A petty cash fund is a tiny amount of money kept on hand to pay for low-cost expenses that are not deemed significant enough to justify writing a check.
Petty cash is also referred to as a "Cash Float" in some situations. The petty cash account can be used to pay for small business costs such as workplace supplies, postage, and other small expenses without having to write a check each time or use the company credit card.In general journal form, prepare journal entries to establish a petty cash fund on cash July 2 and replenish it on July 31 as follows:
Journal Entries for establishing the Petty Cash fundDateParticularsAmount ($)Amount ($)July 2Petty Cash a/cDr100.00To Cash a/c100.00(Being cash deposited to establish the petty cash fund)Journal Entries for replenishing the Petty Cash fundDateParticularsAmount ($)Amount ($)July 31Donations Expense a/cDr20.00Postage Expense a/cDr18.00Office Supplies Expense a/cDr25.00Miscellaneous Expense a/cDr25.00To Cash a/c88.00(Being cash withdrawn to replenish the petty cash fund)Bank Reconciliation:
Bank Balance as per Bank statement$300.00Add: Deposit in transit$100.00Less: Outstanding cheques$250.00Adjusted Bank balance$150.00Book Balance as per Books$180.00Add: Interest earned$20.00Less: Bank Service charges$50.00Adjusted book balance$150.00Journal Entries:
DateParticularsAmount ($)Amount ($)Feb 28Bank Charges Expense a/cDr50.00To Bank a/c50.00(Being bank charges paid by the bank)DateParticularsAmount ($)Amount ($)Feb 28Bank a/cDr20.00Interest Income a/cDr20.00To Income a/c40.00(Being the interest earned on the bank balance credited)Hence, we have prepared the journal entries for establishing and replenishing the petty cash fund, bank reconciliation for Bang Cou and journal entries for recording bank charges and interest income.
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During the first month of operations ended March 31, IceBox Fridgeration Company manufactured 165,000 mini refrigerators, of which 150,000 were sold. Operating data for the month are summarized as follows:
1
Sales
$11,250,000.00
2
Manufacturing costs:
3
Direct materials
$1,980,000.00
4
Direct labor
4,290,000.00
5
Variable manufacturing cost
412,500.00
6
Fixed manufacturing cost
2,475,000.00
9,157,500.00
7
Selling and administrative expenses:
8
Variable
$450,000.00
9
Fixed
1,125,000.00
1,575,000.00
Required:
1. Prepare an income statement based on the absorption costing concept.
2. Prepare an income statement based on the variable costing concept.
3. Explain the reason for the difference in the amount of operating income reported in (1) and (2).
During the first month of operations ended March 31, Ice Box Refrigeration Company manufactured 165,000 mini refrigerators, of which 150,000 were sold.
Operating data for the month are summarized as follows:
1) Preparing Income Statement Based on Absorption Costing Concept Sales of the firm are given as $11,250,000. The cost of goods sold in an absorption costing system includes direct materials, direct labor, variable manufacturing overhead, and fixed manufacturing overhead. Let's calculate the cost of goods sold to get the gross profit.
Direct materials $1,980,000Direct labor $4,290,000 Variable manufacturing costs $412,500 Fixed manufacturing costs $2,475,000 Total manufacturing costs $9,157,500Add opening inventories $0 Less closing inventories (15,000)Cost of goods sold $9,142,500.
Gross Profit = Sales - Cost of goods sold= $11,250,000 - $9,142,500 = $2,107,500 Selling and administrative expenses are given as $1,575,000, which is deducted from the gross profit to obtain the operating income.
Operating Income = Gross Profit - Selling and Administrative Expenses= $2,107,500 - $1,575,000= $532,5002) Preparing Income Statement Based on Variable Costing Concept Under the variable costing method, only variable costs are included in the cost of goods sold.
Direct materials $1,980,000Direct labor $4,290,000.
Variable manufacturing costs $412,500.
Variable selling and administrative expenses $450,000.
Total variable costs $7,132,500 Contribution Margin
= Sales - Variable Costs
= $11,250,000 - $7,132,500
= $4,117,500.
Fixed Manufacturing costs of $2,475,000 and Fixed Selling and administrative expenses of $1,125,000 are not included in cost of goods sold, hence they will be treated as period costs. Therefore, fixed costs will be treated as a deduction from the contribution margin to calculate the operating income.
Operating Income = Contribution Margin - Fixed Costs= $4,117,500 - $3,600,000= $517,5003.
Explanation of the Difference in the Amount of Operating Income Reported in (1) and (2)The difference in the amount of operating income between the two methods of costing is due to the difference in the treatment of fixed manufacturing overhead costs. Under absorption costing, fixed manufacturing overhead costs are included in the cost of goods sold and are expensed as the units are sold.
In contrast, under variable costing, fixed manufacturing overhead costs are treated as period costs and are deducted from the contribution margin to calculate operating income. The sale of 150,000 mini-refrigerators resulted in $2,107,500 of operating income under absorption costing and $517,500 of operating income under variable costing. Therefore, there is a difference of $1,590,000 between the two methods.
This difference can be explained by the fact that absorption costing assigns fixed manufacturing overhead costs to products while variable costing does not. Hence, under absorption costing, some of the fixed manufacturing overhead costs assigned to the unsold units are deferred to the future periods. This leads to a higher amount of operating income under absorption costing as compared to variable costing.
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An investor takes the pay floating side of a plain-vanilla interest rate swap and makes payments at the rate of LIBOR-90 plus a quoted margin of 200 basis points. The swap fixed rate equals 5% (based on a 360 day year). The notional principal of the swap is $10 million and each settlement period is three months long.
16. If LIBOR-90 at the end of the second quarter equals 3%:
A. There is no settlement payment at the end of the third quarter.
B. The settlement payment at the end of the second quarter equals $200,000 C. The settlement payment at the end of the third quarter equals $50,000
17. If LIBOR-90 at the expiration date of the swap rises to 3% (compared to the previous reset date):
A. The pay-floating side will make a payment.
B. The pay-fixed side will make a payment.
C. There will be no payment at expiration of the swap
16. Payment at the end of the first quarter
= Notional principal × (LIBOR-90 + Quoted margin - Fixed rate) × (Actual days in quarter / 360) = $10,000,000 × (3.0% + 2.0% - 5.0%) × (90 / 360) = $50,000
Payment at the end of the second quarter
= Notional principal × (LIBOR-90 + Quoted margin - Fixed rate) × (Actual days in quarter / 360) = $10,000,000 × (3.0% + 2.0% - 5.0%) × (91 / 360) = $50,000
Thus, there is no settlement payment at the end of the third quarter.
Hence, option A is correct.
17. The pay-floating side makes payments based on the prevailing rate of LIBOR-90, so if the LIBOR-90 at the expiration date of the swap rises to 3% (compared to the previous reset date), the pay-floating side will make a payment.
Therefore, option A is correct.
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The accountant for Crusoe Company is preparing the company's statement of cash flows for the fiscal yeat just ended. The foliowing information is avallable What is the ending balance for retained earnings? Multiele Choice 5251.000 $388300. $210.800 5203,500
Based on the facts provided, it is not possible to estimate the final balance for retained earnings.
A company's lifetime net income or loss is reflected in retained profits, a metric that is adjusted for dividends and other payouts to shareholders. We would also need information on the beginning balance of retained earnings, net income or loss for the year, and any dividends declared or paid throughout the year in order to calculate the ending balance of retained earnings. The ending balance of retained earnings cannot be calculated with accuracy without this information.
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please answer simply and correctly- need this for presentation!
thank you in advance! :)
After the negative confidence shock, what can the
government do to restore the original equilibrium
output
The government can restore the original equilibrium output, by; Lowering taxes, Increasing government spending, Lowering interest rates and Implementing policies that improve investor confidence.
After a negative confidence shock, the government can restore the original equilibrium output in the following ways:
Lowering taxes: By lowering taxes, the government can increase people's disposable income and boost consumption, which can result in an increase in aggregate demand, output, and employment.Increasing government spending: Government spending can be used to create jobs and stimulate demand for goods and services. When the government spends money on infrastructure, education, and other public services, it creates employment opportunities and increases output.Lowering interest rates: By lowering interest rates, the government can encourage borrowing and investment, which can lead to an increase in aggregate demand, output, and employment. When the central bank lowers interest rates, commercial banks can offer loans at lower rates, making it easier for businesses and households to invest and consume.Implementing policies that improve investor confidence: The government can implement policies that increase investor confidence, such as stabilizing the political situation, improving the business environment, and increasing transparency and accountability.Know more about the negative confidence shock,
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Suppose that the distribution of the 1-year loss is as follows.
Loss ($ million) Probability
−1 0.4
0 0.2
1 0.2
2 0.1
4 0.1
(a) Find the 1-year 70% VaR.
(b) Find the 1-year 70% ES.
(c) Find the 1-year 80% VaR.
(d) Find the 1-year 80% ES.
Suppose that the distribution of the 1-year loss is given as:L($ million) Probability 0.1a) 1-year 70% is defined as the maximum possible loss for a given level of confidence and period of time.
The 70% VaR, therefore, implies that the confidence level is 1-70% = 30%, and the period of time is 1 year.To calculate the 70% VaR, we need to find the maximum loss of the 30% probability:1. Sort the loss and probability values in descending order:Loss ($ million) Probability
Cumulate the probability values:Loss ($ million) Probability Cumulative Probability 1.03. Identify the maximum cumulative probability that is less than or equal to 0.3. From the table above, the maximum cumulative probability is 0.2.4.
The corresponding loss is the 70% VaR: 2 $ million.b) 1-year 70% ES:ES is defined as the average loss of the worst 30% of scenarios.
In order to find the ES, we must first calculate the loss corresponding to the 30th percentile. From the cumulative probability column of the table above, the loss corresponding to the 30th percentile is $0 million.To calculate the ES, we need to average the losses exceeding $0 million.
These are losses for which the probability is 0.4, 0.1, and 0.1.Loss Probability Cumulative Probability -1 0.4 0.4 0 0.1 0.5 1 0.1 0.6 2 0.1 0.7 4 0.1 0.8 The average of these losses is: (-1*0.4+0*0.1+1*0.1+2*0.1+4*0.1)/0.3 = 1.13 $ millionThus, the 1-year 70% ES is 1.13 $ million.c) 1-year 80% VaR:To calculate the 80% VaR, we need to find the maximum loss of the 20% probability.
Using the same steps from part (a), the 80% VaR is the maximum cumulative probability that is less than or equal to 0.2.Loss Probability Cumulative Probability -1 0.4 0.4 0 0.2 0.6 1 0.2 0.8 2 0.1 0.9 4 0.1 1.0The maximum cumulative probability that is less than or equal to 0.2 is 0.6.
Therefore, the corresponding loss is 0 $ million.d) 1-year 80% ES:To calculate the 80% ES, we need to find the average loss of the worst 20% of scenarios. The loss corresponding to the 20th percentile is $0 million. The losses exceeding $0 million correspond to probabilities of 0.2, 0.2, 0.1, and 0.1.Loss Probability Cumulative Probability -1 0.4 0.4 0 0.2 0.6 1 0.2 0.8 2 0.1 0.9 4 0.1 1.0 The average of these losses is: (-1*0.4+1*0.2+2*0.1+4*0.1)/0.2 = 0.6 $ millionThus, the 1-year 80% ES is 0.6 $ million.
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What is a balance sheet, (as compared to an income statement), and what is the important ‘balance sheet equation’? The ‘income statement equation? What are some of the principal assets and liabilities on the balance sheet and explain how these are related to both bank, stability, profitability and money creation. Using both types of financial statements, how did rapidly rising interest rates lead to the collapse of the Savings and Loan industry?
A balance sheet is one of the most important financial statements that any company or organization prepares. It provides an overview of a company's financial situation by showing what assets and liabilities it has. The balance sheet is different from an income statement, which shows the company's revenues and expenses over a specific period.
The balance sheet equation is Assets = Liabilities + Equity. This means that a company's assets must equal its liabilities plus equity.
This equation is important because it ensures that a company's assets are always balanced with its liabilities and equity.
The income statement equation is Revenues - Expenses = Net Income.
This equation shows how much money a company has earned after deducting all of its expenses. Some of the principal assets on a balance sheet include cash, accounts receivable, inventory, property, and equipment. Some of the principal liabilities include accounts payable, loans, and taxes owed. These assets and liabilities are related to bank, stability, profitability, and money creation in several ways.
For example, if a company has a lot of cash and accounts receivable, it can easily pay its bills and maintain stability. Similarly, if a company has a lot of inventory and property, it can create more products and generate more revenue, which leads to greater profitability.
On the other hand, if a company has a lot of debt, it may be less stable and less profitable. Rapidly rising interest rates led to the collapse of the Savings and Loan industry because many Savings and Loans (S&Ls) had made long-term loans at low interest rates and then had to pay higher interest rates to attract depositors. This made it difficult for S&Ls to make a profit and led to many of them going bankrupt.
Additionally, many S&Ls had invested in risky assets that lost value when interest rates rose, further contributing to their financial problems. As a result, the federal government had to step in and bail out many S&Ls to prevent a complete collapse of the industry.
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Enviro Company issues 8%,10-year bonds with a par value of $250,000 and semiannual interest payments, On the issue date, the annual market rate for these bonds is 5%, which implies a selling price of 123.375. The straight-line method is used to allocate interest expense. 1. What are the issuer's cash proceeds from issuance of these bonds? 2. What total amount of bond interest expense will be recognized over the life of these bonds? 3. What is the amount of bond interest expense recorded on the first interest payment date? What are the issuer's cash proceeds from issuance of these bonds? (Round your final answer to nearest whole dollar amount.) What total amount of bond interest expense will be recognized over the life of these bonds? What is the amount of bond interest expense recorded on the first interest. payment date? (Round your final answer to nearest whole dollar amount.)
The issuer's cash proceeds from the issuance of these bonds are $308,438. The total amount of bond interest expense recognized over the life of these bonds is $20,000. The amount of bond interest expense recorded on the first interest payment date is $1,000.
We must divide the selling price per bond by the total number of bonds issued in order to determine the issuer's cash gains from the sale of these bonds. The selling price is stated as 123.375, which is equal to 1.23375 or 123.375% of the purchase price. The calculation is as follows:
Cash received = Bonds sold * Bonds' selling price
Proceeds in cash equal $250 000 * 1.233 75
Total cash received: $308,437.50
As a result, the issuer received $308,438 in cash from the sale of these bonds.
We can use the straight-line technique to get the total amount of bond interest expense recognized over the life of these bonds. Bond interest costs are calculated using the following formula:
Bond interest costs are calculated as follows: (Par value * annual interest rate) / the number of interest payment periods
Interest on bonds is calculated as ($250,000 * 8%) / (10 years * 2).
Interest on bonds costs $20,000
As a result, $20,000 in bond interest expenses were recorded during the bonds' lifetime.
We can assign half of the yearly bond interest cost on the date of the first interest payment. Due to the bonds' semi-annual interest payments, the following would be the amount of bond interest expenditure reported on the first interest payment date:
Bond interest costs on the initial payment date are calculated as follows: Bond interest costs / number of interest payment periods
Bond interest costs on the first payment date are calculated as follows: $20,000 / (10 years * 2).
Bond interest cost on the due date for payment is $1000.
As a result, $1,000 worth of bond interest expenses were recorded on the first interest payment date.
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Marked out of 1.00 P Flag question Change in CA=500 and change in CL=570, what implications on cash flows we would have: Select one: a. decrease by 70 b. increase by 570 c. increase by 70 d. increase by 1070 Clear my choice
The change in CA = 500 and change in CL = 570 will result in a decrease in cash flows by 70. The correct is option A) decrease by 70.
Cash flow is a financial statement that indicates how much cash or cash equivalents are generated and used by a company over a specified period. Cash flow is concerned with the inflow and outflow of cash and cash equivalents from an enterprise or a business over a specified period, such as a quarter or a year.
Current liabilities are short-term debts that a company owes and must pay within a year. An increase in current liabilities would increase cash flows, while a decrease in current liabilities would decrease cash flows.
Change in CA = 500
Change in CL = 570
The formula to calculate cash flow is:
Cash Flow = Operating Cash Flow (OCF) + Investing Cash Flow (ICF) + Financing Cash Flow (FCF)
Change in Cash = Change in CA - Change in CL
Cash Flow = -70
Change in Cash is calculated by subtracting change in CL from the change in
CA.= Change in CA - Change in CL
= 500 - 570
= -70
Therefore, the cash flows will decrease by 70. The correct is option A) decrease by 70.
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Name three different companies and explain which of Porter's
three competitive strategies they have adopted and why it is
successful or not.
Introduction Porter's Three Competitive Strategies are a great way to classify a company's competitive edge. They are called cost leadership, differentiation, and focus. Three companies that have adopted these strategies are Apple, Walmart, and Netflix.
Porter's Three Competitive Strategies are as follows: Cost Leadership: This is the most popular strategy, which is about providing products and services at the lowest possible cost. It is the most difficult strategy to achieve because firms must keep their costs lower than their competitors. To achieve cost leadership, a company must use a variety of methods, such as process efficiency, technological advancements, and outsourcing.
Differentiation: This is about creating products and services that are different from those of your competitors. Companies that follow this strategy aim to create products that have a unique set of features that set them apart from others.
Focus: Focus is about targeting a niche market. It is about selling products and services to a specific group of people that are underserved by other companies. Companies that adopt this strategy are often very good at serving the needs of a specific group of people.
Example 1: Apple - Differentiation Apple is known for its unique products. Apple uses differentiation as its main competitive strategy, which has helped it create a loyal customer base. Apple's products stand out in the market due to their unique features, such as the camera, touch screen, and sleek design.
Example 2: Walmart - Cost Leadership Walmart is known for providing products and services at the lowest possible cost. Walmart has been able to achieve cost leadership through a variety of methods, such as process efficiency, technological advancements, and outsourcing. Walmart has been able to maintain its position as a low-cost provider, which has helped it attract a large customer base.
Example 3: Netflix - Focus Netflix is known for its streaming service. Netflix has been able to achieve success by focusing on a niche market. Netflix targets customers who want to watch movies and TV shows online, and has been very good at serving their needs. Netflix's success is due to its ability to offer a wide selection of movies and TV shows at a low price.
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doc. brown inc. has a monopoly on flux capacitors. assume that doc. brown inc. is maximizing its profits at its current level of output while facing positive marginal costs. we may conclude that the absolute value of the price elasticity of demand for its flux capacitors is:
The absolute value of the price elasticity of demand for Doc. Brown Inc.'s Flux Capacitors is greater than 1.
Is the price elasticity of demand for Doc. Brown Inc.'s Flux Capacitors greater than 1?When a monopoly like Doc. Brown Inc. maximizes its profits at the current level of output, it implies that the firm has some degree of market power, allowing it to set prices higher than its marginal costs.
In this scenario, if the absolute value of the price elasticity of demand for Flux Capacitors is greater than 1, it indicates that the demand for these products is relatively elastic. This means that a change in price will lead to a relatively larger change in quantity demanded.
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Which of the following are inversely related and are present when the cost of an input changes?
A. The complement and output effects.
B. The substitution and complement effects.
C. The substitution and resource effects.
D. The substitution and output effects.
The substitution and complement effects are inversely related and are present when the cost of an input changes (option b).
The substitution effect refers to the change in the quantity of one input used when the price of another input changes while keeping the level of output constant.
When the price of an input decreases, it becomes relatively cheaper compared to other inputs, leading firms to substitute the now cheaper input for the relatively more expensive input.
This inverse relationship between the prices of inputs and their quantities used is known as the substitution effect.
The complement effect, on the other hand, refers to the change in the quantity of one input used when the price of another input changes while keeping the level of utility or satisfaction constant.
In production, complementary inputs are used together in the production process, so when the price of one input changes, it affects the quantity demanded of the complementary input.
For example, if the price of labor decreases, a firm may decide to hire more workers, which would increase the demand for complementary inputs like machinery.
Both the substitution effect and the complement effect are inversely related to changes in input costs. As input costs change, these effects come into play, leading to adjustments in the quantities of inputs used in production.
Therefore, the correct answer is B. The substitution and complement effects.
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Jamilah recently was asked by her manager to plan and conduct a two-days training course on the pedagogy of teaching online students. The training will be delivered in one month time to a group of 40 lecturers from a community college nearby. She is very well versed in online teaching and the supervisor felt that she would do a good job since she recently had attended a refresher course on technology-based training methods. Jamilah started her preparation by observing another senior trainer delivering a similar training course, read through the training materials several times, looked through materials from previous courses conducted by the other trainers and tried to think of some creative activities she could include in the course. Jamilah sat down with the materials on online pedagogy and started to plan for her course. She knew that she would need some notes, so she developed a set of trainer's notes. She even put some of her notes on a handout to give to those she would be training. Jamilah knew that it was important that she be clear, so she practised reading her notes in a clear voice. She also planned to stop periodically and ask if the participants had any questions. The day of the training finally arrived. During her first session, Jamilah noticed that the participants were not paying attention to her presentation. There were no questions being asked and the participants looked bored and distracted. After the presentation, the participants left the room for a break. Jamilah had a feeling that her first presentation was a failure. She wondered if agreeing to deliver the course was a good decision and she dreaded the next one and a half day that she has to go through to complete the training.
As seen in the passage, Jamilah was asked by her manager to plan and conduct a two-days training course on the pedagogy of teaching online students.
She had observed another senior trainer delivering a similar training course, read through the training materials several times, looked through materials from previous courses conducted by the other trainers and tried to think of some creative activities she could include in the course. However, during her first session, Jamilah noticed that the participants were not paying attention to her presentation. There were no questions being asked and the participants looked bored and distracted.
After the presentation, the participants left the room for a break. Jamilah had a feeling that her first presentation was a failure.There are a few areas that Jamilah can improve to make the rest of the training a success. First, it is important to remember that preparation is key to the success of any training course. Jamilah had prepared by observing senior trainers and reading through training materials. However, there are other ways to prepare as well. For instance, she could have conducted a pilot session with a smaller group of participants to identify potential problems and to make adjustments.
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The preferred stock of a firm is selling for $50 and the dividends on the preferred stock is $5 per share. Calculate the cost of preferred equity for the firm. 8% 12% 6% 10%
The cost of preferred equity refers to the return required by investors who invest in the preferred shares of the firm. The cost of preferred equity, which is the dividend yield, is computed by dividing the annual dividend by the market price of a single share of the preferred stock.
In this case, the preferred stock of the firm is selling for [tex]$50[/tex], and the dividends on the preferred stock are [tex]$5[/tex] per share. Thus, the cost of preferred equity is given as:
Cost of Preferred Equity = Annual Dividend / Market Price of a Share of Preferred
[tex]Stock Cost of Preferred Equity = $5 / $50[/tex]
[tex]= 0.1 or 10%[/tex]
Therefore, the cost of preferred equity for the firm is [tex]10%[/tex].
Note: Preferred stock is a form of equity financing, and the cost of preferred equity is considered to be a fixed cost since the dividend payment on preferred shares is usually fixed.
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After a Covid, management has decided company must can now adopt
a hybrid model.Write an email to all staff explaining the changes
in all operations.Need a sample of email
Subject: As we continue to navigate through the Covid pandemic, the management team has made the decision to adopt a hybrid model for our company's operations.
This means that we will be transitioning to a more flexible work environment that will allow our employees to work from home or in the office as needed. Under this new model, some of you will be working remotely full-time while others will be required to come into the office on a part-time basis. In order to ensure that everyone is on the same page, we have put together a detailed plan that outlines how our company's operations will change. Here are some of the key points that you need to be aware of;
• All employees will be given the option to work from home or in the office depending on their role and responsibilities.
• Our offices will be modified to ensure that social distancing guidelines are followed and that our employees feel safe when they come into work.
• We will continue to hold virtual meetings and conferences to keep everyone connected and informed.
• We will also be implementing new technology to ensure that our employees can work efficiently from any location.
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In Irving Fisher's quantity theory of money, velocity was determined by A) interest rates. B) real GDP. C) the institutions in an economy that affect individuals' transactions. D) the price level.
In Irving Fisher's quantity theory of money, the velocity of money was determined by the institutions in an economy that affect individuals' transactions.
Irving Fisher's quantity theory of money is a classical economic theory. It is based on the idea that the general price level of goods and services is directly proportional to the amount of money in circulation.
This theory has a famous equation of exchange, which is M * V = P * T, where M represents the money supply, V represents the velocity of money, P represents the price level, and T represents the total quantity of goods and services bought and sold in an economy.
In this theory, the velocity of money is the number of times that a dollar is spent in a year. It is determined by the institutions in an economy that affect individuals' transactions.
Irving Fisher's quantity theory of money was developed in the early twentieth century. It is a classical economic theory that is based on the idea that the general price level of goods and services is directly proportional to the amount of money in circulation.
This theory has a famous equation of exchange, which is M * V = P * T, where M represents the money supply, V represents the velocity of money, P represents the price level, and T represents the total quantity of goods and services bought and sold in an economy.
According to this theory, the velocity of money is the number of times that a dollar is spent in a year. It is a measure of the rate at which money circulates in an economy. The higher the velocity of money, the more quickly money is changing hands, and the faster the economy is growing.
The velocity of money is determined by the institutions in an economy that affect individuals' transactions. These institutions include the banking system, financial markets, and other financial intermediaries. They affect how quickly money is transferred between buyers and sellers, and how easily transactions can be made.
Overall, Irving Fisher's quantity theory of money is an important contribution to the field of economics. It provides a framework for understanding the relationship between money and prices, and the role that institutions play in determining the velocity of money.
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How and why can the decision of U.S. citizens
to save money cause economic
problems for the economy? So, if the economy
is in a recession, who is
at fault: business, households, or governments
The decision of U.S. citizens to save money can cause economic problems for the economy. The government's role is to stimulate the economy by engaging in deficit spending.
If the economy is in a recession, no one party can be blamed for it. In this case, the decision of US citizens to save money will not cause economic problems. Instead, in an economy where there is a lack of spending, this decision to save could make the recession worse. What is the role of the government in a recession? During recessions, governments aim to stimulate the economy by engaging in deficit spending. This means that they increase spending and decrease taxes to increase aggregate demand. The aim of this is to stimulate economic growth and prevent a prolonged recession. In a recession, it is nobody's fault. Recessions occur due to a combination of factors such as inflation, unemployment, low GDP growth, and a decrease in aggregate demand. They are caused by economic cycles and are a natural part of economic activity. In conclusion, the decision of US citizens to save money is a good economic decision. However, in an economy where there is already a recession, this decision could worsen the recession. During a recession, no one party can be blamed. Instead, it is a natural part of the economic cycle. The government's role is to stimulate the economy by engaging in deficit spending.
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AB partnership is a 50/50 PS; A has a June 30 year end (YE), and B has a July 31 year end. What is the required taxable year of the partnership?
Partnerships are regarded as pass-through entities for federal tax purposes. As a result, the partners pay tax on their share of partnership income and deductions on their own tax returns.
Every year, partnerships are required to file an information return called Form 1065 with the IRS.AB partnership is a 50/50 PS, which means that both partners share an equal interest in the partnership. A has a June 30 year end, whereas B has a July 31 year end. To determine the taxable year for a partnership, we must first comprehend the concept of partnership tax years.
A partnership's tax year is its fiscal year or the calendar year. The tax year of a partnership can be determined in one of two ways. A partnership can choose its own tax year by filling out Form 1065 and attaching a statement with its tax return stating that it has a legitimate business reason for the year it is using.The other way to determine the tax year of a partnership is based on the tax years of its partners.
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Suppose that a risk-free investment will make three future payments of $100 in 1 year, $100 in 2 years, and $100 in 3 years. Instructions: Round your answers to 2 decimal places. a. If the Federal Reserve has set the risk-free interest rate at 8 percent, what is the proper current price of this investment? $ b. What is the price of this investment if the Federal Reserve ralses the risk-free interest rate to 10 percent? $
Suppose that a risk-free investment will make three future payments of $100 in 1 year, $100 in 2 years, and $100 in 3 years.
If the Federal Reserve has set the risk-free interest rate at 8%, is the proper current price of this investment. In order to calculate the current price of this investment, we will use the Present Value formula. The Present Value (PV) of the investment can be calculated as:
The proper current price of this investment is $257.70. b. What is the price of this investment if the Federal Reserve raises the risk-free interest rate to 10%?If the Federal Reserve raises the risk-free interest rate to 10%, we can use the same formula as above to calculate the new present value of the investment.
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Who was John Maynard Keynes? How does his approach to macroeconomic management depart from the previous status quo? How was American society transformed to make the Keynesian approach more salient than its predecessor? How was the Keynesian approach manifest in macroeconomic policymaking? If you were advising the government of the United States would you suggest more or, less, Keynesianism? Explain. Is the US government likely to become more or, less Keynesian in the coming 12 months? Explain.
John Maynard Keynes (1883-1946) was an English economist who is regarded as one of the most important economists of the 20th century. Keynes's approach to macroeconomic management departed from the previous status quo in a few different ways. Firstly, he believed that government should play an active role in managing the economy. This was a departure from the classical liberal view, which held that the government should not intervene in the economy.
Keynes also believed that economic downturns were caused by a lack of demand in the economy, rather than supply-side issues. In other words, he believed that economic problems were caused by people not spending enough money, rather than there not being enough goods or services available.
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how will market interest rates and bond prices most likely change if the federal reserve decides to make a small, one-time increase in the money supply? interest rates bond prices group of answer choices increase increase increase decrease decrease increase decrease decrease
If the Federal Reserve decides to make a small, one-time increase in the money supply:
- Interest rates are likely to decrease.
- Bond prices are likely to increase.
The market interest rates and bond prices are likely to change in the following way if the Federal Reserve decides to make a small, one-time increase in the money supply:
1. Interest rates:
When the Federal Reserve increases the money supply, it usually aims to stimulate economic activity and encourage borrowing and spending. As a result, the increase in the money supply could lead to a decrease in interest rates. This is because there is more money available for borrowing, which increases the supply of loanable funds. With an increased supply of funds, lenders may lower interest rates to attract borrowers. Therefore, in this scenario, interest rates are most likely to decrease.
2. Bond prices:
When interest rates decrease, the price of existing bonds tends to increase. This is because bond prices and interest rates have an inverse relationship. When interest rates go down, the fixed interest payments offered by existing bonds become more attractive compared to the lower rates in the market. Consequently, investors are willing to pay more for these bonds, driving up their prices. Therefore, in this scenario, bond prices are most likely to increase.
To summarize:
If the Federal Reserve decides to make a small, one-time increase in the money supply:
- Interest rates are likely to decrease.
- Bond prices are likely to increase.
It's important to note that while this is the general trend, the relationship between interest rates, bond prices, and the money supply is complex and can be influenced by various economic factors.
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Issuance of Materials
On May 7, Salinger Company purchased on account 310 units of raw materials at $25 per unit. During May, raw materials were requisitioned for production as follows: 118 units for Job 200 at $22 per unit and 146 units for Job 305 at $25 per unit.
Question Content Area
Journalize the entry on May 7 to record the purchase. If an amount box does not require an entry, leave it blank.
May 7 Accounts PayableFactory OverheadFinished GoodsMaterialsWages PayableWork in Process
- Select - - Select -
Accounts PayableCashFinished GoodsMaterialsWages PayableWork in Process
- Select - - Select -
Question Content Area
Journalize the entry on May 31 to record the requisition from the materials storeroom. If an amount box does not require an entry, leave it blank.
The journal entries to record the issuance of materials for May 7 and May 31 are given below :
Journal entry on May 7:DateAccount Title and ExplanationPRDebitCreditMay 7
Raw Materials310 units × $25 = $7,750
Accounts Payable$7,750(To record the purchase of raw materials on account)Journal entry on May 31:
DateAccount Title and Explanation
PRDebitCreditMay 31Work in Process (Job 200)118 units × $22 = $2,596
Work in Process (Job 305)146 units × $25 = $3,650
Raw Materials (310 – 118 – 146)× $25 = $1,150(310 – 118 – 146)× $25 = $1,150(To record the issuance of raw materials to production)
Therefore, the journal entry on May 7 to record the purchase of 310 units of raw materials on account is:
Raw Materials $7,750Accounts Payable $7,750
The journal entry on May 31 to record the requisition from the materials storeroom is:
Work in Process (Job 200) $2,596Work in Process (Job 305) $3,650Raw Materials $1,150
Work in Process refers to goods that are in the process of being manufactured and are not yet finished.
The Finished Goods account refers to goods that are fully produced and ready to be sold.
Accounts Payable is used to record purchases of goods or services on credit. Materials are goods used in production that are still raw and not yet used. Wages Payable is used to record wages owed to employees that have not yet been paid.
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Transcribed image text:
To purchaye a heuse valued at 5350.000 with a 204 down payment and a 30 -year (e 3.350 months) at a fixed rate morteage at 4 what is the amount of your moethly soyment starting next month? Bound your answer to the nearest whole dollar. Write your answer as a whole number without deamais or the gotar iymbol.
To purchase a house valued at [tex]$535,000[/tex]with a [tex]$204,000[/tex]down payment and a 30-year (360 months) fixed-rate mortgage at 4%, we need to calculate the monthly payment.
Let P be the principal amount, r be the monthly interest rate, and n be the number of monthly payments.
[tex]n = 30 years * 12 months/year = 360r = 4%/12 = 0.00333P = $535,000 - $204,000 = $331,000[/tex]
Using the formula for a fixed-rate mortgage, we have:
[tex]Monthly payment = (P * r) / (1 - (1 + r)^(-n))= ($331,000 * 0.00333) / (1 - (1 + 0.00333)^(-360))= $1,575.53[/tex]
Thus, the amount of your monthly payment starting next month is $1,576 (rounded to the nearest dollar).
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You work as a financial analyst for RBC. Your company is considering buying an airplane and then lease it to Delta Air Lines. Your task is to determine the before tax operating leasing payment
You may follow the Leasing example we discussed in the teaching notes.
You may choose an airplane of your choice (767, 777, 787)
Assume 20 year depreciation period in your lease analysis using the depreciation table in the notes or straight line depreciation method.
Make your assumptions about the following parameters:
tax rate,
required rate of return,
insurance cost,
maintenance and operating costs,
and salvage value.
The before-tax operating leasing payment will be the sum of Depreciation payment ($X - $Y) / 240, Interest payment ($X + $Y) x 10% x (1 - 40%) / (Present value factor), Insurance payment ($1,000), Maintenance and operating payment ($2,000), and Salvage value / Present value factor.
As given in the question, we are to determine the before-tax operating leasing payment, so let's start with the calculation.
Airplane cost: $X
Depreciation period: 20 years
The salvage value of the airplane at the end of 20 years: $Y
Insurance cost: $1,000/month
Maintenance and operating costs: $2,000/month
Required rate of return: 10%
Tax rate: 40%
Formula for calculating the operating leasing payment: Operating leasing payment = Depreciation payment + Interest payment + Insurance payment + Maintenance and operating payment + (Salvage value / Present value factor)
Depreciation payment:
Depreciation payment per month = (Cost of the airplane - Salvage value) / (Depreciation period in months)
Depreciation payment per month = ($X - $Y) / (20 x 12)
Depreciation payment per month = ($X - $Y) / 240
Interest payment:
Interest payment per month = (Cost of the airplane + Salvage value) x (Interest rate) x (1 - Tax rate) / (Present value factor)
Interest payment per month = ($X + $Y) x 10% x (1 - 40%) / (Present value factor)
Insurance payment:
Insurance payment per month = $1,000
Maintenance and operating payment:
Maintenance and operating payment per month = $2,000
Adding all these values and solving the equation as per the formula, we get;
Operating leasing payment = Depreciation payment + Interest payment + Insurance payment + Maintenance and operating payment + (Salvage value / Present value factor)
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Create Your Own Organization / Analyze an Existing Organization For this Independent Study Project, you will be designing your own organization or analyze an organization. You may assume the role of either the owner of a business or the Chief Executive Officer (CEO) of an organization if you wish. Length: At least 6 pages single spaced maximum 12 point font. Instructions You will be applying skills in the four functions of management (Planning, Organizing, Leading, Controlling) that we study. Specific topics for consideration might include the following: - Give a general description of the organization. - Define the objectives of the organization (ie. Mission Statement, Focus areas). - Describe the product or service. - Do a market analysis. Analyze the product, industry, competition. - What strengths, weaknesses, opportunities and threats exist for the organization? - What type of plans and planning tools and techniques are used? - What are policies and procedures? - How will the organization keep things under control? - What tools are used in order to maintain control? - Describe the structure of the organization (ie. Organizational Chart, Chains of command, Span of control). - Describe the level of centralization and delegation. - What type of organizational design will the organization display? - Describe the work process design of the organization. - How does the organization attract a quality workforce? - Develop an application process and interview potential management level employees. - How does the organization develop the quality workforce that is attracted? (ie. Orientation, Training) - What leadership styles and traits does the organization utilize? - Describe the communication process in the organization. - How is conflict managed? - How will the organization be creative and innovative? - What motivation techniques will be utilized in the organization? - What compensation tools will be utilized in the organization?
Introduction: A company is a group of individuals with shared objectives who perform tasks together. There are four fundamental principles of administration: planning, organizing, leading, and controlling.
The organization's framework is defined and implemented through these principles, ensuring that the objectives are accomplished. The following essay will outline an organizational analysis of ABC Corporation.
ABC Corporation is a technology-driven firm specializing in creating custom software solutions for businesses of all sizes. ABC Corporation is devoted to the highest level of customer satisfaction, quality software, and customer service. With 24-hour customer support, the company guarantees that all clients' issues are resolved promptly and efficiently. The organization's mission is to assist businesses in achieving their goals through the use of cutting-edge technology.
The company has established long-term objectives that will guide it through 2030, such as improved consumer satisfaction, which is reflected in customer surveys, product and service excellence, innovation, and organizational efficiency. The organization is committed to providing the best possible service and expertise to its clients, as well as creating a safe and supportive environment for its employees. The organization's product portfolio includes software development and IT solutions. ABC Corporation is committed to investing in high-tech technology and talent in order to provide the best and most innovative products and services to its clients. The organization recognizes the importance of being current and remaining up-to-date in order to meet client needs and remain competitive. This involves a continuous cycle of research and development, as well as regular product and service upgrades, with the goal of achieving a competitive edge and offering superior services to clients.
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ben's investment account was valued at $15,000 but then lost 15% of its value. what percent increase is needed for the investment account to return to its previous value?
15% increase is needed for Ben's investment account to return to its previous value.
How much percent increase is required for Ben's investment?To find the percent increase needed, we will calculate the percentage of the original value that was lost and then determine the percentage increase required to make up for it.
The amount lost from the original value is 15% of $15,000, which is:
= 0.15 * $15,000
= $2,250.
To return to the original value, the investment account needs to increase by $2,250. To get percentage increase needed, we divide the increase by the original value and multiply by 100:
Percentage increase = ($2,250 / $15,000) * 100 = 15%.
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Study the screenshot above. The tabs PivotTable Analyze and Design, are not ordinarily visible. What do you need to do in order to access these tabs and the functions they contain?
a. To display them tick the Pivot Table Tools tick box in the Tables group
b. To display them click anywhere within a Pivot Table
c. To display them hover your mouse above the normal tabs on the ribbon
d. To display them click on the Pivot Table tab on the ribbon
In order to access the tabs PivotTable Analyze and Design, and the functions they contain, you need to click on the Pivot Table tab on the ribbon.
The PivotTable tab is not ordinarily visible on the ribbon, and so it is necessary to first create a PivotTable or select an existing one for the PivotTable tab to appear.
Below is a step by step guide on how to access the PivotTable Analyze and Design tabs on the ribbon.
Step 1: Create a PivotTable or select an existing one on the Excel worksheet.
Step 2: Click on any cell within the PivotTable.
Step 3: The PivotTable Tools tab appears on the ribbon with three sub-tabs, including Options, Design, and Analyze.
Step 4: Click on the Analyze or Design tab to access the functions they contain.
Option A is incorrect because the Tables group does not have the Pivot Table Tools tick box.
Option B is incorrect because clicking anywhere within a PivotTable does not cause the PivotTable Tools tab to appear.
Option C is incorrect because hovering the mouse above the normal tabs on the ribbon does not display the PivotTable Tools tab.
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GAT. Inc. has issued a $1.000 par 4% annual coupon bond that
is to mature in 18 years. If
your required rate of return is 6.5%, what price would you be
willing to pay for the bond?
Therefore, the price you would be willing to pay for the bond is [tex]$762.76[/tex], if your required rate of return is [tex]6.5%.[/tex]
The given information is as follows: [tex]Par value of the bond (face value) = $1,000[/tex] [tex]Coupon rate = 4%[/tex] [tex]Annual required rate of return (yield to maturity) = 6.5%[/tex]
[tex]Time to maturity = 18 years[/tex]
Formula for the present value of a bond:
[tex]PV = C * (1 - (1 + r)^-n) / r + FV / (1 + r)^n[/tex]
where PV is the present value of the bond, C is the coupon payment, r is the required rate of return, n is the time to maturity in years, and
FV is the face value of the bond. Using the given formula to calculate the price of the bond:
[tex]PV = 40 * (1 - (1 + 0.065)^-18) / 0.065 + 1,000 / (1 + 0.065)^18[/tex]
[tex]= $762.76[/tex]
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Messman Manufacturing will issue common stock to the public for $30. The expected dividend and the growth in dividends are $2.75 per share and 6%, respectively. If the flotation cost is 16% of the issue's gross proceeds, what is the cost of external equity, re? Round your answer to two decimal places
In order to determine the cost of external equity, the following formula is used Cost of external equity:
Re = (D1 / (P0 - F)) + g
where,
D1 = expected dividend = $2.75P0 = the market price of the stock = $30F = flotation cost = 16% of $30 = $4.8g = growth rate of dividends = 6%
Substitute the given values in the above formula,
Re = ($2.75 / ($30 - $4.8)) + 6%Re = ($2.75 / $25.2) + 6%Re = 10.9127%
Rounded off to two decimal places,
Re = 10.91%
the cost of external equity is 10.91%.
Explanation:
: Re = (D1 / (P0 - F)) + g
Here,
D1 is the expected dividend and g is the growth rate of dividends.
P0 is the market price of the stock and F is the flotation cost.
The given values are:D1 = $2.75P0 = $30F = 16% of $30 = $4.8g = 6%
Substituting the values in the formula,
Re = ($2.75 / ($30 - $4.8)) + 6%Re = ($2.75 / $25.2) + 6%Re = 10.9127%
Rounded off to two decimal places,
Re = 10.91%.
the cost of external equity is 10.91%.
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QUESTION 2 [35 MARKS]
2.1
As a financial professional and potential manager, you need to be aware of the impact
of business ills such as corruption, bribery, and fraudulent financial reporting on the
environment, society, and governance (known as ESG factors). How would you advise
the executives at Ernst & Young (EY) to approach and remedy this scandal? The use
of practical examples in your response will garner you higher marks. (25)
2.2 The company you recently joined and now work for as a finance manager has been
involved in fraudulent financial reporting and underhand dealings in its service
provisions under its previous financial manager.
A recent investigation discovered that these two aspects have been ongoing since the
company was formed in 2001.
The board has requested you to formulate internal controls and ethical guidelines to
ensure that fraudulent financial reporting and underhand dealings will not occur in the
future or at least mitigate their occurrences in the future. The internal controls and
ethical guidelines you formulate should be presented in a memo to the board. (10)
2.1 Advice to Ernst & Young (EY) Executives: To approach and remedy the scandal of corruption, bribery, and fraudulent financial reporting,
I would advise the executives at EY to take the following actions:
1. Strengthen Internal Controls: Implement robust internal control systems that include checks and balances, segregation of duties, and regular audits to detect and prevent fraudulent activities. EY should ensure that these controls are consistently followed across all levels of the organization.
2. Enhance Ethical Culture: Foster an ethical culture within the organization by promoting transparency, integrity, and accountability. This can be achieved through ethics training programs, whistleblower mechanisms, and a strong code of conduct that clearly outlines expected behaviors and consequences for non-compliance.
3. Conduct Independent Investigations: Engage independent third-party firms or experts to conduct thorough investigations into the scandal. This demonstrates EY's commitment to uncovering the truth and holding individuals accountable for their actions.
4. Implement Stringent Anti-Corruption Measures: Develop and enforce policies and procedures to prevent corruption and bribery. This includes conducting due diligence on clients and business partners, implementing anti-bribery compliance programs, and strictly adhering to relevant laws and regulations.
5. Collaborate with Regulatory Bodies: Cooperate fully with regulatory bodies and law enforcement agencies to ensure compliance with legal requirements. EY should actively participate in investigations and share any relevant information to assist in the resolution of the scandal.
Practical Example: EY can take inspiration from the Siemens case, where the company implemented comprehensive reforms following a major corruption scandal. Siemens established a dedicated compliance department, enhanced training and awareness programs, and appointed an independent ombudsman to address ethical concerns. These measures helped rebuild trust and restore the company's reputation.
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XYZ Enterprise allows a 2 percent discount on any invoice it sends out that is paid within 30 days. In the past, 20 percent of its invoices have been paid within 30 days. If it sends out 12 invoices on 31st March, and if the payment of these invoices is independent, calculate the probability that (a) All receive a discount. (b) The number receiving a discount is less than the expected number receiving a discount.
The probability that all 12 invoices receive a discount is approximately X%.
To calculate the probability, we can use the binomial distribution formula. Let's denote success as an invoice receiving a discount and failure as an invoice not receiving a discount. The probability of success (p) is 0.20 (since 20% of invoices are paid within 30 days), and the probability of failure (q) is 1 - p = 0.80.Using the binomial distribution formula: P(X = k) = C(n, k) * p^k * q^(n-k). where n is the total number of trials (12 invoices) and k is the number of successful trials (12 invoices receiving a discount), we can calculate the probability of all 12 invoices receiving a discount:
P(X = 12) = C(12, 12) * 0.20^12 * 0.80^(12-12). (b) The probability that the number of invoices receiving a discount is less than the expected number is approximately Y%.The expected number of invoices receiving a discount can be calculated by multiplying the total number of invoices (12) by the probability of success (0.20):Expected number = 12 * 0.20.To calculate the probability that the number of invoices receiving a discount is less than the expected number, we need to sum the probabilities of all possible outcomes from 0 to the expected number (exclusive).
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