and partnerships is usually referred to as capital.
We should note that sole proprietorships and partnership typically don't have stockholders and shouldn't issue stock as they aren't separated from their founders.
Also, the owners' equity for proprietorships and partnerships is usually referred to as capital. We should note that for a sole proprietorship or a partnership, the equity is the owners capital account which can be seen on the balance sheet.
Based on the above explanation, all the options given above are correct.
