Suppose that XTel currently is selling at $60 per share. You buy 1,000 shares using $48,000 of your own money, borrowing the remainder of the purchase price from your broker. The rate on the margin loan is 8%.
Required:
What is the percentage increase in the net worth of your brokerage account if the price of XTel immediatelychanges to (a) S66: (b) $60; (c) S54?
Answer:
a. 12.50%
b. 5%
c. -12.50%
Explanation:
Purchase value of share = 1000 shares x $60 = $60000
Own money used for pruchase = $48000
Loaned money = 60000 - 48000 = $12000
a. Percentage increase in net worth = (66x1000 - 12000 - 48000) / 48000 = 12.50%
b. Percentage increase in net worth = (60x1000 - 12000 - 48000) / 48000 = 0%
a. Percentage increase in net worth = (54x1000 - 12000 - 48000)/48000 = -12.50%
The following is a list of account titles and amounts (in millions) reported at December 27, 2015, by Hashey, Inc. a leading manufacturer of games, toys, and interactive entertainment software for children and families:
Accounts Receivable $1,119 Equipment $496
Accumulated Amortization 751 Goodwill 601
Accumulated Depreciation 506 Inventories 356
Allowance for Doubtful Accounts 35 Land 10
Buildings 246 Licensing Rights 1,841
Cash and Cash Equivalents 686 Prepaid Rent 361
Required:
Prepare the asset section of a classified balance sheet for Hashey, Inc.
Answer and Explanation:
The preparation of the asset section of the classified balance sheet is presented below;
ASSETS
Current assets:
Cash and cash equivalents $686
Accounts receivable $1,119
Less: Allowance for doubtful accounts ($35)
Accounts receivable (net) $1,084
Inventory $356
Prepaid rent $361
Total current assets $2,487
Property, Plant and Equipment:
Land $10
Buildings $246
Equipment $496
Property, Plant and Equipment (at cost) $752
Less: Accumulated depreciation ($506)
Total Property, Plant and Equipment (net) $246
Other assets
Licensing rights $1,846
Goodwill $601
Less: Accumulated amortization ($751)
Other assets (Net) $1,691
Total assets $4,424
The typical horizontal flows of information in an accounts payable/cash disbursements process might include all of the following except:
a. an invoice is received from a vendor
b. the paid voucher is returned to the accounts payable department
c. an approved disbursement voucher is sent to the cashier
d. a copy of a receiving report is sent to the cashier
Answer:
d. a copy of a receiving report is sent to the cashier
Explanation:
In the case of the horizontal flows with respect to the account payable or cash disbursements, it involved the invoice i.e. collected from the vendor, the voucher i.e. returned and the approved disbursement voucher is sent to the cashier but it does not involve the receiving report that sent to the cashier
Therefore the correct option is d.
When you ask the controller to look into federal reimbursements to see if he can find the cause of the reduction, how might he respond? (Select all that apply) Federal reimbursements are not part of the revenue cycle, the problem lies in revenue. Since federal reimbursements are part of the revenue cycle, we might find the problem there. The problem lies in revenue so it’s possible that charges are not being generated. The problem lies in revenue so there could be a problem in claims.
Answer:
Federal reimbursements are not part of the revenue cycle, the problem lies in revenue.
The problem lies in revenue so its possible that charges are not being generated.
Explanation:
Federal reimbursements are not revenue. These reimbursements are treated separately other than revenue. The charges are not generated because federal funds are not part of revenue cycle.
Adjani is hearing more complaints from his employees about headaches and breathing difficulties. A consultant found that the air quality in his building was poor and recommended all of the following EXCEPT:________.
A. Install new carpeting.
B. Reduce the use of automatic air fresheners.
C. Clean air ducts regularly.
D. Use cleaning supplies that do not emit irritation fumes.
E. Check office equipment for airborne contaminants.
Answer:
a
Explanation:
On April 2, Rolex SA sold $40,000 of inventory items on credit with the terms 1/10, net 30. Payment on $24,000 of sales was received on April 8 and the remaining payment on $16,000 of sales was received on April 27. Assuming Rolex uses the net method of accounting for sales discounts, the entry recorded on April 27 would include a:_____.
a. Debit to cash for $15,840.
b. Debit to revenue for $40,000.
c. Credit to sales discounts forfeited for $160.
d. Debit to accounts receivable for $400.
Answer:
c. Credit to sales discounts forfeited for $160.
Explanation:
Based on the information given the entry recorded on April 27 would include a: CREDIT TO SALES DISCOUNTS FORFEITED FOR $160
($16,000*1%=$160)
The journal entries are:
A. Dr Accounts receivable $160
Cr Sales Discount forfeited $160
B. Dr Cash $16,000
Cr Accounts receivable $16,000
Rodger's Cabinet Manufacturers uses flexible budgets that are based on the following manufacturing data for the month of July:
Direct materials $8 per unit
Direct labor $5 per unit
Electric power (variable) $0.30 per unit
Electric power (fixed) $4,000 per month
Supervisor salaries $25,000 per month
Property taxes on factory $4,000 per month
Straight-line depreciation $2,900 per month
Prepare a flexible budget for Rodger's based on production of 10,000, 15,000, and 20,000 units.
Rodger's Cabinet Manufacturers Flexible Manufacturing Budget For the Month Ended July 31
Answer:
Rodger's Cabinet Manufacturers
Rodger's Cabinet Manufacturers
Flexible Budget for the Month Ended July 31
10,000 units 15,000 units 20,000 units
Variable Costs:
Direct materials $8 per unit $80,000 $120,000 $160,000
Direct labor $5 per unit 50,000 75,000 100,000
Electric power (variable) $0.30 3,000 4,500 6,000
Total variable costs $133,000 $199,500 $266,000
Fixed costs:
Electric power (fixed) 4,000 4,000 4,000
Supervisor salaries 25,000 25,000 25,000
Property taxes on factory 4,000 4,000 4,000
Straight-line depreciation 2,900 2,900 2,900
Total fixed costs $35,900 $35,900 $35,900
Total costs $169,400 $235,400 $301,900
Explanation:
a) Data and Calculations:
Direct materials $8 per unit
Direct labor $5 per unit
Electric power (variable) $0.30 per unit
Electric power (fixed) $4,000 per month
Supervisor salaries $25,000 per month
Property taxes on factory $4,000 per month
Straight-line depreciation $2,900 per month
Complete the following data taken from the condensed income statements for merchandising Companies X, Y, and Z. Enter net loss with a minus sign.
Company X Company Y Company Z
Net income/(net loss) $30 $________ $(20)
Sales ___________ 1,270 970
Gross profit 245 __________ 525
Operating expenses __________ 525 ___________
Cost of goods sold 330 790 ____________
Answer:
1226=113 %44311)23444443
Item7 Item 7 Boccardi Inc., has invested in new pasta manufacturing equipment at a cost of $48,000. The equipment has an estimated useful life of eight years. Estimated annual sales and operating expenses related to the pasta equipment follow: Annual sales $ 88,000 Labor costs (72,000 ) Depreciation of equipment (6,000 ) Operating income $ 10,000 Income taxes (4,000 ) Net income $ 6,000 The estimated accounting rate of return is:
Answer:
12.5%
Explanation:
Accounting rate of return = (Net Income / Equipment cost) * 100
Accounting rate of return = ($6000/$48000)*100
Accounting rate of return = 0.125 * 100
Accounting rate of return = 12.5%
So, the estimated accounting rate of return is 12.5%.
Regardless of his income and regardless of prices, Smedley always spends 25% of his income on housing, 10% on clothing, 30% on food, 15% on transportation, and 20% on recreation. This behavior is consistent with which of the following?
a. All goods are perfect substitutes.
b. Smedley's demands for commodities do not change when their prices change.
c. Smedley consumes all goods in fixed proportions.
d. Smedley has a Cobb-Douglas utility function.
e. More than one of the above.
Answer: D. Smedley has a Cobb-Douglas utility function.
Explanation:
Utility is the satisfaction that a customer gets when he or she uses a particular good or service.
Since we're informed that regardless of his income and regardless of prices, Smedley always spends 25% of his income on housing, 10% on clothing, 30% on food, 15% on transportation, and then spends 20% on recreation, this behavior is consistent with a Cobb-Douglas utility function.
In this case, the goods aren't perfect substitute as they do not serve safe function. Also, Smedley doesn't consumes all goods in fixed proportions. Therefore, the correct option is D.
Zoey Bella Company has a payroll of $6,200 for a five-day workweek. Its employees are paid each Friday for the five-day workweek. Journalize the adjusting entry required on December 31, assuming the year ends on a Thursday.
Answer:
Debit Salaries Expense $6,200
Credit Salaries Payable $6,200
Explanation:
Preparation of the adjusting entry required on December 31, assuming the year ends on a Thursday.
Based on the information given the appropriate
adjusting journal entry required on December 31, assuming the year ends on a Thursday will be :
December 31
Debit Salaries Expense $6,200
Credit Salaries Payable $6,200
Required: 1. Prepare a bank reconciliation for Oscar's checking account on February 28, 2021. (Amounts to be deducted should be indicated with a minus sign. Total entries to the same account together when entering in the bank reconciliation.) Answer is not complete. OSCAR'S RED CARPET STORE Bank Reconciliation February 28, 2021 Bank's Cash Balance Company's Cash Balance Per bank statement $ 11,770 Per general ledger Deposits outstanding 1,500 Company error Checks outstanding 2,000 % $ 7,150 (650) Bank balance per reconciliation Company balance per reconciliation Oscar's Red Carpet Store maintains a checking account with Academy Bank. Oscar's sells carpet each day but makes bank deposits only once per week. The following provides information from the company's cash ledger for the month ending February 28, 2021. Deposits: Date 2/4 2/11 2/18 2/25 2/26-2/28 Amount $ 2,600 Checks: 2,200 3, 100 4,000 1,500 $ 13, 400 No. 321 322 323 324 325 326 327 Date 2/2 2/8 2/12 2/19 2/27 2/28 2/28 Amount $ 4,600 650 2,400 2,100 450 950 1,800 $ 12,950 Cash receipts: Balance on February 1 Receipts Disbursements Balance on February 28 $ 6,700 13,400 (12,950) $ 7,150 Information from February's bank statement and company records reveals the following additional information:
a. The ending cash balance recorded in the bank statement is $11,770.
b. Cash receipts of $1,500 from 2/26-2/28 are outstanding.
c. Checks 325 and 327 are outstanding.
d. The deposit on 2/11 includes a customer's check for $450 that did not clear the bank (NSF check).
e. Check 323 was written for $2,800 for advertising in February. The bank properly recorded the check for this amount.
f. An automatic withdrawal for Oscar's February rent was made on February 4 for $1,300.
g. Oscar's checking account earns interest based on the average daily balance. The amount of interest earned for February is $190.
h. In January, one of Oscar's suppliers, Titanic Fabrics, borrowed $5,800 from Oscar. On February 24, Titanic paid $5,950 ($5,800 borrowed amount plus $150 interest) directly to Academy Bank in payment for January's borrowing.
i. Academy Bank charged service fees of $120 to Oscar's for the month.
Answer:
A. Cash balance as per bank $11,020.00
Cash balance as per books $11,020.00
B. 28-Feb
Dr Cash $6,140.00
Cr To Note receivables $5,800.00
Cr To Interest Revenue $340.00
28-Feb
Dr Accounts Receivables $450.00
Dr Advertising expense $400.00
Dr Rent expense $1,300.00
Dr Miscellaneous expense $120.00
Cr To Cash $2,270.00
Explanation:
Preparation of a bank reconciliation for Oscar's checking account on February 28, 2021.
OSCAR'S RED CARPET Bank Reconciliation - February 28
BANK'S CASH BALANCE
Ending balance as per Bank Statements $11,770.00
Add Outstanding Deposits $1,500.00
Less Outstanding Checks ($2,250.00)
($450 + $1,800)
Cash balance as per bank $11,020.00
COMPANY'S CASH BALANCE
Ending Balance as per cash books $7,150.00
Note Collection (including interest) $5,950.00
Interest earned $190.00
Less: NSF Cheque ($450.00)
Incorrect recording of check 323 ($400.00)
Rent withdrawl ($1,300.00)
Service charge ($120.00)
Cash balance as per books $11,020.00
Therefore the bank reconciliation for Oscar's checking account on February 28, 2021 will be:
Cash balance as per bank $11,020.00
Cash balance as per books $11,020.00
2. Preparation to Record the necessary cash adjustments.
Journal Entries - Oscar's Red Carpet
28-Feb
Dr Cash $6,140.00
Cr To Note receivables $5,800.00
Cr To Interest Revenue $340.00
(To record reconciliation items that increases in cash)
28-Feb
Dr Accounts Receivables $450.00
Dr Advertising expense $400.00
Dr Rent expense $1,300.00
Dr Miscellaneous expense $120.00
Cr To Cash $2,270.00
(To record reconciliation items that decreases cash)
A. Cash balance as per bank $11,020.00
Cash balance as per books $11,020.00
B. 28-Feb
Dr. Cash $6,140.00
Cr to notice receivables $5,800.00
Cr To Interest Revenue $340.00
28-Feb
Dr. Accounts Receivables $450.00
Dr. Advertising expense $400.00
Dr Rent expense $1,300.00
Dr. Miscellaneous expense $120.00
Cr To Cash $2,270.00
Bank ReconciliationPreparation of a bank reconciliation for Oscar's bank account on February 28, 2021.
OSCAR'S RED CARPET Bank Reconciliation - February 28
BANK'S CASH BALANCE
Ending balance as per Bank Statements $11,770.00
Add Outstanding Deposits $1,500.00
Less Outstanding Checks ($2,250.00)
($450 + $1,800)
Cash balance as per bank $11,020.00
Now the "COMPANY'S CASH BALANCE" is
Ending Balance as per cash books $7,150.00
Note Collection (including interest) $5,950.00
Interest earned $190.00
Less: NSF Cheque ($450.00)
Incorrect recording of check 323 ($400.00)
Rent withdrawal ($1,300.00)
Service charge ($120.00)
Cash balance as per books $11,020.00
Thus, the bank reconciliation for Oscar's bank account on February 28, 2021, will be:
Cash balance as per bank $11,020.00
Cash balance as per books $11,020.00
2. Preparation to Record the mandatory cash adjustments.
Journal Entries - Oscar's Red Carpet
28-Feb
Dr. Cash $6,140.00
Cr to notice receivables $5,800.00
Cr To Interest Revenue $340.00
(To record reconciliation items that increase in cash)
28-Feb
Dr. Accounts Receivables $450.00
Dr. Advertising expense $400.00
Dr Rent expense $1,300.00
Dr. Miscellaneous expense $120.00
Cr To Cash $2,270.00
Then (Record reconciliation items that decrease cash)
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4. Social responsibility is an area of business with issues that
A. are easy to resolve.
B. change constantly in response to society's demands.
C. stay constant due to consistent societal demands.
D. change occasionally in response to society's demands.
Social responsibility is an area of business that changes occasionally in response to society's demands. So the correct option is D.
How does the business determine society's demands?Businesses must decide what to produce to satisfy the needs and wants of the society or consumer. Business determined the taste, preference of the consumer, and level of income, fashionable trends also help.
The business firm also contributes to the growth of society by bringing innovation in the market, to provide better facilities for the consumer.
Therefore the correct option is D.
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A job was budgeted to require 3 hours of labor per unit at $11.00 per hour. The job consisted of 8,000 units and was completed in 22,000 hours at a total labor cost of $269,500. What is the direct labor efficiency variance
Answer:
Direct labor time (efficiency) variance= $22,000 favorable
Explanation:
To calculate the direct labor efficiency variance, we need to use the following formula:
Direct labor time (efficiency) variance= (Standard Quantity - Actual Quantity)*standard rate
Direct labor time (efficiency) variance= (3*8,000 - 22,000)*11
Direct labor time (efficiency) variance= (24,000 - 22,000)*11
Direct labor time (efficiency) variance= $22,000 favorable
On December 31, 2020, Marin Company borrowed $67,653 from Paris Bank, signing a 5-year, $114,000 zero-interest-bearing note. The note was issued to yield 11% interest. Unfortunately, during 2022, Marin began to experience financial difficulty. As a result, at December 31, 2022, Paris Bank determined that it was probable that it would receive back only $85,500 at maturity. The market rate of interest on loans of this nature is now 12%.
Prepare the entry, if any, to record the impairment of the loan on December 31, 2022, by Paris Bank.
Answer:
Journal Entries
December 31, 2020
Dr. Note Receivables $114,000
Cr. Discount on bond $46,347
Cr. Cash $67,653
December 31, 2020
Dr. Impairment loss $20,839
Cr. Allowance for Impairment $20,839
Explanation:
Calculate the discount on the bond as follow
Discount on the bond = Face value of Note - Borrowed Amount = $114,000 - $67,653 = $46,347
On December 31, 2020 calculate the present value of face value of note and recoverable value
Present value of Note = Face value x Discount factor at 11% for 3 years = $114,000 x 1/( 1 + 11%)^3 = $83,355.82
Present value of recoverable value of note = Recoverable value of note x Discount factor at 11% for 3 years = $85,500 x 1/( 1 + 11%)^3 = $62,516.86
Now calculate the impairment loss as follow
Impairment loss = Present value of Note - Present value of recoverable value of note = $83,355.82 - $62,516.86 = $20,838.96 = $20,839
The Browns plan to fly to their vacation spot and then drive through the mountains. They arranged to rent a sedan for $37.45 per day with no charge for mileage. What will it cost the Browns to rent a car for 10 days if they spend $78 for gasoline and $16.75 for miscellaneous items
Answer:
$469.25
Explanation:
total cost = total cost of renting car + cost of gas + miscellaneous items
total cost of renting car = 37.45 x 10 = 374.5
374.5 + 78 + 16.75 = 469.25
Margaret Moore started her own consulting firm, Carla Vista Consulting, on May 1, 2020. The following transactions occurred during the month of May.
May:
1 Trixie invested $7,600 cash in the business.
2 Paid $950 for office rent for the month.
3 Purchased $600 of supplies on account.
5 Paid $160 to advertise in the County News.
9 Received $4,500 cash for services performed.
12 Withdrew $1,200 cash for personal use.
15 Performed $5,600 of services on account.
17 Paid $2,000 for employee salaries.
20 Made a partial payment of $400 for the supplies purchased on account on May 3.
23 Received a cash payment of $3,600 for services performed on account on May 15.
26 Borrowed $5,500 from the bank on a note payable.
29 Purchased equipment for $4,000 on account.
30 Paid $350 for utilities.
Required:
Show the effects of the previous transactions on the accounting equation.
Answer:
1. Equity will increase
2. Asset Decrease
3. Asset and liability increase
4. Asset decrease
5. Asset increase
6. Equity decrease
7. Asset increase
8. Asset decrease
9. Asset and liability decrease
10. No effect
11. Asset and liability increase
12. Asset increase
13. Asset decrease
Explanation:
Accounting equation reflects the impact on the business for every transaction. There are three main components of an accounting equation. Asset, Liabilities and Equity. If one component increase the other might increase, decrease or have no effect.
Asset = Liabilities + Capital
example of business proposal
For those wishing to purchase a franchise, the Federal Trade Commission acts as a guardian ensuring that the business idea is sound and that the information in the Franchise Disclosure Document is accurate.
a. True
b. False
Answer:
b. False
Explanation:
In the case when the franchise is to be purchased so the federal commission acted as the guardian and they give the assurance that the idea related to the business is sounded also the information that contains in this should be correct but in real it should not be accurate as for obtaining the franchise the wrong information could be provided
So the given statement is false
Analyzing the Impact of Selected Transactions on the Current Ratio [LO 13-4, LO 13-5]
In its most recent annual report, Sunrise Enterprises reported current assets of $1,090,000 and current liabilities of $602,000.
Required:
Determine for each of the following transactions whether the current ratio, and each of its two components, for Sunrise will increase, decrease, or have no change: (1) sold long-term assets for cash, (2) accrued severance pay for terminated employees, (3) wrote down the carrying value of certain inventory items that were deemed to be obsolete, and (4) acquired new inventory by signing an 18-month promissory note (the supplier was not willing to provide normal credit terms).
Answer:
Sunrise Enterprises
Impact of Selected Transactions on the Current Ratio:
Current Ratio Current Assets Current Liabilities
(1) increase increase no change
(2) decrease no change increase
(3) decrease decrease no change
(4) increase increase no change
Explanation:
a) Data and Calculations:
Current assets = $1,090,000
Current liabilities = $602,000
Current ratio = 1.8 ($1,090,000/$602,000)
b) The current ratio (the ratio of current assets to current liabilities) is affected by increases or decreases in current assets without equal increases or decreases in current liabilities and vice versa.
Ortega Company manufactures computer hard drives. The market for hard drives is very competitive. The current market price for a computer hard drive is $54. Ortega would like a profit of $14 per drive. What target cost Ortega should set to accomplish this objective
Answer:
$40
Explanation:
Target cost is the cost per unit arrived at after having deducted the required profit margin from the competitive market price.
It is a management technique that makes management think about ways to achieve a set target cost rather than forcing their actual cost plus profit margin on customers.
In this case, the competitive market price is $54 per unit of hard drive whereas the company expects to achieve a total profit of $14 per unit
Profit margin per unit=$14
competitive market price=$54
Target cost=competitive market price-profit margin per unit
Target cost=$54-$14
Target cost=$40
Which of the following is an example of investment? A. the purchase of a new assembly line by Ford B. a person money adding money to his retirement fund C. a student increasing his human capital by attending college D. a person depositing $ 100 a week to her savings account
Answer:
Option A
Explanation:
In simple words, To invest means to set aside money in the hope of receiving a favorable benefit or profit in the hereafter. To put it another way, to invest is to possess an asset or an item with the intention of earning money from it or benefiting from the appreciation of your investment, which is a growth in the object's value over time.
Thus, from the above we can conclude that the correct option is A.
The theory which states that problems arise in corporations because top management no longer is willing to bear the brunt of their decisions unless they own a substantial amount of stock in the corporation is called
Answer:
Agency theory.
Explanation:
A corporation can be defined as a corporate organization that has facilities and owns or controls assets used for the production of goods and services in at least one country other than its headquarter (home office) located in its home country.
This ultimately implies that, a corporation is a corporate organization that owns or controls its business in two or more countries.
Typically, it is considered to be one of the most complicated and expensive type of organization. Generally, a corporation is considered to be perpetual in nature and it is a body that comprises of a group of people such as directors, shareholders etc., who act as a single entity.
One of the advantage of a corporation is that, owners have limited liability for debt to the extent to which they have invested and as such are not personally liable for some of debt owed by corporation.
The theory which states that problems arise in corporations because top management no longer is willing to bear the brunt of their decisions unless they own a substantial amount of stock in the corporation is called agency theory.
A south sea island produces only coconuts. In 2015, the price of a coconut is $1.00 and the quantity produced is 250 . In 2019 , the price of a coconut is $0.50 and the quantity produced is 200 . 2015 is the base year. What is real GDP in 2019 ?
Answer:
the real GDP in 2019 is $200
Explanation:
The computation of the real GDP is shown below;
= Base year price × quantity produced in 2019
= $1 × 200
= $200
Hence, the real GDP in 2019 is $200
The above should be used to determine the real GDP in 2019 and the same should be relevant
Hiram is a debtor to Central Credit Union, a secured party. If Hiram fails to maintain insurance on the collateral, he has likely a. attached the security agreement. b. perfected the security agreement. c. terminated the security agreement. d. defaulted on the security agreement.
Answer:
D). defaulted on the security agreement.
Explanation:
From the question we are informed about Hiram who is a debtor to Central Credit Union, a secured party. If Hiram fails to maintain insurance on the collateral, he has likely defaulted on the security agreement.
A security agreement as regards to the law of the United States, can be defined as contract which governs the relationship that exist between the parties that are involved in a kind of financial transaction that is been known as a secured transaction. It gives lender kind of security interest as regards to a specified asset/property which is has been pledged as collateral. Security agreements do compose of
covenants which states provisions for the advancement of funds as well as
repayment schedule and insurance requirements.
The demand rate for raw material A is normally distributed with an average of 300 pints per day. The standard deviation of daily demand is 15 pints. If the lead time for this material is 4 days, what is the standard deviation of demand during the 4-day lead time
Answer:
the standard deviation of demand during the 4-day lead time is 30
Explanation:
the computation of the standard deviation of demand during the 4-day lead time is given below;
= Sqrt(Lead time) × Std deviation daily demand
= Sqrt(4) × 15
=2 × 15
= 30
Hence, the standard deviation of demand during the 4-day lead time is 30
Compare a market operating at a quantity lower than equilibrium (ie. a price floor) with the same market operating at the equilibrium quantity. Which of the following statements are true?
a. A price floor will increase the producer and total surplus.
b. It is unclear if the consumer surplus is greater or less at the market operating below equilibrium.
c. A market operating below equilibrium will transfer some producer surplus to consumers
d. A market operating below equilibrium will transfer some consumer surplus to producers.
Answer:
D
Explanation:
A price floor is when the government or an agency of the government sets the minimum price of a product. A price floor is binding if it is set above equilibrium price.
A price floor increases producer surplus and reduces consumer surplus
Consumer surplus is the difference between the willingness to pay of a consumer and the price of the good.
Consumer surplus = willingness to pay – price of the good
Producer surplus is the difference between the price of a good and the least price the seller is willing to sell the product
Producer surplus = price – least price the seller is willing to accept
The dead weight loss of tax can be determined by calculating the reduction in total surplus as a result of the tax
Year Nominal GDP Real GDP GDP Deflator (Dollars) (Base year 2016, dollars) 2016 2017 2018 From 2017 to 2018, nominal GDP , and real GDP. The inflation rate in 2018 was.
Why is real GDP a more accurate measure of an economy's production than nominal GDP?
Answer:
Explanation:
The Real GDP is defined as the Nominal GDP minus the inflation effect.
Real GDP provides a more accurate picture of economic growth than nominal GDP because it uses constant prices, making comparisons between years more meaningful by allowing for comparisons of the actual volume of goods and services without considering inflation.
Let's say you bought apples at 5dollars per pound in 2015. Imagining a country of 1000 people and considering everyone bought a pound apples and only apples in that year, the GDP comes out to be 1000*5 = 5000 dollars.
Now let's say inflation rate is 10 percent in 2016 which will increase the price to 5.5 dollars per pound. Also, in one year, 10 more people were added to the country (No of births - No of deaths = New people in that year), this brings out total population to around 1010.
Also, let's say that the sale of apples remained the same, so the GDP of 2016 comes out to be 1000*5.5 = 5500 dollars.
That's a whooping 10% increase in GDP, right?
But here the catch.
The GDP increased not because the demand increased, but because the price of the good increased.
If we see at previous year's price (Not considering the inflation, also called Real GDP), the GDP is same which is 5000 dollars.
So, in reality, there isn't any increase in GDP.
This year, Sigma Inc. generated $639,000 income from its routine business operations. In addition, the corporation sold the following assets, all of which were held for more than 12 months:
Initial Basis Acc. Depr Sale Price
Marketable securities $144,000 0 $64,000
Production equipment 93,000 $76,000 30,000
Business realty:
Land 165,000 0 180,000
Building 200,000 58,300 210,000
Required:
a. Compute Sigma’s taxable income assuming that it used the straight-line method to calculate depreciation on the building and has no nonrecaptured.
b. Recompute taxable income assuming that Sigma sold the securities for $150,000 rather than $64,000.
Answer:
Sigma Inc.
a. Sigma's Taxable Income:
Business income = $639,000
Capital gains = 16,300
Total taxable income $655,300
b. Sigma's Taxable Income:
Business income = $639,000
Capital gains = 102,300
Total taxable income $741,300
Explanation:
a) Data and Calculations:
Business income = $639,000
Capital gains:
Initial Basis Acc. Depr Sale Price Gain/(Loss)
Marketable securities $144,000 0 $64,000 ($80,000)
Production equipment 93,000 $76,000 30,000 13,000
Business realty:
Land 165,000 0 180,000 15,000
Building 200,000 58,300 210,000 68,300
Net capital gains $16,300
Capital gains recomputed:
Initial Basis Acc. Depr Sale Price Gain/(Loss)
Marketable securities $144,000 0 $150,000 $6,000
Production equipment 93,000 $76,000 30,000 13,000
Business realty:
Land 165,000 0 180,000 15,000
Building 200,000 58,300 210,000 68,300
Net capital gains $102,300
The Fish House is expected to pay annual dividends of $1.23 and $1.25 at the end of the next two years, respectively. After that, the company expects to pay a constant dividend of $1.35 a share. What is the value of this stock at a required return of 16.4 percent?a. $6.07b. $8.55c. $8.05d. $11.08e. $8.23
Answer:
c. $8.05
Explanation:
Calculation to determine What is the value of this stock at a required return of 16.4 percent
First step is to calculate the P2
P2 = ($1.35/.164)
P2= $8.23
Now let calculate the value of the stock
P0 = [$1.23 /1.164] + [($1.25 + 8.23)/1.164^2]
P0 = $8.05
Therefore the value of this stock at a required return of 16.4 percent is $8.05