Answer:
Options 2, 4, 6, 7, 8, and 9 are capital expenditure.
Options 1, 3, and 10 are the immediate expenses.
Option 5 is Neither.
Explanation:
Capital expenditure is those expenditures that are incurred to maintain the fixed assets. Thus Options 2, 4, 6, 7, 8, and 9 are capital expenditure. While the expenses that are compulsory and immediate in nature are called the immediate expenses. This means if the equipment requires repairing then it will fall in the category of immediate expense because without repairing it won't work. Therefore, a property tax of $75000, repair of the main plant, and maintenance for equipment are immediate expenses.
Club Med Inc. talks to its present and potential customers to assess their needs for its products. Then it develops products to satisfy those needs. The firm is thus applying the ____ concept.
Answer:
marketing concept.
Explanation:
The above is marketing concept because it involves all actions taken to draw the attention of people towards the product offered by a business. The product so offered can be a physical good such as sale of home appliances or services to be rendered. Example of marketing concept are advertising a product either in the television or radio or on bill boards.
Marketing concept makes use of data to concentrate on the desires of consumers by developing products that would suit those need and also accomplish the organization goals of satisfying their customers needs.
You short 200 contracts of a call option on Stock XYZ. The contract multiplier is 100, i.e. each contract is on 100 shares of the stock.
In addition, you hold the following positions as of the end of previous trading day: 15,559 shares of the underlying stock; and $809,608 in debt.
The XYZ stock price is $51 right now. The risk-free interest rate is 4% per year. There are 252 trading days in a year.
Using the Black-Scholes model, you establish that the total delta of your option position is
-13,495
You adjust your hedge to bring your shareholding to match the new option delta. Which of the following is correct for your DEBT account, after you make the necessary adjustments?
a. $809,608 - (15,559 – 13,495)*51 = 704,344
b. $809,608e(0.04*1/252) + (15,559 – 13,495)*51 = 915,000
c. $809,608e(0.04*1/252) – (15,559 – 13,495)*51 = 703,932
d. $809,608 + (15,559 – 13,495)*51 = 914,872
Answer:
c. $809,608e(0.01*1/252) - (15,559 - 13,495) *51 = 703,932
Explanation:
Black Scholes Model is a mathematical model for pricing a contract of an option. It is best suited for dynamic financial market. The model determines the price of an option contract after incorporating the effects of volatility. In the given scenario there are 200 contracts of a call option. The trading days are 252 in the year and risk free interest rate is 4% prevailing in the market.
Estes Park, Inc., has declared a dividend of $6.70 per share. Suppose capital gains are not taxed, but dividends are taxed at 30 percent. New IRS regulations require that taxes be withheld at the time the dividend is paid. The company's stock sells for $118 per share, and the stock is about to go ex-dividend. What do you think the ex-dividend price will be
Answer:
$113.31
Explanation:
Estees park has declared a dividend of $6.70 per share
The dividend is taxed at 30%
= 30/100
= 0.3
The company stock sells for $118 per share
The first step is to calculate the after tax dividend
After tax dividend= 6.70(1-0.3)
= 6.70×0.7
= $4.69
Therefore, the ex-dividend price can be calculated as follows
Ex-dividend price= $118-$4.69
= $113.31
Hence the ex-dividend price is $113.31
The decision to accept an additional volume of business should be based on a comparison of the revenue from the additional business with the sunk costs of producing that revenue.
a) true
b) false
Answer:
false
Explanation:
Sunk cost is cost that has already been incurred and cannot be recovered. it should not be considered when making future decisions
A company is evaluating a new 4-year project. The equipment necessary for the project will cost $3,250,000 and can be sold for $645,000 at the end of the project. The asset is in the 5-year MACRS class. The depreciation percentage each year is 20.00 percent, 32.00 percent, 19.20 percent, 11.52 percent, and 11.52 percent, respectively. The company's tax rate is 35 percent. What is the aftertax salvage value of the equipment
Answer: $615,810
Explanation:
The Book Value of the Asset at the end of 4 years will be;
= Cost of equipment - Accumulated Depreciation
= 3,250,000 - ( 3,250,000 * ( 20% + 32% + 19.20% + 11.52%))
= 3,250,000 - 2,688,400
= $561,600
The Equipment will be sold at $645,000 meaning a gain is made
= 645,000 - 561,600
= $83,400
Tax to be paid is;
= 83,400 * 0.35
= $29,190
After-tax salvage value of the equipment = Sales Price - Tax
= 645,000 - 29,190
= $615,810
Chris Spear invested $16,700 today in a fund that earns 10% compounded annually. To what amount will the investment grow in 2 years? To what amount would the investment grow in 2 years if the fund earns 10% annual interest compounded semiannually?
a. Investment at 10% annual interest?
b. Investment at 10% annual interest, compounded semiannually?
Answer:
Results are below.
Explanation:
Giving the following information:
Chris Spear invested $16,700 today in a fund that earns 10% compounded annually.
To calculate the future value of the investment, we need to use the following formula:
FV= PV*(1+i)^n
a. Interest rate= 10% compounded annually.
FV= 16,700*(1.10^2)
FV= $20,207
b. Interest rate= 0.1/2= 0.05
n= 2*2= 4
FV= 16,700*(1.05^4)
FV= $20,298.95
The current price of a stock is $50, the annual risk-free rate is 6%, and a 1-year call option with a strike price of $55 sells for $7.20. What is the value of a put option, assuming the same strike price and expiration date as for the call option?
Answer:
$9.00.
Explanation:
The computation of the value of a put option is shown below:
Data provided in the question
Current price of the stock = $50
Risk free rate = 6%
Strike price = $55
Sale price = $7.20
Based on the above information
The value of put option is
Put = V - P + X exp(-r t)
= $7.20 - $50 + $55 e RF - 0.06(1)
= $7.20 - $50 + $51.80
= $9.00
Hence, the value of put option is $9
Tailoring goods or services to the tastes of individual customers on a high-volume scale is a segmentation strategy known as _____.
Answer:
Segments of one.
Explanation:
Market segmentation can be defined as the process of aggregating potential consumers (buyers) into a collective groups having common or related needs and are most likely to respond similarly to marketing techniques. A good market segmentation base are the behavioral, demographic, psychographic and geographical variables to determine its strategy or techniques.
Tailoring goods or services to the tastes of individual customers on a high-volume scale is a segmentation strategy known as segments of one.
Under the segment of one, service providers or business entities are typically focused on a single customer and as such they track and understand the preferences or behavior of this customer. This is to enable the service provider an ability to tailor their products or services to meet the tastes, or preferences of such customer.
Analysis reveals that a company had a net increase in cash of $21,430 for the current year. Net cash provided by operating activities was $19,300; net cash used in investing activities was $10,650 and net cash provided by financing activities was $12,780. If the year-end cash balance is $25,950, the beginning cash balance was:
Answer:
i thinktheanswer would be 87 or 98 few dw
Explanation:
You are interested in purchasing a new automobile that costs $ 38 comma 000. The dealership offers you a special financing rate of 12 % APR (1%) per month for 48 months. Assuming that you do not make a down payment on the auto and you take the dealer's financing deal, then your monthly car payments would be closest to:
Answer:
$1,000.69
Explanation:
For computing the monthly car payment we need to apply the PMT formula i.e to be shown in the attachment below
Provided that
Present value = $38,000
Future value or Face value = $0
NPER = 48 months
RATE = 1%
The formula is shown below:
= PMT(RATE;NPER;-PV;FV;type)
The present value come in negative
So, after applying the above formula, the monthly car payment is $1,000.69
During the ____________step in activity-based costing, overhead costs in each activity cost pool are assigned to products.
a. first
b. second
c. third
d. fourth
Answer:
d. fourth
Explanation:
Activity-based costing involves the following steps:
-First step: establish the activities that use resources and assign the costs to them.
-Second step: identify what causes the costs in each activity and this would be the allocation base.
-Third step: find an activity rate.
-Fourth step: assign costs to the products according to the activity usage by the product.
According to this, the answer is that during the fourth step in activity-based costing, overhead costs in each activity cost pool are assigned to products.
For each scenario, identify which argument is being used to justify trade protectionism.
Argument:
1. Job creation argument
2. National Security argument
3. Infant industry argument
a. Politicians in a small nation want to impose tariffs on foreign food because they believe the nation is too dependent on foreign producers.
b. Lobbyists argue that by prohibiting the importation of manufactured goods, the domestic manufacturing industry will create thousands more jobs.
c. Brazil imposes high tariffs for computer imports so small, domestic manufacturers can develop the technology needed to compete with foreign competitors.
d. Lobbyists argue that raising import tariffs on foreign oil will lead to more domestic jobs in the domestic energy industry.
Answer:
a. Politicians in a small nation want to impose tariffs on foreign food because they believe the nation is too dependent on foreign producers.
2. National Security argumentThis argument is generally used on high tech products, but it is sometimes used to support other industries that are considered essential and very important for a country. The problem is that it always results in higher domestic prices benefiting only a few.
b. Lobbyists argue that by prohibiting the importation of manufactured goods, the domestic manufacturing industry will create thousands more jobs.
1. Job creation argumentUnder this policy, politicians think that they can substitute imports by local products which would favor the trade balance and also generate jobs. The problem is that domestic prices might be very high and consumers will be forced to pay those high prices. Also, other economies can retaliate and the country's exports might be negatively affected.
c. Brazil imposes high tariffs for computer imports so small, domestic manufacturers can develop the technology needed to compete with foreign competitors.
3. Infant industry argumentThis argument is used by politicians that claim that infant industries (or recent, new industries) need to be protected in order to be able to function, prosper and grow. The problem with this argument is that industries operate under a bubble and consumers are charged very high prices for obsolete technology.
d. Lobbyists argue that raising import tariffs on foreign oil will lead to more domestic jobs in the domestic energy industry.
1. Job creation argumentAgain, under this policy, politicians think that they can substitute imports by local products which would favor the trade balance and also generate jobs. The problem is that domestic prices might be very high and consumers will be forced to pay those high prices.
a. If the market price is $56.00 per bushel of wheat, and Ali chooses to produce wheat, how much will he produce per month to maximize his profits in the short run
Answer:
2000 Bushels of wheat per month
Explanation:
Profit is maximized where Marginal cost equals Marginal Revenue. The revenue is maximized where 2000 bushels are sold for the price of $56 per bushel. The marginal revenue at this point equals the marginal cost. Ali will maximize his profits in the short run based on the marginal revenue and marginal cost equilibrium.
Where in the CAFR would one find the long-term liability for revenue bonds (paid from the revenues of an enterprise fund)?
A. The proprietary funds Statement of Net Position only
B. The government-wide Statement of Net Position only
C. The government-wide Statement of Net Position and the proprietary funds Statement of Net Position
D. The government-wide Statement of Net Position and the RSI Schedule of Bonds Payable
Answer:
C. The government-wide Statement of Net Position and the proprietary funds Statement of Net Position
Explanation:
CAFR ( Comprehensive Annual Financial reporting ) is provides accurate, summarised, and meaningful information. There are three sections of this reporting as below.
IntroductionFinancialStatisticalIn government-wide statement, The capital is reported on the net basis on financial statements.
Free Spirit’s marketing and sales director doesn’t think that the firm’s market is big enough for the firm to break even. In fact, she believes that the firm will be able to sell only about 200,000 units. However, she also thinks that the demand for Free Spirit’s product is relatively inelastic (so the firm can increase the sales price without significantly decreasing the volume of product sold). Assuming that the firm can sell 200,000 units, what price must it set to break even? $67.69 per unit $85.50 per unit $78.38 per unit $71.25 per unit
Answer:
$60.75
Explanation:
your question seems incomplete. here is the full question used in answering this question
Free Spirit Industries Inc. is considering a project that will have fixed costs of $10,000,000. The product will be sold for $41.50 per unit, and will incur a variable cost of $10.75 per unit. p na r so Free Spirit's marketing and sales director doesn't think that the firm's market is big enough for the firm to break even. In fact, she believes that the firm will be able to sell only about 200,000 units. However, she also thinks that the demand for Free Spirit's product is relatively inelastic (so the firm can increase the sales price without significantly decreasing the volume of product sold). Assuming that the firm can sell 200,000 units, what price must it set to break even? O $57.71 per unit O $72.90 per unit O $60.75 per unit O $66.83 per unit
Breakeven price = (fixed cost / quantity sold) + variable price per unit
($10,000,000 / 200,000) + $10.75 = $60.75
Use linear approximation to estimate the amount of paint in cubic centimeters needed to apply a coat of paint 0.07 cm thick to a hemispherical dome with a diameter of 30 meters.
Answer:
dv= 989100cm^3
Explanation:
The volume of a sphere can be calculated using below formula
Volume of a sphere = 4/3 π r^3
Therefore, for a hemisphere, V= 2/3 pi r^3
V=(4/3)πr³
V= 2/3πr³
dV/dr=4πr²
Then we need to pproximate dV/dr with
ΔV/Δr then we have
Volume of hemispherical some is one half of the the volume of a sphere where dr is change in radius, dv is change in volume
dV/dr=2πr²
Take the derivative of V with respect to r then we have
dV=2πr²dr
where
Radius = diameter/2
Our diameter is 30cm then
r=30m/2 = 15cm
Then we convert to cm we have
r= 1500cm
dv= 2×π ×(1500)^2 × 0.07
dv= 989100cm^3
the amount of paint in cubic centimeters needed to apply a coat of paint 0.07 cm thick to a hemispherical dome with a diameter of 30 meters is
989100cm^3
Using a linear approximation to estimate the amount of paint in cubic centimeters needed to apply a coat of paint 0.07 cm thick to a hemispherical dome with a diameter of 30 meters will be: 989,601.69 cubic centimeters
Volume of a sphere = 4/3 πr^3
Hemisphere:
V= 2/3 πr^3
dV = 2πr^2 dr
Where:
dr=0.07cm
r=(1/2)×30m=1500cm
Let plug in the formula
dV = 2×π×(1500^2)×(.07)
dV=989,601.69 cubic centimeters
Inconclusion using a linear approximation to estimate the amount of paint in cubic centimeters needed to apply a coat of paint 0.07 cm thick to a hemispherical dome with a diameter of 30 meters will be: 989,601.69 cubic centimeters
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Flapjack Corporation had 7,600 actual direct labor hours at an actual rate of $12.41 per hour. Original production had been budgeted for 1,100 units, but only 950 units were actually produced. Labor standards were 7.0 hours per completed unit at a standard rate of $13.00 per hour. The direct labor time variance is
Answer:
-$12,350 Unfavorable
Explanation:
The computation of direct labor variance is shown below:
Labor time variance = (Standard hours - Actual hours) × standard rate
= (950 × 7.0 - 7,600) × $13
= (6,650 - 7,600) × $13
= -950 × $13
= -$12,350 Unfavorable
Therefore for computing the direct labor variance we simply applied the above formula by considering the given information
Maxwell and Smart are forming a partnership. Maxwell is investing a building that has a market value of $84,000. However, the building carries a $52,000 mortgage that will be assumed by the partnership. Smart is investing $28,000 cash. The balance of Maxwell's Capital account will be:
Answer:
$32,000
Explanation:
Calculation for the balance of Maxwell's Capital account
Using this formula
Assets =Liabilities-Owner's Equity
Where,
Liabilities =$84,000
Owner's Equity=$52,000
Let plug in the formula
Assets =$32,000
Therefore the balance of Maxwell's Capital account will be $32,000
The inflation rate over the past year was 3.8 percent. If an investment had a real return of 6.9 percent, what was the nominal return on the investment?
Answer:
Nominal rate of return= 10.96%
Explanation:
Inflation is the increase in the price level.It erodes the value of money.rise in the price of money
Nominal interest is that quoted for investment or loan transactions. It has not been been adjusted for inflation.
Real interest rate is the amount of interest in terms of the the quantity of good and services that can be purchased. It is the nominal interest rate adjusted for inflation.
The relationship between inflation, real interest and nominal interest rate is given using the Fishers Effect;
N = ( (1+R) × (1+F)) - 1
N- nominal rate, R-real rate, F- inflation
Nominal rate of return =(1.038)× (1.069) - 1 = 0.109622
Nominal rate of return = 0.109622 × 100 = 10.96%
Nominal rate of return= 10.96%
Which of the following business combinations is a vertical integration? A. The corner gas station buys the competitor across the street and shuts them down to increase its own market share. B. The corner gas station and the competitor across the street agree to set their prices at the same level. C. The corner gas station acquires the gasoline distributor to ensure they can get gas in times of shortages. D. The corner gas station starts selling fireworks during December/January and June/July.
Answer:
C. The corner gas station acquires the gasoline distributor to ensure they can get gas in times of shortages.
Explanation:
Vertical integration is the situation where the same company owns both the sources of supply and the distribution (retail) outlets. The description of (C) matches this definition.
Joe Henry's machine shop uses 2,500 brackets during the course of a year. These brackets are purchased from a supplier 90 miles away. The following information is known about the brackets: (12 points) Annual demand 4,000 Holding cost per bracket per year $1.75 Order cost per order $25.00 Lead time 4 days Working days per year 250
a. Given the above information, what would be the economic order quantity (EOQ)?
b. Given the EOQ, what would be the average inventory? What would be the annual inventory holding cost?
c. Given the EOQ, how many orders would be made each year? What would be the annual order cost?
d. Given the EOQ, what is the total annual cost of managing the inventory?
e. What is the time between orders?
f. What is the reorder point (ROP)?
Answer:
a. 339 brackets
b. 169.5 and $296.63
c. 12 and $300
d. $596.63
e. 4 days
f. 40 brackets
Explanation:
Economic Order Quantity is the Order size that minimizes holding costs and ordering cost of inventory.
Economic Order Quantity = √ 2 × Annual Demand × Ordering Cost / (Holding Cost per unit)
= √(2 × 4,000 × $25.00) / $1.75
= 339 brackets
Average Inventory = Economic Order Quantity ÷ 2
= 339 ÷ 2
= 169.5
Annual inventory holding cost = Average Inventory × Holding Cost per unit per year
= 169.5 × $1.75
= $296.63
Orders to make each year = Total Annual Demand ÷ Economic Order Quantity
= 4,000 ÷ 339 brackets
= 11.7994 or 12
Annual order cost = Number of Orders × Cost per Order
= 12 × $25.00
= $300
Total Annual Cost = Annual inventory holding cost + Annual order cost
= $296.63 + $300
= $596.63
Reorder point (ROP) = Lead time × usage per day
= 4 × ( 2,500 / 250)
= 40 brackets
4. (10 points). Prezas Company's balance sheet showed total current assets of $4,250, all of which were required in operations. Its current liabilities consisted of $975 of accounts payable, $600 of 6% short-term notes payable to the bank, and $250 of accrued wages and taxes. What was its net operating working capital
Answer: $3,025
Explanation:
The Net Working Capital is used to find out if the company is able to use its current assets to cater for it's Current Liabilities and as such is calculated by subtracting Current Assets from Current Liabilities.
= Current Assets - Current Liabilities
Current Liabilities = 975 + 250
= $1,225
The interest bearing funds are not included when Calculating Net Working Cap.
Net Working Capital = 4,250 - 1,225
= $3,025
For a recent year, McDonald's Company-owned restaurants had the following sales and expenses (in millions):
Sales $28,600
Food and packaging $9,710
Payroll 7,200
Occupancy (rent, depreciation, etc.) 6,630
General, selling, and administrative expenses 4,200
$27,740
Income from operations $860
Assume that the variable costs consist of food and packaging, payroll, and 40% of the general, selling, and administrative expenses.
a. What is McDonald's contribution margin? Round to the nearest tenth of a million (one decimal place)
b. What is McDonald's contribution margin ratio? Round to one decimal place.
c. How much would income from operation increase if the same-store sales increased by $900 million for the coming year, with NO change in the contribution margin ratio or fixed costs? Round your answer to the nearest tenth of a million (one decimal place)
Answer:
a. What is McDonald's contribution margin?
contribution margin = total sales - total variable costs = $28,600 - [$9,710 + $7,200 + (0.4 x $4,200)] = $10,010
b. What is McDonald's contribution margin ratio?
contribution margin ratio = contribution margin / total sales = $10,010 / $28,600 = 0.35 ≈ 0.4
c. How much would income from operation increase if the same-store sales increased by $900 million for the coming year, with NO change in the contribution margin ratio or fixed costs?
increase in total contribution margin = $900 x 0.35 = $315
Income from operations will increase by $315 million
One basic factor for success with DynamoDB. select one
Answer:
how can I select one of there isn't any options.
Per Unit Percent of Sales Selling price $ 115 100 % Variable expenses 69 60 Contribution margin $ 46 40 % Fixed expenses are $83,000 per month and the company is selling 2,500 units per month. rev: 06_04_2020_QC_CS-205709, 06_18_2020_QC_CS-216765 Required: 1-a. How much will net operating income increase (decrease) per month if the monthly advertising budget increases by $8,800 and monthly sales increase by $17,250
Answer:
Net operating income will increase by $8,450 per month.
Explanation:
Prepare a Incremental analysis to reflect the impact of the new circumstances.
Incremental analysis
Incremental Sales $17,250
Less Incremental Fixed Cost ($8,800)
Incremental Income $8,450
Conclusion :
Net operating income will increase by $8,450 per month.
"An investor buys $10,000 of a "regulated" mutual fund investing solely in municipal securities. Which statement is TRUE regarding the Federal tax treatment of the interest income?"
Answer: D. The investor has no tax liability on distributions received, and the investment company has no tax liability on retained income
Explanation:
Municipal Securities are exempt of Federal taxes and this is what makes them most attractive. An investor in a mutual fund which invests solely in municipal securities will therefore not have any tax liability because their returns would be based on securities that are federally tax exempt. The same goes for any income the Mutual fund intends to retain.
Cash receipts journal-perpetual LO P1 Ali Co. uses a sales journal, a purchases journal, a cash receipts journal, a cash disbursements journal, and a general journal. The following transactions occur in the month of November.
Nov. 3 The company purchased $4,100 of merchandise on credit from Hart Co., terms n/20. 7 The company sold merchandise costing $1,082 on credit to J. Than for $1,189, subject to a $24 sales discount if paid by the end of the
month.
9 The company borrowed $3,125 cash by signing a note payable to the bank. 13 J. Ali, the owner, contributed $4,425 cash to the company.
18 The company sold merchandise costing $172 to B. Cox for $306 cash.
22 The company paid Hart Co. $4,100 cash for the merchandise purchased on November 3.
27 The company received $1,165 cash from J. Than in payment of the November 7 purchase.
30 The company paid salaries of $2,050 in cash.
Required:
Journalize the November transactions that should be recorded in the cash receipts journal assuming the perpetual inventory system is used.
Answer:
Analysis
Date Description Amount Account // Sales // Other
Receivables
9th Promissory Note 3,125 3,125
18th Cash Sale 306 306
27th J.Than Account 1,165 1,165
Subtotals 4,596 1,165 306 3,125
Explanation:
We are required to record inthe cash receipts journal therefore, only thus transactions which involve the receipts of cash will be jounralize.
We will record the amount to get the total
And then, break it into account receivables, sales and other concepts.
Arctic Cat sold Seneca Motor Sports a shipment of snowmobiles. The snowmobiles were delivered on January 1, 2021, and Arctic received a note from Seneca indicating that Seneca will pay Arctic $40,000 on a future date. Unless informed otherwise, assume that Arctic views the time value of money component of this arrangement to be significant and that the relevant interest rate is 8%.
Required:
a. Assume the note indicates that Seneca is to pay Arctic the $40,000 due on the note on December 31, 2021. Prepare the journal entry for Arctic to record the sale on January 1, 2021.
b. Assume the same facts as in requirement 1, and prepare the journal entry for Arctic to record collection of the payment on December 31, 2021.
c. Assume instead that Seneca is to pay Arctic the $40,000 due on the note on December 31, 2022. Prepare the journal entry for Arctic to record the sale on January 1, 2021.
d. Assume instead that Arctic does not view the time value of money component of this arrangement to be significant, and that the note indicates that Seneca is to pay Arctic the $40,000 due on the note on December 31, 2021. Prepare the journal entry for Arctic to record the sale on January 1, 2021.
Answer:
Assume the note indicates that Seneca is to pay Arctic the $40,000 due on the note on December 31, 2021. Prepare the journal entry for Arctic to record the sale on January 1, 2021.
Dr Notes receivable 40,000
Cr Sales revenue 37,037
Cr Discount on notes receivable 2,963
Discount on notes receivable is a contra asset account that decreases the net amount of notes receivable.
Assume the same facts as in requirement 1, and prepare the journal entry for Arctic to record collection of the payment on December 31, 2021.
Dr Cash 40,000
Cr Notes receivable 37,037
Cr Interest revenue 2,963
Assume instead that Seneca is to pay Arctic the $40,000 due on the note on December 31, 2022. Prepare the journal entry for Arctic to record the sale on January 1, 2021.
Dr Notes receivable 40,000
Cr Sales revenue 34,294
Cr Discount on notes receivable 5,706
Discount on notes receivable is a contra asset account that decreases the net amount of notes receivable.
Assume instead that Arctic does not view the time value of money component of this arrangement to be significant, and that the note indicates that Seneca is to pay Arctic the $40,000 due on the note on December 31, 2021. Prepare the journal entry for Arctic to record the sale on January 1, 2021.
Dr Notes receivable 40,000
Cr Sales revenue 40,000
Explanation:
Non interest bearing notes must be recorded at present value, so we need to determine the present value of the payment:
Payment due December 21, 2021, PV = $40,000 / (1 + 8%) = $37,037
Payment due December 21, 2022, PV = $40,000 / (1 + 8%)² = $34,294
We use the discount on notes receivable account (contra asset account) to decrease the net value of notes receivable.
When China reformed state-owned enterprises, it tried a new approach to choosing managers: it put managerial jobs up for auction. The bids for the jobs consisted of promises of future profit streams that the managers would generate and then deliver to the state. In cases where the incumbent manager was the winning bidder, firm productivity tended to increase dramatically. When outside bidders won, there was little productivity improvement. Assume that incumbent managers and new managers had similar qualifications. True or False: This result is an example of the winner's curse.
Answer:
True
Explanation:
Winner curse is a situation where the bidder win the bid in an auction that exceeds the true worth or intrinsic value of the item auctioning. In the given scenario the inside managers bid for realistic performance. The outside managers tend to bid for higher performance to get the job. They does not seem to be realistic.
According to the Keynesian transmission mechanism, an increase in the money supply causes a(n) __________ in the interest rate and a(n) __________ in investment, which in turn causes a(n) __________ in total expenditures and aggregate demand.
Answer: lower; rise; raises.
Explanation:
According to the Keynesian transmission mechanism, when there is an increase in money supply which is an expansionary policy, this will result into a reduction in the interest rate.
Since the interest rate has been reduced, this will lead to an increase the in investment as investors will be willing to borrow loan for investment opportunities and this will also lead to a rise in the total demand and expenditure.