Answer: A partnership is formed by two individuals who were previously sole proprietors. Property other than cash that is part of the initial investment in the partnership would be recorded for financial reporting purposes at the "E)Fair value of the property at the date of the investment".
Explanation: In the constitution of a company the assets contributed must be measured at their market value.
Creating an endowment Personal Finance Problem On completion of her introductory finance course, Marla Lee was so pleased with the amount of useful and interesting knowledge she gained that she convinced her parents, who were wealthy alumni of the university she was attending, to create an endowment. The endowment will provide for three students from low-income families to take the introductory finance course each year in perpetuity. The cost of taking the finance course this year is $300 per student (or $900 for 3 students), but that cost will grow by 2.2% per year forever. Marla's parents will create the endowment by making a single payment to the university today. The university expects to earn 6% per year on these funds. a. What will it cost 3 students to take the finance class next year? b. How much will Marla's parents have to give the university today to fund the endowment if it starts paying out cash flow next year? c. What amount would be needed to fund the endowment if the university could earn 8% rather than 6% per year on the funds?
Answer:
Course cost netxt year: 919.8
Perpetuity fund at 6% return: 24,205.27
Perpetuity funds at 8% return: 15,858.63
Explanation:
1 student 300
3 student 900
it grows at 2.2% per year
the return on the fund will be of 6%
The cost of the couse for next year will be:
900 x (1+2.2%) = 900 x 1.022 = 919.8
The perpetuity will be calculate as follow:
[tex]\frac{cost}{return-growth} = Perpetuity[/tex]
[tex]\frac{919.8}{0.06-0.022} = Perpetuity[/tex]
Perpetuity fund: 24205.26316
Ifthe return is for 8% per year:
[tex]\frac{919.8}{0.08-0.022} = Perpetuity[/tex]
Perpetuity funds: 15858.62069
The cost for 3 students to take the finance course next year would be $919.8. The initial endowment needed would be $22,995. An 8% fund's rate of return would decrease the necessary endowment to $15,996.55.
Explanation:The main concern of the problem shared involves evaluating a financial endowment created for the purpose of sponsoring students for a finance course. This falls under the field of Financial Mathematics, particularly focusing on the concept of perpetuities.
The cost for 3 students to take the finance class next year would require accounting for a 2.2% increase on the current cost of $900. This would come out to $900 * 1.022 = $919.8. To calculate the endowment amount needs to cover the perpetuity, Marla's parents would need to determine the present value of a growing perpetuity. The equation PV = D / (r - g) could be used, where D is the cost of the class next year, r is the return rate of 6%, and g is the growth rate of 2.2%. Using these values, the endowment needed would be $919.8 / (0.06 - 0.022) = $22,995. If the university could earn 8% rather than 6% per year on the funds, the calculation would change slightly. Utilizing the same growing perpetuity formula would get an endowment amount of $919.8 / (0.08 - 0.022) = $15,996.55. Learn more about Endowment Funding here:
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Nancy Kirkwood runs a small job shop where garments are made. The job shop employs 8 workers. Each worker is paid $10 per hour. During the first week of March, each worker worked 45 hours. Together, they produced a batch of 132 garments. Of these garments, 52 were "seconds" (meaning that they were flawed). The seconds were sold for $90 each at a factory outlet store. The remaining 80 garments were sold to retail outlets at a price of $198 per garment. What was the labor productivity, in dollars per labor-hour, at this job shop during the first week of March?
Answer:
productivity per labor hours: 55.55 dollars
Explanation:
productivity per hour:
total output/total hours
total output:
52 second quality garment x $80 each = 4,160
80 first quality garment x $198 each = 15,840
total output 4,160 + 15,840 = 20,000
hours worked:
8 workers at 45 hours each = 360 hours
Productivity: 20,000/360 = 55.55
each labor hour produced $55.55 dollar per labor hours
Jamie is considering leaving her current job, which pays $75,000 per year, to start a new company that develops applications for smart phones. Based on market research, she can sell about 50,000 units during the first year at a price of $4 per unit. With annual overhead costs and operating expenses amounting to $145,000, Jamie expects a profit margin of 20 percent. This margin is 5 percent larger than that of her largest competitor, Apps, Inc. a. If Jamie decides to embark on her new venture, what will her accounting costs be during the first year of operation
Answer:
The accounting costs during the first year of operation is $145,000
Explanation:
Accounting cost: It is that cost which represents expenditure for a particular year.
In this question, the accounting cost would be annual overhead costs and operating expenses. So, it would be $145,000
All other costs which are mentioned in the question are irrelevant. Thus, ignored the other things because they are used to compute the implicit and the opportunity cost
Determine which economic principle is illustrated by each scenario. The owner of a snow cone trailer realizes that the demand for snow cones is low during the winter, and thus, closes shop until the temperature warms back up near summertime. The local river has so much pollution that three-eyed fish are forming. The government responds by regulating the amount of chemicals that can be dumped into the river. At a high-end restaurant, the restaurant owner has one chef at a meat station, one chef at a vegetable station, and one chef, who has an artistic eye, plate the food she is given. The result is increased service speed, and the kitchen is able to serve more customers in an evening. During the summer, a bumper crop of oranges in Florida causes a surplus in the supply of oranges nationwide. As a result, prices fall to compensate for the surplus and consumers enjoy the fruits of the farmers' labor. Answer Bank
Answer:
The correct answer is: market efficiency; government intervention; specialization; equilibrium.
Explanation:
The owner of the snow cones realizes that the demand for snow cones has decreased in winter, and thus, closes shop to open back. This is an example of market efficiency.
The local river is being polluted too much because of the huge quantity of chemicals being dumped in the river. The government, as a result, enforces regulation on the quantity of chemicals being dumped. This is an example of government intervention in the economy.
At a restaurant one chef is placed at the vegetable station, one chef is at meat station, and one is to plate the food. This an example of specialization the management is placing chef that specializes in vegetable, meat and in plating at their respective positions. So they can work in the most efficient manner and the service speed increases.
The favorable weather leads to an increase in the supply of oranges. This causes a rightward shift in the supply curve. The price of oranges fall as a result. This is an example of change in equilibrium.
The described scenarios illustrate the law of demand, government regulation, division of labor, and the law of supply in various economic contexts, demonstrating the responsiveness of markets to changes and external factors.
Explanation:The scenarios provided illustrate different economic principles:
The snow cone trailer owner's decision to close shop during winter demonstrates the law of demand, where he recognizes that demand for snow cones decreases as the temperature drops.The government's intervention to regulate pollution showcases government regulation influencing market outcomes to protect public health and the environment.The high-end restaurant optimizing its staff's skills for efficiency represents the principle of division of labor, which increases productivity and service speed.The drop in orange prices due to a bumper crop exemplifies the law of supply, where an increase in supply, if not matched by an increase in demand, typically leads to lower prices.These scenarios underscore how markets operate under the laws of demand and supply, and how both producers and consumers respond to changes in market conditions, including seasonal variations and government policies.
Suppose you bought 700 shares of stock at an initial price of $43 per share. The stock paid a dividend of $0.40 per share during the following year, and the share price at the end of the year was $44. Compute your total dollar return on this investment.
Answer:
Total dollar return = $980
Explanation:
Data:
S = Shares of Stock = 700
P0 = Initial Price = $43
D = Dividends = $0.40
P1 = Price at the end of the year = $44
DR = Dollar Return = ?
Equation:
DR = S * (P1 - P0 + D)
Calculation:
DR = 700 * ($44 - $43 + $0.40)
DR = 700 * ($1.40)
DR = $980
The total dollar return on this investment is $980.
Hope this helps!
How should cumulative preferred dividends in arrears be shown in a corporation's statement of financial position?
a. Note disclosure
b. Increase in stockholders' equity
c. Increase in current liabilities
d. Increase in current liabilities for the amount expected to be declared within the year or
operating cycle, and increase in long-term liabilities for the balance
Answer: Option A
Explanation: The unpaid dividends on cumulative preferred stock are recorded on the notes of the financial statements. These dividends are generally omitted and are not declared by the organisation liable to pay them. Hence they are not recorded on the balance sheet and are shown as footnotes.
From the above we can conclude that the correct option is A.
The correct option is a. Note disclosure. Cumulative preferred dividends in arrears be shown in a corporation's statement of financial position as note disclosure.
Cumulative preferred dividends in arrears are not recorded as liabilities on the balance sheet since they are not actual liabilities until declared. Instead, they are disclosed in the notes to the financial statements to inform stakeholders about the potential obligation that may impact future dividend payments.
Why other options are incorrect:
b. Increase in stockholders equity
Cumulative preferred dividends in arrears do not affect stockholders' equity directly. They are not recognized as part of equity until declared, so they should not be added to the stockholders' equity section of the balance sheet.
c. Increase in current liabilities
These dividends are not considered current liabilities until they are declared. Until declared, they are not recognized as liabilities on the balance sheet. Therefore, they should not be included in current liabilities.
d. Increase in current liabilities for the amount expected to be declared within the year or operating cycle, and increase in long-term liabilities for the balance
This option is incorrect because cumulative preferred dividends in arrears are not recorded as liabilities at all until they are declared. They are only disclosed in the notes to the financial statements, rather than being categorized as current or long-term liabilities.
The 2013 annual report of Oracle Corporation included the following information relating to their allowance for doubtful accounts: Balance in allowance at the beginning of the year $323 million, accounts written off during the year of $145 million, balance in allowance at the end of the year $296 million. What did Oracle Corporation report as bad debt expense for the year?
(A) $27 million
(B) $178 million
(C) $118 million
(D) $151 million
(E) None of the above
Answer:
Oracle Corporation report as bad debt expense for the year: $118 million
Explanation:
allowance at the end of the year - allowance at the beginning of the year + accounts written off during the year = bad debt expense for the year
$296 million - $323 million + $145 million = $118 million
The accounts written off during the year increase the expense because they are uncollectible so there were removed from a receivable account in the general ledger. The way to do so is:
A credit to Accounts Receivable, and a debit to Allowance for Doubtful Accounts
Show a detailed journalizing of the following transactions:
Galle Inc. entered into the following transactions during January;
Jan 1- Borrowed $250,000 from First Street Bank by signing a note payable.
Jan 4 - Purchased $25,000 of equipment for cash.
Jan 6 - Paid $2,250 to landlord for rent for January.
Jan 15 - Performed services for customers on account, $10,000.
Jan 25 - Collected $3,000 from customers for services performed in Transaction d.
Jan 30 - Paid salaries of $2,500 for the current month.
Answer:
cash (+assets) 250,000 debit
Note Payable (+Liabilities) 250,000 credit
equipment (+Assets) 25,000 debit
Cash (-Assets) 25,000 credit
Rent expense (-Equity) 2,250 debit
Cash (-Assets) 2,250 credit
Account Receivable (+Assets) 10,000 debit
Service Revenue (+Equity) 10,000 credit
Cash (+ Assets) 3,000 debit
Account Receivable (-Assets) 3,000 credit
Salaries expense (-Equity) 2,500 debit
Cash (-Assets) 2,500 credit
Explanation:
We will post after each account, which component of the accounting equation modifies.
Also, we must remember than journal entries should have debit = credit
If you deposit $1,000 into a savings account that pays you 5% interest per year, approximately how long will it take to double your money?If you deposit $1,000 into a savings account that pays you 5% interest per year, approximately how long will it take to double your money?"
Answer:
It will take 14 years.
Explanation:
Imagine you are Julie at year cero about to purchase eleven acres of land. The seller tells you that in X amount of years it will value $34686 because it increases 5% each year. He also tells you that according to the Present Value formula, the eleven acres are worth today $15890.
The formula is:
PV=Ct/[(1+r)^n]
Ct= cash flow at t time
r= rate
n= period of time
To calculate how many years it will be worth $34686 you need to isolate n from the PV formula
n=[ln(Ct/PV)]/ln(1+r)
n=ln(34686/15890)/ln(1+0,05)
n=16
Giving the following information, we need to calculate how many years will take to the investment to duplicate:
I= $1000
I=5%
To calculate we are going to use the Present value formula:
PV=Ct/[(1+r)^n]
Ct= cash flow at t time
r= rate
n= period of time
To calculate how many years it will take to duplicate we need to isolate n from the PV formula
n=[ln(Ct/PV)]/ln(1+r)
n=ln(2000/1000)/ln(1+0,05)
n=14
Considering the world economic outlook for the coming year and estimates of sales and earning for the pharmaceutical industry, you expect the rate of return for Lauren Labs common stock to range between -20 percent and +40 percent with the following probabilities:Probability Possible Returns.10 -.20.15 -.05.20 .10.25 .15.20 .20.10 .40Compute the expected rate of return E(Ri) for Lauren Labs.
Answer:
The expected rate of return E(Ri) for Lauren Labs is 16.5%
Explanation:
The formula to compute the expected rate of return is shown below:
Expected rate of return = (Probability 1 × Possible Returns 1) + (Probability 2 × Possible Returns 2) + (Probability 3 × Possible Returns 3) + (Probability 4 × Possible Returns 4) + (Probability 5 × Possible Returns 5) + (Probability 6 × Possible Returns 6)
= (0.10 × 0.20) + (0.15 × 0.05) + (0.20 × 0.10) + (0.25 × 0.15) + (0.20 × 0.20) + (0.10 × 0.40)
= 2% + 0.75% + 2% + 3.75% + 4% + 4%
= 16.5%
Final answer:
The expected rate of return for Lauren Labs common stock is calculated by multiplying each possible return by its probability and summing the results, giving an expected rate of return of 11%.
Explanation:
To compute the expected rate of return E(Ri) for Lauren Labs, we multiply each possible return by its corresponding probability and sum up these products. The calculation is as follows:
(0.10 × -0.20) = -0.02
(0.15 × -0.05) = -0.0075
(0.20 × 0.10) = 0.02
(0.25 × 0.15) = 0.0375
(0.20 × 0.20) = 0.04
(0.10 × 0.40) = 0.04
Adding up these products, we get the expected rate of return for Lauren Labs:
-0.02 - 0.0075 + 0.02 + 0.0375 + 0.04 + 0.04 = 0.110 or 11%
Therefore, based on the provided probabilities and returns, the expected rate of return for Lauren Labs common stock is 11%.
How would external reporting of GAAP-based financial statements differ for a nonprofit hospital compared to a for-profit hospital?
Answer and Explanation:
The external reporting of GAAP-based budget summaries for a non-benefit hospital will vary to a profit hospital in the accompanying ways:
For profit's hospital money related reports starts heading as "letter" from the entrepreneur or the CEO. The focal point of this letter is on the earlier year tending to any trouble the organization has survived. Though, non-benefit yearly reports report out the association's motivation and measurements about what number of individuals have profited by the examination, projects and administrations.The yearly report of revenue driven associations regularly delineates how well they deal with their cash, to dazzle the potential speculators. Though, non-benefit associations simply center around how they go out dealing with the things will pretty much nothing or less assets close by, and the financing they put into their projects and administrations to help improve the network and offer help for those out of luck.For profit associations wind up revealing their future field-tested strategies, for example, new item or administration propelling, which would make higher income and benefits for the organization in future. Not-for-profit associations, will some way or another state what administrations or projects have been the best and how they plan on building up these to serve more individuals on a bigger scale.Final answer:
Nonprofit hospitals report financial activities with an emphasis on their mission and may include complex revenue recognition, whereas for-profit hospitals focus on profitability with a clear link between costs and revenues. The Notes to the Financial Statements are critical for understanding the financial policies and assumptions of both types of hospitals. Long-term liabilities and operational efficiency reporting may also differ due to the distinct goals of nonprofit vs. for-profit hospitals.
Explanation:
The external reporting of GAAP-based financial statements for nonprofit hospitals vs. for-profit hospitals differs primarily due to the underlying purpose of each entity and the way activities are reported. Nonprofit hospitals, which focus on advancing their mission rather than generating profit, report their activities and financial performance in a manner that emphasizes the revenue and expenses linked to their charitable operations. This might include detailing expenses for community health programs with a not-so-clear link between expenses and the revenues like grants or donations. In contrast, for-profit hospitals report financial performance with a focus on profitability, including a clear cost-revenue structure in their income statement, also known as the profit/loss statement.
For nonprofit hospitals, revenue recognition and the matching of expenses can be complex, especially when dealing with non-cash contributions or governmental grants. The Notes to the Financial Statements play a critical role in both types of hospitals, outlining key accounting assumptions and financial policies.
Which of the following is true about foreign direct investment (FDI)?
(A) It is less risky than franchising
(B) It is only done by public companies
(C) It is different than a Greenfield venture
(D) It involves ownership of foreign assets
Answer:
D.
Explanation:
Let's analize what is FDI. And why D is the correct answer.
Foreign direct investment (FDI) is is an investment in the form of a controlling ownership in a business in one country by an entity based in another country. So it involves ownership of foreign assets.
Now why A B and C are false.
C. Greenfield venture is a form of FDI.
B. No, it can be done by private companies. Is the most common actually.
A. The risk depends on the market, and other factors, but it can be generalized as less risky.
Foreign Direct Investment (FDI) involves ownership of foreign assets.
Explanation:Foreign Direct Investment (FDI) is a type of international business activity where a company from one country directly invests in another country.
The correct option about FDI is: (D) It involves ownership of foreign assets.
FDI can take various forms such as mergers and acquisitions, joint ventures, and establishing wholly-owned subsidiaries. In contrast to franchising, FDI provides more control and ownership over the foreign assets, making it a riskier venture. Additionally, FDI is not limited to public companies; private companies can also engage in FDI.
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On January 1, 2016, Jacob Inc. purchased a commercial truck for $48,000 and uses the straight-line depreciation method. The truck has a useful life of eight years and an estimated residual value of $8,000. On December 31, 2017, Jacob Inc. sold the truck for $43,000. What amount of gain or loss should Jacob Inc. record on December 31, 2017?
A. Gain, $22,000.
B. Gain, $5,000.
C. Loss, $3,000.
D. Loss, $18,000.
Answer:
The correct answer is B: gain $5000
Explanation:
Giving the following information:
On January 1, 2016, = commercial truck for $48,000.
straight-line depreciation method.
useful life of eight years.
residual value of $8,000.
On December 31, 2017, Jacob Inc. sold the truck for $43,000.
Depreciation expense per year= (Purchase value - residual value)/8
Depreciation expense per year= (48000-8000)/8=5000
Accumulated depreciation year 2= 5000*2= 10000
To calculate the gain or loss we need to use the following formula:
Gain/loss= price value - book value
Gain/loss= price value - (purchase price - accumulated depreciation)
Gain/loss= 43000 - (48000- 10000)= 5000 gain
Winston Watch's stock price is $70 per share. Winston has $10 billion in total assets. Its balance sheet shows $1 billion in current liabilities, $3 billion in long-term debt, and $6 billion in common equity. It has 400 million shares of common stock outstanding. What is Winston's market/book ratio? Do not round intermediate calculations. Round your answer to two decimal places.
Answer:
The Market/book ratio is 5.67.
Explanation:
Book value per share = (common equity)/(number of shares)
= ($ 6 billion)/($ 400million )
= $ 15 per share
Market/book ratio = (market price per share)/(book value per share
= $75/$15
= 5.00
Therefore, the Market/book ratio is 5.67.
Despite some problems with equating GDP with economic well-being, real GDP per person does imply greater economic well-being because it tends to be positively associated with:
A. crime, pollution, and economic inequality. B. better education, health and life expectancy.
C. poverty, depletion of nonrenewable resources, and congestion. D. unemployment, availability of goods and services, and better education.
Answer:
B
Explanation:
A positive relationship between two variables or quantities happens when both increase if one increases or both decrease if one decreases. In this case, the problem states that real GDP per person is positively associated with well-being, which means that if GDP increases then well-being increases too. For instance, we should look for variables that if they increase then the well-being increases too. It is not option A,C or D because if there is an increase in crime, poverty or unemployment, people´s well-being will decrease, so those variables are negatively associated with GDP. The answer is B because if there is better education, health and life expectancy, people´s well-being increases.
[5] According to the FASB’s conceptual framework, which of the following best describes the distinction between expenses and losses? A. Losses are reported net of related tax effect, and expenses are not. B. Losses are decreases in net assets, and expenses are not. C. Losses are material, and expenses are immaterial. D. Losses result from peripheral or incidental transactions, and expenses result from ongoing major or central operations of the entity
Answer:
D. Losses result from peripheral or incidental transactions, and expenses result from ongoing major or central operations of the entity
Explanation:
The expenses represent the cash outlow or liabilities taken to carry out the activities to continue his operations.
While the Gains and Losses are incidental transactions or other events which are not controlled by the entity management. They aren't the outcome of the company's decisions. Thus, they could arise from changes in price of real state, equipment, tecnology breakthrough which means equipment obsolete and so on.
Bramble Corp. just began business and made the following four inventory purchases in June:
June 1 140 units $938
June 10 190 units 1292
June 15 190 units 1349
June 28 140 units 1050
$4629
A physical count of merchandise inventory on June 30 reveals that there are 200 units on hand. Using the LIFO inventory method, the value of the ending inventory (rounded to whole dollar) on June 30 is
Answer:
the value of the ending inventory (rounded to whole dollar) on June 30 is 1400
Explanation:
Month Units Cost Unit Cost Inven. Inven. Cost
jun-01 140 938 7 140 980
jun-10 190 1292 7 60 420
jun-15 190 1349 7 0 0
jun-28 140 1050 8 0 0
200 1400
Which of the following is true of corporations that operate in several different countries? a. Uniformity of tax-laws across different nations result in proper coordination and control of subsidiaries. b. Cash flows in various parts of a multinational corporate system are denominated in one currency. c. A nation may expropriate the assets of multinational corporations without compensation. d. Differences in legal systems of host nations make it easy for executives trained in one country to operate effectively in another. e. Multinational corporations have the advantage of uniform attitudes toward risk taking from one country to the next.
Cash flows in various parts of a multinational corporate system are denominated in one currency.
Explanation:Corporations that operate in several different countries, also known as multinational corporations (MNCs), have certain characteristics.
Out of the given options, the most accurate characteristic of MNCs is b. Cash flows in various parts of a multinational corporate system are denominated in one currency.
This means that the financial transactions within the MNC, such as revenues, expenses, and investments, are conducted using a single currency, which helps in simplifying the financial management of the organization.
Final answer:
The statement that 'A nation may expropriate the assets of multinational corporations without compensation' is the most accurate regarding multinational corporations, which face non-uniform tax laws, operate in multiple currencies, and are subject to diverse legal systems and cultural attitudes.
Explanation:
Among the statements provided, the one that most accurately reflects a reality of multinational corporations (MNCs) is option c, 'A nation may expropriate the assets of multinational corporations without compensation.'
While MNCs do operate across multiple countries and are subject to respective local regulations, tax laws are not uniform across nations, which may lead to complexities and potential for tax optimization by shifting profits to lower-tax jurisdictions. As observed in cases like Netflix International using Luxembourg's favorable tax laws, multinational corporations can leverage different tax regimes to their advantage. However, concerns around such practices have led to scrutiny, and there is a movement towards changing these rules in response to public pressure.
Additionally, cash flows within a multinational corporate system are not denominated in a single currency, but rather in many different currencies. This results in the need for managing exchange rate risks and currency conversions. Lastly, the differences in legal systems across various host nations do not necessarily make it easy for executives to operate effectively abroad, and attitudes toward risk-taking are not necessarily uniform from one country to the next, as cultures and business environments can differ significantly.
In Macroland, currency held by the public is 2,000 econs, bank reserves are 300 econs, and the desired reserve/deposit ratio is 15 percent. If commercial banks borrow 100 econs in reserves from the Central Bank through discount window lending, then the money supply in Macroland will _____ to _____ econs, assuming that the public does not wish to change the amount of currency it holds.
A. increase; 3,133
B. increase; 4,100 C. increase; 4,667 D. increase; 2,667
Answer: Option (C) is correct.
Explanation:
Given that,
Currency held by the public = 2,000 econs
Bank reserves = 300 econs
Desired reserve/deposit ratio = 15 percent
If Commercial banks borrow 100 econs in reserves from the Central Bank.
[tex]\frac{Reserves}{Deposits}[/tex] = 0.15
[tex]\frac{300}{Deposits}[/tex] = 0.15
Deposits = [tex]\frac{300}{0.15}[/tex]
= 2000
Money supply = Currency held by the public + Deposits
= 2,000 + 2,000
= 4,000
Money multiplier = [tex]\frac{1}{rr}[/tex]
= [tex]\frac{1}{0.15}[/tex]
= 6.67
Increase in money supply = Borrowing amount × Money multiplier
= 100 x 6.67
= 667
Hence, money supply increases from 4,000 econs to 4,667 econs.
Final answer:
With the addition of 100 econs in reserves borrowed from the Central Bank and a reserve/deposit ratio of 15%, the money supply in Macroland will increase by 667 econs, resulting in a total money supply of 2,967 econs.
Explanation:
When the Central Bank of Macroland lends 100 econs to commercial banks through the discount window, the increase in reserves is used by banks to create more loans and thereby increase the money supply. With a desired reserve/deposit ratio of 15%, also known as the required reserve ratio, each econ of additional reserves can support 1/0.15 econs of new deposits. Therefore, the money multiplier is 1 / 0.15 = 6.67. When banks receive an additional 100 econs in reserves, they can potentially increase the money supply by 100 econs * 6.67 = 667 econs.
Since the initial currency held by the public remains unchanged (2,000 econs), and the initial reserve amount was 300 econs (before borrowing), the total initial money supply was 2,300 econs (currency held by the public + bank reserves). After the 100 econs are borrowed by the banks, and banks utilize their full lending capacity, the money supply will be the initial money supply plus the additional money created through lending: 2,300 + 667 = 2,967 econs. Therefore, the money supply in Macroland will increase to 2,967 econs.
Montego Company’s Cash account had a balance of $14,000 on January 1. Analysis of the company’s Cash account during the year revealed the following information: Receipts from customers $ 50,000 Payments for dividends 10,000 Receipts of dividends 5,000 Payments for merchandise 25,000 Receipts from issuance of stock 20,000 On December 31, the company’s Cash account had a balance of ____.
Answer:
ending cash balance 54,000
Explanation:
receipts from customer 50,000
payment for merchandise (25,000)
generated from operating activities 25,000
receipts of dividends 5,000
generated from investing activities 5,000
issuance of stock 20,000
payment for dividends (10,000)
generated from financing activities 10,000
cash generated for the cash 40,000
beginning cash balance 14, 000
ending cash balance 54,000
Answer:
$54,000
Explanation:
The computation of the ending cash balance is shown below:
= Beginning cash balance + cash receipts - cash payments
where,
Beginning cash balance is $14,000
Cash receipts would be
= Receipts from customers + Receipts of dividends + Receipts from issuance of stock
= $50,000 + $5,000 + $20,000
= $75,000
And, the cash payment is
= Payments for dividends + Payments for merchandise
= $10,000 + $25,000
= $35,000
So, the ending cash balance would be
= $14,000 + $75,000 - $35,000
= $54,000
Your company is contemplating bidding on an RFP (Request For Proposal) to produce 100,000 units of a specialized part. Suppose, however, that the requesting company really needs only 90,000 units of the part. Also assume that, because the part is specialized, potential suppliers do not yet possess the machines and factories needed to produce it and that overhead expenses involved in production have yet to be incurred. Suppose the average costs of all potential suppliers are as follows: Units Average Total Cost (Dollars Per Unit) 90,000 4 100,000 3 True or False: The requesting company can solicit lower bids by requesting 100,000 units as opposed to 90,000. True False
Answer: True
Explanation:
Average costs of all potential suppliers:
Units = 90,000 at average total cost = $4 per unit
So,
Total cost = No. of units × Average total cost per unit
= 90,000 × $4
= $360,000
Units = 100,000 at average total cost = $3 per unit
So,
Total cost = No. of units × Average total cost per unit
= 100,000 × $3
= $300,000
Hence, the company will save 60,000 dollar if it orders 100,000 units.
Answer:
True
Explanation:
The computation is shown below:
At 90,000 units
The total cost is
= 90,000 units × $4
= 360,000 units
At 100,000 units
The total cost is
= 100,000 units × $3
= $300,000
So as we can see that there is a difference of $60,000 after deducting the total cost at 90,000 units from total cost at 100,000 units
Therefore, in 100,000 units the company could save $60,000
Hence, the given statement is true
If a factory produces 100 TV sets per year, each TV will be quite expensive to make. However, if a factory produces 20,000 TV sets each year, then it can set up an assembly line with huge machines and workers performing specialized tasks, and the average cost of production per TV will be lower. What is this an example of?
(A) specialization
(B) division of labor
(C) productivity
(D) economies of scale
Answer:
The correct answer is D: economies of scale
Explanation:
Economies of scale are the diminished cost by companies when production becomes efficient. Companies can achieve economies of scale by increasing production and lowering costs. This happens because fixed costs are spread over a larger number of goods. There are implications in variable costs as well (for example in obtaining discounts by large purchases from suppliers). In general, the larger the scale, the more cost savings.
The cost per unit depends on how much the company produces. Larger companies can produce more by spreading the cost of production over a larger amount of goods. Specialization of labor and more integrated technology boost production volumes. Lower per-unit costs can come from bulk orders from suppliers, larger advertising buys, or lower cost of capital. Spreading internal function (for ex: accounting, information technology, and marketing) costs across more units produced and sold helps to reduce costs.
Final answer:
The example described is of economies of scale, where increasing production leads to a lower average cost per unit. This occurs because of a more efficient production process and the spreading of fixed costs over a larger number of units. Hence, it is option D.
Explanation:
The concept described in the question is that of economies of scale. This is when the average cost of production per unit decreases as the level of production increases. For instance, producing 20,000 TV sets instead of just 100 allows a factory to invest in an assembly line, resulting in more automation and workers who can perform specialized tasks more efficiently. This specialized setup effectively reduces the average cost per TV set. Economies of scale happen because the fixed costs are spread over a larger number of units, and the factory can optimize production processes and use resources more effectively.
When considering other choices presented in the student's question, specialization and division of labor are closely related concepts and contribute to economies of scale. Specialization means workers focusing on a particular aspect of production, which enhances their expertise and efficiency. Division of labor is the breaking down of production into steps or tasks, where each worker or group performs a specific role. Together, these contribute to greater overall productivity, but the direct answer to what makes the average cost of production per TV set lower in larger amounts is economies of scale.
Blossom Company has the following inventory data:
Nov. 1 Inventory 35 units @ $7.10 each
8 Purchase 142 units @ $7.60 each
17 Purchase 71 units @ $7.45 each
25 Purchase 106 units @ $7.80 each
A physical count of merchandise inventory on November 30 reveals that there are 118 units on hand. Ending inventory (rounded) under FIFO is
Answer:
Ending inventory= $916.2
Explanation:
Giving the following information:
Nov. 1 Inventory: 35 units $7.10 each
Nov. 8 Purchase: 142 units $7.60 each
Nov. 17 Purchase: 71 units $7.45 each
Nov. 25 Purchase: 106 units $7.80 each
Nov. 30 ending inventory: 118 units on hand. FIFO (first-in, first-out)
Ending inventory= 106*7.8+12*7.45= $916.2
On June 1, 2018, Dirty Harry Co. borrowed cash by issuing a 6-month noninterest-bearing note with a maturity value of $480,000 and a discount rate of 9%. Assuming straight-line amortization of the discount, what is the carrying value of the note as of September 30, 2018? (Round all calculations to the nearest whole dollar amount.)
Answer:
Ans. the carrying value of the note as of September 30, 2018 is $404,006
Explanation:
Hi, the note was issued to mature in 6 months, and 4 months had passed, therefore there are still 2 months left for the note to mature, in other words, this works just as a non-coupon bond which you price in terms of its discount rate and the time remaining for this instrument to mature.
With that in mind, what we need to do is to find the time remaining for the bond to mature, so remember that it was issued on June,1 2018, and in order to facilitate our calculations, we say: "From June 1 to June 30, there is a month..." Now our date will match its maturity, so we just count months until September 30 and we found out that the result is 4 months, it means that this note has 2 months until it matures.
The formula to use is as follows.
[tex]Value(Sep.2018)=\frac{IssuingValue}{(1+Disc.Rate)^{n} }[/tex]
Where n is the months to its maturity.
Everything should look like this:
[tex]Value(Sep.2018)=\frac{480,000}{(1+0.09)^{2} }=404,006[/tex]
Best of luck.
The carrying value of the Dirty Harry Co. note on September 30, 2018, is calculated to be $472,800, taking into account the amortization of the discount over the 4 month period.
Explanation:The subject of the question is related to the concept of noninterest-bearing notes and their carrying value. In the case of the Dirty Harry Co. note, the discount for the 6-month period would be $480,000 * 9% * (6/12) = $21,600. Given that the note was issued on June 1, 2018, the amount of the discount that has been amortized by September 30, 2018 (4 months later), would be $21,600 * (4/6) = $14,400. Therefore, the carrying value of the note on September 30, 2018, would be the maturity value of the note minus the unamortized discount, or $480,000 - ($21,600 - $14,400) = $472,800)
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A manufacturing company has a beginning finished goods inventory of $16,100, raw material purchases of $19,500, cost of goods manufactured of $35,500, and an ending finished goods inventory of $19,300. The cost of goods sold for this company is:
Answer:
Cost of goods sold= $32300
Explanation:
The cost of goods sold refers to the direct costs attributable to the production of the goods sold in a company. This amount includes the cost of the materials used in creating the goods along with the direct labor costs used to produce the goods. It excludes indirect expenses, such as distribution costs and sales force costs.
COGS=Beginning Inventory+Production during period−Ending Inventory
COGS= $16,100 + 35,500 - $19,300= $32300
One reason we need government, even in a market economy, is that a the invisible hand seldom leads to an efficient allocation of resources in any market. b property rights become too entrenched in the absence of government. c the invisible hand, while powerful, is not perfect. d there are insufficient quantities of externalities in the absence of government.
Answer:
The correct answer is option c.
Explanation:
The term 'invisible hand' was coined by the economist Adam Smith in his book "Wealth of nations". It refers to the invisible market force that helps the economy to reach the equilibrium.
This invisible force though powerful is not perfect. In some cases, it fails to achieve efficiency which leads to market failure. In such situations, government intervention is necessary to efficiently allocate resources in the economy. So even in a market economy, we need government.
Hermann Corporation had net income of $200,000 and paid dividends to commonstockholders of $50,000 in 2012. The weighted average number of shares outstanding in2012 was 50,000 shares. Hermann Corporation's common stock is selling for $50 pershare on the New York Stock Exchange. Hermann Corporation's price-earnings ratio is
Answer:
the P/E ratio is 12.5
Explanation:
the price-earning ratio represent how many times the earnings per shares "fits" into the price of the share. It represent how many years are needed to payback the investment of rchase the share.
We first need the earningper share:
[tex]\frac{income - preferred \: dividends}{outstading \: shares} = EPS[/tex]
200,000 net income / 50,000 = 4 dollars EPS
price-earnings ratio:
[tex]\frac{Price}{EPS} = P/E[/tex]
50/4 = 12.5 years
You want to have the equivalent of $700,000 (in terms of today's spending power) when you retire in 30 years. Assume a 3% rate of annual inflation. If you can earn 10% annually, how much do you have to invest per year in order to have your full amount of money needed at retirement?(A) 21230.00(B) 85,651.00(C) 7856.00(D) 10,329.00
Answer:
The correct answer is D: $10,329
Explanation:
Giving the following information:
You want to have the equivalent of $700,000 (in terms of today's spending power) when you retire in 30 years. Assume a 3% rate of annual inflation. The interest rate is 10% annual.
First, we need to determine how much is $700,000 in 30 years.
FV= PV*(1+i)^n
FV= 700000*(1.03^30)= $1,699,083.73
Now, we can calculate the annual payment required using the following formula:
FV= {A*[(1+i)^n-1]}/i
A= annual payment
Isolating A:
A= (FV*i)/{[(1+i)^n]-1}
A= (1,699,083.73* 0.10)/[(1.10^30)-1]= $10329
To have the equivalent of $700,000 in terms of today's spending power at retirement, you would need to invest approximately $331,763.82 per year. This calculation takes into account a 3% rate of annual inflation and an annual earning rate of 10%.
Explanation:To calculate the amount you need to invest per year in order to have $700,000 at retirement, we can use the concept of present value. We need to find the present value of $700,000 in terms of today's spending power considering a 3% rate of annual inflation.
Using the present value formula:
PV = FV / (1 + r)ⁿ
Where PV is the present value, FV is the future value, r is the discount rate, and n is the number of years. In this case, FV is $700,000, r is 3%, and n is 30 years.
Plugging in the values:
PV = 700,000 / (1 + 0.03)³⁰ = $329,504.37
Now, we can use the present value formula again to calculate the amount to invest per year:
PV = PMT× [(1 - (1 + r)⁻ⁿ) / r]
Where PMT is the amount to invest per year. Plugging in the values:
329,504.37 = PMT × [(1 - (1 + 0.1)⁻³⁰) / 0.1]
Simplifying the formula:
329,504.37 = PMT× [(1 - 0.007210523) / 0.1]
329,504.37 = PMT×0.99278948
PMT = 329,504.37 / 0.99278948 = $331,763.82
Therefore, you would need to invest approximately $331,763.82 per year to have the full amount of money needed at retirement.
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Nataraj (2007) finds that a 100% increase in the price of water for heavy users in Santa Cruz caused the quantity of water they demanded to fall by an average of 20%. (Before the increase, heavy users initially paid $1.55 per unit, but afterwards they paid $3.10 per unit.) In percentage terms, how much did their water expenditure (price times quantity)long dashwhich is the water company's revenuelong dashchange? With the price increase, the company's revenue changed by .31 nothing%. (Enter your answer rounded to two decimal places.)
Answer:
The sales revenue will increase by 60%
Explanation:
Let's work this as the amount of sales were 1 units:
Price when to 3.10 dollars from 1.55
And quantity from 1 untis to "0.8 unit"
So revenue before price changes: 1.55 x 1 = 1.55
Revenue after price changes: 3.10 x 0.8 = 2.48
The percentaje in sales revenue will be.
new price sales/ old price sales - 1 = 2.48 / 1.55 -1 = 0.6
We can conclude the sales revenue will increase by 60%
Final answer:
The company's revenue increased by approximately 59.35% after the price of water doubled and the demand decreased by 20%, demonstrating how higher prices for utilities can sometimes lead to higher revenues even with reduced consumption.
Explanation:
The question involves calculating the percentage change in water expenditure following a price increase of water for heavy users, as found by Nataraj (2007). To start, we are informed that the initial price of $1.55 per unit doubled to $3.10 per unit, resulting in a 20% decrease in the quantity of water demanded by heavy users. The key here is to determine how this change affected the water company's revenue.
Before the increase, if we presume 100 units were purchased, the total revenue would be $155 (100 units * $1.55). After the price increase and a 20% reduction in demand, 80 units would now be purchased, resulting in a total revenue of $248 (80 units * $3.10). We calculate the percentage change in revenue by subtracting the initial revenue from the final revenue, dividing by the initial revenue, and then multiplying by 100 to convert it into a percentage.
(($248 - $155) / $155) * 100 = 59.35%.
Therefore, with the price increase, the company's revenue changed by an increase of approximately 59.35%, contrary to the question's incorrectly stated outcome of .31 nothing percent.
During the year, credit sales amounted to $ 820 comma 000$820,000. Cash collected on credit sales amounted to $ 760 comma 000$760,000, and $ 18 comma 000$18,000 has been written off. At the end of the year, the company adjusted for bad debts expense using the percentminus−ofminus−sales method and applied a rate, based on past history, of 2.52.5%. The ending balance of Accounts Receivable is ________.
Answer:
Account Receivable 42,000
Allowance (20,500)
Net 21,500
Explanation:
credit sales: 820,000
cash collected (760,000)
write-off (18,000)
Account Receivable 42,000
allowance for bad debt expense
820,000 x 2.5% = 20,500
The accout receivable gross balance will be 42,000
and the net will be 42,000 - 20,500 = 21,500