According to the law of comparative advantage, what should be the distinguishing characteristics of the goods a nation imports?

(A) They have the lowest capital costs.
(B) They can be domestically produced cheaply.
(C) They cannot be domestically produced cheaply.
(D) They have the greatest domestic demand.

Answers

Answer 1

Answer:

The correct answer is option C.

Explanation:

The law of comparative advantage states that a country will produce and export the commodity it has a comparative advantage in producing.  

In other words, if the country can produce good cheaply or at a lower opportunity cost.  

The good that cannot be produced cheaply or has a higher opportunity cost will be imported from the country that produces it cheaply.

Answer 2

According to the law of comparative advantage, the distinguishing characteristics of the goods a nation imports should be that they cannot be domestically produced cheaply. Therefore, options (c) is accurate.

This principle suggests that nations should specialize in producing goods where they have a comparative advantage (lower opportunity cost) and trade for goods they produce less efficiently.

By focusing on producing what they do best, even if it's not the absolute best, countries can achieve greater efficiency and benefit from global trade. This leads to mutual gains as each nation concentrates on its strengths and imports goods that would be more costly to produce domestically.

Therefore, option (c) is accurate.

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Related Questions

Trade diversion happens when... Instead of importing from most efficient country, a Country import goods from nation within a Preferential Trade Agreement, with higher production costs Instead of importing from most efficient country within a Preferential Trade Agreement, a Country imports from the World's most efficient producer, violating the agreement A Country imports the same good from several different Countries, instead of focusing on one or few Countries alone A Country exports the same good from several different Countries, instead of focusing on one or few Countries alone

Answers

Answer: Option (A) is correct.

Explanation:

There are two terms in international economics; Trade creation and Trade diversion.

When some countries engaged in a particular economic integration then they have to agree upon various tariff rates. Trade diversion means that an economic integration or a free trade area diverts the trade from the most productive or efficient producer outside the economic integration towards the less productive or efficient producer inside the free trade area.

Types of economic integration:

(1) Preferential trade agreement

(2) Free trade agreement

(3) Custom unions

(4) Common Market

(5) Economic Union

Kingbird, Inc. has the following inventory data:

Nov. 1 Inventory 34 units @ $6.80 each
8
Purchase 137 units @ $7.35 each
17 Purchase 68 units @ $7.20 each
25 Purchase 103 units @ $7.50 each

A physical count of merchandise inventory on November 30 reveals that there are 114 units on hand. Cost of goods sold (rounded) under FIFO is

Answers

Answer:

Cost of goods sold (rounded) under FIFO is $ 1.649

Explanation:

Date Q Cost U.Cost inventory Sold Cost

nov-01 34 231,2           6,8  0   34                231

nov-08 137 1006,95          7,35 0   137                1.007

nov-17 68 489,6            7,2 11   57                 410

nov-25 103 772,5            7,5 103   0                  0

                                          114 228              1.649

Suppose banks decide to hold more excess reserves relative to deposits. Other things the same, this action will cause the
a. money supply to fall. To reduce the impact of this the Fed could sell Treasury bonds.
b. money supply to fall. To reduce the impact of this the Fed could buy Treasury bonds.
c. money supply to rise. To reduce the impact of this the Fed could sell Treasury bonds.
d. money supply to rise. To reduce the impact of this the Fed could buy Treasury bond

Answers

Answer:

The correct answer is option b.

Explanation:

If banks decide to hold more excess reserves relative to deposits, they will provide fewer loans. Fewer loans will cause reduction in investment because of lack of funds. This will cause the money supply to fall.

Federal Reserve can increase the money supply by buying treasury bonds. When Feds buy treasury bonds they pay for it. This increases the money supply in the market.  

Final answer:

If banks hold more excess reserves, the money supply will fall. To counteract this, the Fed could buy Treasury bonds to increase the money supply.

Explanation:

If banks decide to hold more excess reserves relative to deposits, it means they are keeping a larger portion of their deposits as reserves instead of lending it out. This action will cause the money supply to fall because there will be less money available for lending and economic activity.

To combat the impact of this, the Federal Reserve (the Fed) could buy Treasury bonds. When the Fed buys Treasury bonds, it injects money into the banking system, increasing the money supply and offsetting the decrease caused by the banks holding excess reserves.

Therefore, the correct answer is b. money supply to fall. To reduce the impact of this the Fed could buy Treasury bonds.

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In the AD partnership, Allen's capital is $140,000 and Daniel's is $40,000 and they share income in a 3:1 ratio, respectively. They decide to admit David to the partnership. Each of the following questions is independent of the others.

Refer to the information provided above. David invests $40,000 for a one-fifth interest in the total capital of $220,000. The journal to record David's admission into the partnership will include:
A. a credit to Cash for $40,000.
B. a debit to Allen, Capital for $3,000.
C. a credit to David, Capital for $40,000.
D. a credit to Daniel, Capital for $1,000.

Answers

Answer:

B. a debit to Allen, Capital for $3,000.

Explanation:

Capital after admission: 220,000

Daniel receives a fifth so 20%: 20% of 220,000  = 44,000

Daniel investment 40,000

So there is a 4,000 bonus that will be taken between the old partners at their share ratio:

Allen 4,000 x 3/4  = 3,000

Daniel 4,000 x 1/4 = 1,000

The journal entry wil lbe:

cash 40,000

allen 3,000

daniel 1,000

       davin         44,000

A company currently pays a dividend of $2.2 per share (D0 = $2.2). It is estimated that the company's dividend will grow at a rate of 22% per year for the next 2 years, and then at a constant rate of 7% thereafter. The company's stock has a beta of 1.4, the risk-free rate is 6.5%, and the market risk premium is 2%. What is your estimate of the stock's current price? Do not round intermediate calculations. Round your answer to the nearest cent.

Answers

Answer:

Estimate of the stock's current price=$132.71

Explanation:

Price of the stock today = [tex]\frac{D1}{(1+ke)^1}+\frac{D2}{(1+ke)^2}+\frac{D3}{(1+ke)^3}+\frac{P3}{(1+ke)^3}[/tex].

where [tex]D_1= D_0*(1+g)=2.2(1.22)=2.684[/tex]

and ke  using CAPM = [tex]r_f+b(r_m-r_f)[/tex] = 0.065+1.4(0.02)=0.093

and P3= [tex]\frac{D4}{ke-g}[/tex]

Estimate of the stock's current price = [tex]\frac{2.684}{(1+0.093)^1}+\frac{2.684(1.22)}{(1+0.093)^2}+\frac{2.684(1.22)(1.07)}{(1+0.093)^3}+\frac{2.684(1.22)(1.07^2)}{(0.093-0.07)(1+ke)^3}[/tex] = 132.71

Selected information from Green Co.'s accounting records and financial statements is as follows: Gain on sale of land $ 12,000 Proceeds from sales to customers 21,800 Purchase of Black, Inc. bonds (face amount $205,000) 367,000 Amortization of bond discount 4,800 Cash dividends declared 98,000 Cash dividends paid 72,000 Proceeds from sales of Green Co. common stock 157,000 What are the net cash flows from financing activities that will be reported in the statement of cash flows? (Enter net cash outflows with a minus sign.)

Answers

Answer:

cash generate from financing activities     85,000

Explanation:

financing activities:

sale of common stock 157, 000

cash dividends paid     (72,000)

cash generate from financing activities     85,000

On the cash flow statement we will focus on trasnaction that involve cash.

The financing activities will only consider the finance of the business. This is the dividends and common stock.

The amortization on bonds don't involve cash, so are ignored.

The purchase of bonds are investing activities, the business is not financing.

Goodwill is:
A. Only recorded by the seller of a business.

B. The value of a business as a whole, over and above the value of its net identifiable assets.

C. Amortized over the greater of its estimated life or forty years.

D. Recorded when created internally through advertising expense.

Answers

Answer:

The value of a business as a whole, over and above the value of its net identifiable assets.

Explanation:

Goodwill arises when a company acquires another entire business. . Goodwill represents assets that are not separately identifiable.  The goodwill represents non tangible future value.

Consider the following marginal cost function. a. Find the additional cost incurred in dollars when production is increased from 100 units to 150 units. b. Find the additional cost incurred in dollars when production is increased from 500 units to 550 units. C′​(x)=4000−0.4x

Answers

Answer:   (a) $197,500

(b) $ 189,500

Explanation:

Given : The marginal cost function : [tex]C′​(x)=4000−0.4x[/tex]

To find the cost function, we need to integrate the above function with respect to x.

Now, the additional cost incurred in dollars when production is increased from 100 units to 150 units will be:-

[tex]\int^{150}_{100}\ C'(x)\ dx\\\\=\int^{150}_{100} (4000-0.4x)\ dx\\\\=[4000x-\dfrac{0.4x^2}{2}]^{150}_{100}\\\\=[4000(150)-\dfrac{0.4(150)^2}{2}-4000(100)+\dfrac{0.4(100)^2}{2}]\\\\=[600000-4500-400000+2000]\\\\=197500[/tex]

Hence, the additional cost incurred in dollars when production is increased from 100 units to 150 units= $197,500

Similarly,  the additional cost incurred in dollars when production is increased from 500 units to 550 units :-

[tex]\int^{550}_{500}\ C'(x)\ dx\\\\=\int^{550}_{500} (4000-0.4x)\ dx\\\\=[4000x-\dfrac{0.4x^2}{2}]^{550}_{500}\\\\=[4000(550)-\dfrac{0.4(550)^2}{2}-4000(500)+\dfrac{0.4(500)^2}{2}]\\\\=[2200000-60500-2000000+50000]\\\\=189,500[/tex]

Hence, the additional cost incurred in dollars when production is increased from 500 units to 550 units = $ 189,500

Final answer:

Calculate additional costs for production level changes using the given marginal cost function.

Explanation:

Marginal cost function: C′​(x) = 4000 − 0.4x

Additional cost for 100 to 150 units: C'(150) - C'(100)Substitute values and calculate: $ (4000 - 0.4*150) - (4000 - 0.4*100)Answer: The additional cost is $20Additional cost for 500 to 550 units: C'(550) - C'(500)Substitute values and calculate: $ (4000 - 0.4*550) - (4000 - 0.4*500)Answer: The additional cost is $20

Prof. Chaos finds a new house he wants to buy for $260,000. After selling his current house he expects to have $80,000 as a down payment for his new house. What would Prof. Chaos monthly payment be on the $180,000 mortgage he would need if he takes out a 30-year fixed rate mortgage at a 4% nominal annual rate? (round your answer to the nearest cent)

Answers

Final answer:

The monthly mortgage payment for Prof. Chaos's $180,000 mortgage with a 30-year term at a 4% annual interest rate would be approximately $859.35.

Explanation:

Prof. Chaos is buying a new house for $260,000 and after selling his current house, he expects to have an $80,000 down payment, leaving him with a $180,000 mortgage. To calculate the monthly mortgage payment for a 30-year fixed-rate mortgage at a 4% annual interest rate, we can use the formula for the monthly payment (M) of a mortgage:

M = P[r(1+r)^n]/[(1+r)^n - 1]

Where:

P is the principal amount ($180,000)r is the monthly interest rate (4% annual rate divided by 12 months, so 0.04/12 = 0.003333)n is the number of payments (30 years times 12 months/year = 360 payments)

Plugging in the values, we get:

M = $180,000[0.003333(1+0.003333)^360]/[(1+0.003333)^360 - 1]

After calculating, rounding to the nearest cent, Prof. Chaos's monthly payment would be approximately $859.35.

This estimate ignores additional costs such as property taxes, homeowners insurance, and potential private mortgage insurance (PMI), which might be required if the down payment is less than 20% of the home's purchase price.

Given the following adjusted trial balance:


Debit Credit
Cash $931
Accounts receivable 1175
Inventory 1749
Prepaid rent 48
Equipment
170
Accumulated depreciation-equipment
$29
Accounts payable 46
Unearned service revenue
68
Common stock 120
Retained earnings 3700
Service revenue 206
Interest revenue 31
Salaries and wages expense
90
Travel expense 37
Total $4200 $4200

After closing entries have been posted, the balance in retained earnings will be:

Answers

Answer:

The balance in retained earnings will be $3,810

Explanation:

For computing the ending balance of the retained earning, first, we have to compute the net income

So, the net income would be equal to

= Service revenue + interest revenue - Salaries and wages expense - Travel expense

= $206 + $31 - $90 - $37

= $110

Now we can find out the ending balance of retained earnings. It is shown below:

= Beginning retained earning balance + net income - dividend paid

= $3,700 + $110 - $0

= $3,810

Your firm has a credit rating of A. You notice that the credit spread for five-year maturity A debt is 85 basis points (0.85%). Your firm’s five-year debt has a coupon rate of 6%. You see that new five-year Treasury notes are being issued at par with a coupon rate of 2.0%. What should the price of your outstanding five-year bonds be per $100 of face value?

Answers

Answer:

The market price should be: $114.67

Explanation:

the risk free rate is          2.00%

this firm has a spread of 0.85%

            firm cost of debt 2.85%

The market will adjust the bond price so the yield ofthe bonds relfect this rate.

So we will calculate the present value of a coupon 100 with a 6% rate

We use the ordinary annuity for the coupon payment:

[tex]C \times \frac{1-(1+r)^{-time} }{rate} = PV\\[/tex]

Coupon payment: 100 face value x 3% bond rate = 3

time 10 (5 years with 2 payment per year)

market rate: 0.01425  (2.85%/2)

[tex]3 \times \frac{1-(1+0.01425)^{-10} }{0.01425} = PV\\[/tex]

PV $27.7768

and lump sum present value for the maturity:

[tex]\frac{Maturity}{(1 + rate)^{time} } = PV[/tex]  

Maturity  100

time  5

rate  0.0285

[tex]\frac{100}{(1 + 0.0285)^{5} } = PV[/tex]  

PV   86.89

Last, we add them to get the market price:

PV c $27.7768

PV m  $86.8917

Total $114.6685

Final answer:

To calculate the price of the firm's outstanding five-year bonds per $100 of face value, one must discount the bond's cash flows by the total yield required by investors, which is the sum of the Treasury yield and the firm's credit spread. This approach reflects the impact of interest rate changes on bond prices, with bonds trading at discounts or premiums depending on the prevailing interest rate environment.

Explanation:

The student is asking how to determine the price of their firm's outstanding five-year bonds given the coupon rate, the credit spread, and the current Treasury note rate. To calculate the price of the bonds, you need to consider the total yield that investors would require to hold the firm's bond instead of a risk-free Treasury bond. The total yield would be the Treasury yield plus the credit spread, which in this case would be 2.0% (from the Treasury note) plus 0.85% (the credit spread), resulting in a total yield of 2.85%. Using this yield to discount the firm's bond coupon payments and the face value payment at maturity will give you the present value, or price, of the outstanding bonds per $100 of face value.

Calculating Bond Prices

Let's look at an example to illustrate how bond prices are affected by changes in interest rates. Assume an investor holds a two-year bond that was issued for $3,000 at an 8% interest rate. This bond pays $240 in interest annually. If the discount rate reflects the current interest rate environment at 8%, then the present value of these payments equals the face value of the bond, because the coupon rate matches the discount rate. In this scenario, the bond would be worth its face value, or $3,000. However, if interest rates rise and the new discount rate is 11%, the present value of the bond's future payments would be lower than the face value, because investors can get a higher return elsewhere. Therefore, the bond would trade at a discount to reflect the higher market interest rates.


Using a financial calculator or present value formula would allow you to calculate the precise price of the bond under different interest rate scenarios, taking into account the time value of money and the structure of cash flows from the bond.

Kant Miss Company is promising its investors that it will double their money every 3 years. What annual rate is Kant Miss​ promising? Is this investment a good​ deal? If you invest ​$300 now and Kant Miss is able to deliver on its​ promise, how long will it take your investment to reach ​$26 comma 000​?

Answers

Answer:

Intructions are listed below.

Explanation:

Giving the following information:

Kant Miss Company is promising its investors that it will double their money every 3 years.

A) According to the rule of 70, an investment will duplicate in X number of years using the following formula:

N= 70/ interest rate

In this exercise:

3=70/i

i=70/3= 23.33%

B) If this is a good deal or not will depend on the interest rate and risk that you are willing to accept.

C) To find how many years it will take to reach to $26000 we need to use the following formula:

n=[ln(FV/PV)]/ln(1+r)

ln= natural logarithm

FV= Final value

PV= present value

r= interest rate

n=[ln(26000/300)]/ln(1+0,23333)

n= 21,55 years.

Final answer:

The Kant Miss Company is promising an implied annual rate of approximately 25.9%. Whether this is a good investment would depend on various factors. It would take about 20.3 years for an investment of $300 to reach $26,000 at this rate.

Explanation:

The Kant Miss Company is offering to double investors' money every 3 years, meaning it's implying an interest rate that can achieve this. To find this rate, we can use the formula of compound interest: A = P(1+r/n)^(nt), where A is the final amount, P is the principal amount, r is the annual interest rate, n is the number of times interest is compounded per year, and t is time in years. In this case, A/P = 2 (doubling), n = 1(compounding annually), and t = 3 years.

As such, 2 = (1 + r) ^ 3. Solving it using a cube root function, we get (1+r) = 2^(1/3) = 1.259. Hence, r = 1.259-1 = 0.259 or 25.9% as the implied annual rate.

Whether this is a good deal or not depends on the risk tolerance of the investor and the viability of the company. Hardly any secure investment yields a 25.9% annual return, so it might carry significant risk.

Regarding how long it would take for a $300 investment to reach $26,000:

we can set up and solve the same compound interest equation, letting P = $300, A = $26,000, r = 0.259, and solve for t. Using a logarithmic function, it will take approximately 20.3 years to reach your investment goal.

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The First Church has been asked to operate a homeless shelter in part of the church. To operate a homeless shelter the church must hire a full time employee for $1,200/month to manage the shelter. In addition, the church would have to purchase $400 of supplies/month for the people using the shelter. The space that would be used by the shelter is rented for wedding parties. The church averages about 5 wedding parties a month that pay rent of $200 per party. Utilities are normally $1,000 per month. With the homeless shelter, the utilities will increase to $1,300 per month. What is the opportunity cost to the church of operating a homeless shelter in the church?

Answers

Answer: $1,000

Explanation:

Opportunity cost is the benefit that is foregone for an individual by choosing one alternative over other alternatives available to him.

If the opportunity cost is lower for an individual then this will benefit him whereas if the opportunity cost is higher then this will not benefit the individuals.

Therefore, the opportunity cost for operating a homeless shelter is the amount that is received by renting the space of shelter for wedding parties.

Opportunity cost = Average wedding parties per month × Rent per party

                            = 5 × $200

                            = $1,000

Final answer:

The opportunity cost for the First Church to operate a homeless shelter is $2,900 per month, which includes lost rental income, increased utility costs, and new expenses for an employee and supplies.

Explanation:

The opportunity cost to the First Church of operating a homeless shelter is the total of lost rental income from wedding parties, additional utility costs, and the new expenses for the employee and supplies. The church earns $200 per party from 5 wedding parties a month, which results in $200 x 5 = $1000 per month in rental income. Since they will give up this income to operate the shelter, this is part of the opportunity cost.

Next, we consider the increase in utility costs from $1,000 to $1,300 per month. This increased cost of $300 is also a part of the opportunity cost. Additionally, the church would have new expenses totaling $1,200 (employee) + $400 (supplies) per month.

Adding these figures together, the total opportunity cost for the church is:

Lost rental income: $1,000

Increase in utility costs: $300

Employee salary: $1,200

Supplies: $400

So, the total opportunity cost = $1,000 + $300 + $1,200 + $400 = $2,900 per month.

A newspaper article informs you that most businesses reduced production in the last quarter but also sold from their inventories during the last quarter. Based on this information GDP likely
a. increased.
b. decreased.
c. stayed the same.
d. may have increased, decreased, or stayed the same

Answers

Answer:

The correct answer is B: decreased

Explanation:

Gross Domestic Product (GDP) is the sum of all the finished goods and services produced in a specific period, based on the market value of such items. The data sets are net of inflation, they are calculated adjusting for price changes.

The formula is as follow:

GDP = C + I + G + NX

GDP is the sum of consumer spending C, Investments I, Government spending G, and net exports NX.

Inventory level itself is not part of GDP; however, changes in inventory does affect GDP by affecting investments. So if a corporation chooses to build up its inventory by amount X, it essentially makes an expenditure that increases I by X. Inventory will increase when a company produces more than what it sells.

So a reduction in production affects I, reducing GDP.

Answer:

The correct answer is letter "B": decreased.

Explanation:

The Gross Domestic Product or GDP represents the overall market value of all nation-produced goods and services and calculates the performance of the economy. It is calculated using the following formula:

GDP = C +  G + I + NX

Where:

C: private consumption or consumer spending G: government spending I: businesses' capital spending NX: net exports (exports - imports)

In the example, if businesses decreased their production, capital spending (I) will be lowered. Thus, if the other factors remained the same, the GDP is likely to decrease during that quarter.

Cell One Corporation began 2018 with retained earnings of $ 260 million. Revenues during the year were $ 520 ​million, and expenses totaled $ 340 million. Cell One declared dividends of $ 61 million. What was the​ company's ending balance of retained​ earnings? To answer this​ question, prepare Cell One​'s statement of retained earnings for the year ended December​ 31, 2018​, complete with its proper heading. Prepare the statement of retained earnings. ​(Enter all amounts in millions. Enter a net loss with a minus sign or parentheses. Include a subtotal after the​ "Add" line of the​ statement.) (millions) Add: Subtotal Less:

Answers

Answer:

The ending balance of  retained earnings was $ 379

Please see details below:

Explanation:

Opening retained earnings $ 260

Add: Net Income $ 180

Subtotal    $ 440

Less: Dividens      -$ 61

Total    $ 379

Final answer:

To determine the ending balance of retained earnings for Cell One Corporation, prepare a statement of retained earnings. The beginning balance of retained earnings is added to the net income and subtracted by the dividends declared to calculate the ending balance. For Cell One Corporation, the ending balance is $379 million.

Explanation:

To determine the ending balance of retained earnings for Cell One Corporation, we need to prepare the statement of retained earnings. The statement of retained earnings calculates the change in retained earnings over a given period. We start with the beginning balance of retained earnings, add the net income (revenues minus expenses), and subtract any dividends declared during the year. The result is the ending balance of retained earnings.

The statement of retained earnings for Cell One Corporation for the year ended December 31, 2018, is as follows:

Cell One Corporation

Statement of Retained Earnings

For the Year Ended December 31, 2018

Beginning balance of retained earnings: $260 millionAdd: Net income (revenues - expenses): $520 million - $340 million = $180 millionSubtotal: $260 million + $180 million = $440 millionLess: Dividends declared: $61 millionEnding balance of retained earnings: $440 million - $61 million = $379 million

Nguyen Inc. applies overhead to products based on direct labor hours using normal costing. During 2016, total overhead costs were estimated to be $500,000. Actual overhead totaled $540,000 based on 32,000 actual direct labor hours. At the end of the year, overhead was overapplied by $20,000. Based on this information, what was the predetermined overhead rate used during 2016?

Answers

Answer:

overhead rate: 17.5

Explanation:

The difference between applied an actual overhead is calculated as follows:

actual hours x overhead rate - actual cost = over or underapplied overhead

underapplied means actual were higher than applied

while, overapplied means the actual cost were lower.

Based on this information we can set up the foermula as follows:

overhead rate x 32,000 -540,000 =  20,000

now we solve for the rate:

rate = (20,000 + 540,000) / 32,000 = 17.5

There is evidence that the rate at which money changed hands rose during the German hyperinflation. This means that
a. velocity rose. If monetary neutrality holds the rise in velocity increased the ratio M/P.
b. velocity rose. If monetary neutrality holds the rise in velocity decreased the ratio M/P.
c. velocity fell. If monetary neutrality holds the fall in velocity increased the ratio M/P.
d. velocity fell. If monetary neutrality holds the fall in velocity decreased the ratio M/P.

Answers

Answer:

The correct answer is b. velocity rose. If monetary neutrality holds the rise in velocity decreased the ratio M/P.

Explanation:

The quantitative theory of money states that in a given period of time, the money supply multiplied by the velocity of money (that is the rate at which moeny changes hands) is equal to the price level multiplied by the amount of goods and services. Mathematically:

[tex]M_{t} \times V_{t} =P_{t}\times Y_{t}[/tex]

By algebraic manipulation we obtain:

[tex]\frac{M_{t}}{P_{t}}  \times V_{t}=Y_{t}[/tex]

Money neutrality means that a change in the supply of money only has an effect on nominal variables, such as the price level, with no effect on real variables such as the real amount of goods and services.

Therefore if we know that the velocity of money rises then the ratio [tex]M_{t}/P_{t}[/tex] must decrease for money neutrality to hold, that is for [tex]Y_{t}[/tex] to remain constant.

Marion Inc. has 5,000 shares of 5%, $100 par value, noncumulative preferred stock and 20,000 shares of $1 par value common stock outstanding at December 31, 2015. The board of directors declares and pays a $65,000 dividend in 2015. What is the amount of dividends received by the common stockholders in 2015?

Answers

Answer:

$40,000

Explanation:

Holders of preferred stocks are given preference in terms of dividend distribution. However, the amount of dividend that they will share in the $65,000 dividends declared by the board of directors is only limited to 5% of the total par value (5,000 shares x $100 = $500,000) of preferred stocks, which in this case is only $25,000 ($500,000 x 5%). After deducting the dividends for preferred stocks, the remaining dividends of $40,000 ($65,000 - $25,000) will be distributed to holders of common stocks.

A firm seeks to accept projects with a high degree of liquidity, avoid the higher forecasting error associated with cash flows occurring in the distant future, and avoid projects that require a large amount of research and development expenses. This firm may be justified in using the ___________to evaluate its projects.

Answers

Answer: Payback rule

Explanation: As per the pay back rule, the project which earns its initial investment more quickly is considered to be acceptable and profitable.

     In the given case, the company is expecting a project which do not affect liquidity and does not take too much cost on research for the coming future. Thus, a project with a shorter time period of recovery of initial investment will be suitable fro them.

Hence the company should use payback rule to evaluate its product.

​First, compute cost of goods manufactured. Schedule of Cost of Goods Manufactured Beginning Work-in-Process Inventory 38000 Direct Materials Used: Beginning Direct Materials 28000 Purchases of Direct Materials 70000 Direct Materials Available for Use 98000 Ending Direct Materials (33000) Direct Materials Used 65000 Direct Labor 80000 Manufacturing Overhead 38000 Total Manufacturing Costs Incurred during the Year 183000 Total Manufacturing Costs to Account For 145000 ▼ Cost of Goods Manufactured

Answers

Answer:

Cost of manufactured period=  $221000

Explanation:

We need to calculate the production during the period.

Cost of manufactured period= Beginning work in progress inventory+ direct materials + direct labor + factory overhead - ending work in progress

Beginning work in progress= $38000

Cost of raw materials= beginning inventory + purchase - ending inventory= 28000 + 70000 - 33000= $65000

Direct labor= 80000

Manufactured overhead=38000

Ending work in progress= 0

Cost of manufactured period= 38000 + 65000 + 80000 + 38000= $221000

An investment pays you $100 at the end of each of the next 3 years. The investment will then pay you $200 at the end of Year 4, $300 at the end of Year 5, and $500 at the end of Year 6. If the interest rate earned on the investment is 8 percent, what is its present value? What is its future value?

Answers

Answer:

Present value is $923.90 and future value is $1,466.24

Explanation:

Given:

$100 is received in the next three years. It's an annuity so refer present value of annuity table. Present value annuity factor for 3 years, 8% is 2.5771. So present value of this will be $257.71 (2.5771 × 100). Similarly calculation for inflows from the investment are as follows:

$200 at 8% in the 4th year, present value factor of lumpsum amount is 0.7350 which is $147 (0.735 × 200)

$300 at 8% in the 5th year, present value factor of lumpsum amount is 0.6806 which is $204.18 (0.6806 × 300)

$500 at 8% in the 6th year, present value factor of lumpsum amount is 0.6302 which is $315.10 (0.6302 × 500)

Total present value of investment is $923.90 (257.71 + 147 + 204.18 + 315.10)

Present value of inflows are calculated. Calculate future value of these amounts.

future value factor @8%, 6 years is 1.5869.

Future value of first inflow is $408.96 (257.71 × 1.5869)

Future value of second inflow is $233.27 (147× 1.5869)

Future value of third inflow is $324.01 (204.18 × 1.5869)

Fourth Inflow in the sixth year is $500

Total present value of investment is $1,466.24 (408.96 + 233.27 + 324.01 + 500)

Algonquin Cosmetics noticed that while India had a population of more than 1.2 billion people, the retail market was such that more than 95% of retail was through stand-alone stores that were not part of a chain. In other words, if Algonquin were to enter India, they would have to sell through more than a million independent retail stores. What kind of a retail system does India have for the products that Algonquin Cosmetics is trying to sell?

Answers

Answer:

Fragmented retail system.

Explanation:

India presents a fragmented retail system.

This type of system works when there are many retailers, but none of them has a majority share of the market. In this country, the best distribution strategy is a long channel, since this type of market tends to promote the growth of wholesalers to provide retailers.

Hope this helps!

Taco Hut purchased equipment on May 1, 2018, for $15,000. Residual value at the end of an estimated 8-year service life is expected to be $4,000.

Calculate depreciation expense using the straight-line method for 2018 and 2019, assuming a December 31 year-end. (Do not round your intermediate calculations. Round your final answers to the nearest whole dollar.)

Answers

Answer:

2018: 8 months

Depreciation= $916,67

2019: full year

Depreciation= $1375

Explanation:

Giving the following information:

Taco Hut purchased equipment on May 1, 2018.

Price:  $15,000.

Residual value: $4,000

Useful life: 8 year

We need to calculate the depreciation for 2018 and 2019 using straight-line method:

Depreciation= (purchase price- residual value)/useful life

Depreciation= (15000-4000)/8= $1375

2018: 8 months

Depreciation=(1375/12)*8= 916,67

2019: full year

Depreciation= $1375

A cell phone company offers two different plans. Plan A costs $92 per month for unlimited talk and text. Plan B costs $0.20 per minute plus $0.10 per text message sent. You need to purchase a plan for your teenage sister. Your sister currently uses 1,750 minutes and sends 1,600 texts each month. 1. What is your sister’s total cost under each of the two plans? 2. Suppose your sister doubles her monthly usage to 3,500 minutes and sends 3,200 texts. What is your sister’s total cost under each of the two plans?

Answers

Answer:

Instructions are listed below

Explanation:

Giving the following information:

Plan A:

$92 per month for unlimited talk and text.

Plan B:

$0.20 per minute plus $0.10 per text message sent.

A) 1,750 minutes and 1,600 texts

Plan A= $92

Plan B= 0.20*1750+0.10*1600= $510

B) 3,500 minutes and 3,200 texts.

Plan A= $92

Plan B= 0.20*3500+0.10*3200= $1020

Milani, Inc., acquired 10 percent of Seida Corporation on January 1, 2017, for $188,000 and appropriately accounted for the investment using the fair-value method. On January 1, 2018, Milani purchased an additional 30 percent of Seida for $637,000 which resulted in significant influence over Seida. On that date, the fair value of Seida's common stock was $2,000,000 in total. Seida's January 1, 2018 book value equaled $1,850,000, although land was undervalued by $135,000. Any additional excess fair value over Seida's book value was attributable to a trademark with an 8-year remaining life. During 2018, Seida reported income of $308,000 and declared and paid dividends of $108,000. Prepare the 2018 journal entries for Milani related to its investment in Seida.

Answers

Final answer:

Milani, Inc. accounts for its investment in Seida Corporation using the equity method, making journal entries for the purchase, their share of Seida's income, dividends received, and fair value adjustments. These entries reflect the acquisition of significant influence and the associated changes in the investment value.

Explanation:

For Milani, Inc., accounting for its investment in Seida Corporation involves making several journal entries for the year 2018 based on the equity method due to the acquisition of significant influence over Seida.

Journal Entries for Milani, Inc. in 2018

Recording the additional 30 percent purchase of Seida:
Investment in Seida  637,000
  Cash                        637,000Adjusting the investment for Milani's share of Seida's net income:
Investment in Seida  92,400
  Equity in Subsidiary Income          92,400
(Note: Milani's share is 30% of 308,000.)Recording dividends received:
Cash                   32,400
  Investment in Seida       32,400
(Note: Milani's share is 30% of 108,000.)Adjustment for excess land valuation and trademark:
Investment in Seida            16,875
  Equity in Subsidiary Income              16,875
(Note: $135,000 * 30% = $40,500 for land undervaluation; divided over 8 years = $5,062.50. Trademark excess fair value = Total FV - Book Value - Land undervaluation = $200,000-$1,850,000-$135,000 = $15,000; $15,000 * 30% = $4,500; divided over 8 years = $562.50. Annual Amortization = $5,062.50 + $562.50 = $5,625; Milani's share is 30% of $5,625 which equals $1,687.50, rounded to $1,688. During 2018, this amount should be adjusted for the full year, thus the amount is doubled to get $16,875.)

When considering the equity method of accounting, Milani recognizes its proportionate share of Seida's net income and any dividends received as well as amortization of the fair value adjustments for the assets such as land and trademark.

The following information is from the Income Statement of the Vaughn Laundry Service:


Revenues
Service Revenues $5070
Expenses
Salaries and wages expense $ 1910
Advertising expense 390
Rent expense 230
Supplies expense 160
Insurance expense 80
Total expenses 2770
Net income $2300

The entry to close the expense accounts includes a:

Answers

Answer:

Debit to income summary account = $2,770

Explanation:

The journal entry to close the expense account is shown below:

Income summary A/c Dr $2,770

   To Salaries and wages expense     $1,910

   To Advertising expense                   $390

   To Rent expense                              $ 230

   To Supplies expense                        $160

   To insurance expense                       $80

(Being expense accounts are closed)

Pember Corporation started business in 2007 by issuing 200,000 shares of $20 par common stock for $36 each. In 2012, 30,000 of these shares were purchased for $52 per share by Pember Corporation and held as treasury stock. On June 15, 2013, these 30,000 shares were exchanged for a piece of property that had an assessed value of $810,000. Perber's stock is actively traded and had a market price of $60 on June 15, 2013. The cost method is used to account for treasury stock. The amount of paid-in capital from treasury stock transactions resulting from the above events would be
a. $1,200,000. b. $720,000. c. $585,000. d. $240,000.

Answers

Answer:

d. $240,000.

Explanation:

The computation of the amount of paid-in capital from treasury stock is calculated by applying the formula which is shown below:

= Number of shares × (Market price per share - purchase price per share)

= 30,000 shares × ($60 per share - $52 per share)

= 30,000 × $8 per share

=  $240,000

The other items which are mentioned in the question are irrelevant. Therefore, it is not to be considered in the computation part.

Suppose that the value of an investment in the stock market has increased at an average compound rate of about 5% since 1914. It is now 2019. a. If your great grandfather invested $1,000 in 1914, how much would that investment be worth today?

Answers

Answer:

FV= $273381.67

Explanation:

Giving the following information we need to find the value of the investment in present day

I=1000

i=0.05

n=115

The general formula to calculate the value of an investment for cases like this is:

FV= I*[(1+i)^n]

FV= 1000*(1,05^115)= $273381.67

Final answer:

To calculate the value of the investment today, use the formula for compound interest: Final Value = Initial Value × (1 + Rate)^(Number of Years). Plugging in the values, the investment would be worth around $28,942.34 today.

Explanation:

To calculate the value of the investment today, we can use the formula for compound interest. In this case, the investment has grown at an average compound rate of 5% per year since 1914. We can use the formula:

Final Value = Initial Value × (1 + Rate)^(Number of Years)

Plugging in the values, we get:

Final Value = $1,000 × (1 + 0.05)^(2019 - 1914)

Simplifying the equation:

Final Value ≈ $1,000 × (1.05)^105

This calculation gives us a final value of approximately $28,942.34. Therefore, the investment would be worth around $28,942.34 today.

The following are common categories on a classified balance sheet. a) Current assets b) Long-term investments c) Plant assets d) Intangible assets e) Current liabilities f) Long-termliabilities For each of the following items, select the letter that identifies the balance sheet category where the item typically would best appear. _____ Land not currently used in operations _____ Notes payable (due in five years) _____ Accounts receivable _____ Trademarks _____ Accounts payable _____ Store equipment _____ Wages payable _____ Cash

Answers

Final answer:

The given items are categorized according to their place in the balance sheet into long-term investments, long-term liabilities, current assets, intangible assets, current liabilities, plant assets and current assets.

Explanation:

The item 'Land not currently used in operations' typically would best appear under: (b) Long-term investments

The item 'Notes payable (due in five years)' typically would best appear under: (f) Long-term liabilities

The item 'Accounts receivable' typically would best appear under: (a) Current assets

The item 'Trademarks' would typically best appear under: (d) Intangible assets

The item 'Accounts payable' would typically best appear under: (e) Current liabilities

The item 'Store equipment' would typically best appear under: (c) Plant assets

And the item 'Wages payable' would typically best appear under: (e) Current liabilities

The item 'Cash' would best appear in: (a) Current assets.

Learn more about Classification of Balance Sheet Items here:

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A company needs 10,000 units of a component used in producing one of its products. The latest internal accounting reports show that the per unit manufacturing cost to be $150.00, variable manufacturing costs of $110.00 and fixed manufacturing cost of $40. The company recently received an offer from another manufacturer to produce the component for $144.00. If it buys the component on the outside 40% of the fixed manufacturing cost can be avoided. Required: a. If the company buys the component from the outside supplier at $144.00, what is the impact on income? b. What price would make the company indifferent between making the component internally and having the outside supplier make it?

Answers

Answer:

A) The outsourcing costs $18 more per unit. It increases the cost by $18000

B) Price= $126

Explanation:

Giving the following information:

Q= 10000 units

In-house:

Variable manufacturing cost= $110 unit

Fixed cost= $40 unit

Total cost= $150 unit

Outsource:

Price=$144 unit

Fixed cost= $40*0,60= $24

Total cost= $168

A) The outsourcing costs $18 more per unit. It increases the cost by $18000

B) The price that makes the decision indifferent is the one that equals unitary costs. We can't reduce fixed costs.

Price=144-18= $126

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