Answers
Answer:
$2,500,000
Explanation:
Following the stated assumptions in the question, the money multiplier will be used to calculate the resulting effect of the $500,000 injection into the money supply.
The money multiplier formula is 1/r , where r is the required reserve ratio. So, the resulting change in demand deposits is:
Change in Demand Deposits = Change in Fresh Reserves (that is, the Initial Deposit)×1/r
= $500,000×1/0.20
=$500,000 × 5
= $2,500,000
Related Questions
If taxes rise, then aggregate demand shifts:____________ a. left, making unemployment higher than otherwise. b. left, making unemployment lower than otherwise. c. right, making unemployment higher than otherwise. d. right, making unemployment lower than otherwise.
Gator Corporation manufactures several types of accessories. For the year, the gloves and mittens line had sales of $489,000, variable expenses of $360,000, and fixed expenses of $140,000. Therefore, the gloves and mittens line had a net loss of $11,000. If Gator eliminates the line, $35,000 of fixed costs will remain. Prepare an analysis showing whether the company should eliminate the gloves and mittens line. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Continue Eliminate Net Income Increase (Decrease) Sales $ $ $ Variable costs Contribution margin Fixed costs Net income / (Loss) $ $ $ The analysis indicates that Gator should the gloves and mittens line.
What is the specific eight-digit Codification citation (XXX-XX-XX-X) that describes the information about loans and trade receivables that is to be disclosed in the summary of significant accounting policies?
Suppose there is a policy debate regarding the United States’ imposing trade restrictions on imported steel rods. Read the following scenario and answer the question that follows. The president of the United States argues that the United States should threaten to impose a tariff on Chinese steel rods in order to induce the Chinese to remove its tariff on American cars. Which of the following justifications is the pundit using to argue for the trade restriction on steel rods? a. National-security argument b. Infant-industry argument c. Jobs argument d. Using-protection-as-a-bargaining-chip argument e. Unfair-competition argument
B. The second advisor because the total first-year cost is $5,000.
C. The first advisor because the total first-year cost is $5,000.
D. Because the cost is approximately the same, either advisor could be selected.
Answers
Answer:
The answer is A.
Explanation:
According to the details given in the question on the two financial advisor's approach, the first advisor does not request a payment but a commission on the funds purchased with the inheritance money. The second advisor does request payment for the job and also a share on the assets managed with the inheritance money.
If Kirby wants to minimize the upfront expenses which can be described as the sum that is paid before a service or a job is done, then the first advisor is the better option. So the answer is A.
I hope this answer helps.
Answers
Answer:
Accounts Receivables Turnover Ratio = = 10 times.
Explanation:
Accounts Receivables Turnover ratio =
Here Net Credit Sales = $6.5 million
Accounts Receivables Opening Balance = $600,000
Accounts Receivables Closing Balance = $700,000
Average Accounts Receivable Balance =
Accounts Receivables Turnover Ratio = = 10 times.
This shows that accounts receivables are on an average 1/10th of credit sales.
Final Answer
Accounts Receivables Turnover Ratio = = 10 times.
Answers
Answer:
1. In a Year 20,367 20,017
2. In a Year 21,333 21,917
3. In the case of NPW analysis Selected Target is best option because it is the better and cheaper investment while EUAM analysis states Walmart kit is better option,
4.Target is the best option because the cost difference is only around $600 which will last for 6 Years while in walmart case we will need to replace all the furniture in 3 Years .
Explanation:
1. Using NPW Analysis
Walmart Kit Target
Intial Cost 40000 65000
AMC 10000 12000
Salvage Value 12000 25000
Life Years 3 6
Total Cost
Intial Cost 40000 65000
Less Salvage 12000 25000
Balance 28000 40000
5% Interest 6000 19500
AMC PV 2.71 5.05
Amc 27100 60600
Total Cost 61100 120100
In a Year 20,367 20,017
2. Using EUAW Analysis
Walmart Kit
Target
Intial Cost 40000 65000
AMC 10000 12000
Salvage Value 12000 25000
Life Years 3 6
Total Cost
Intial Cost 40000 65000
Less Salvage 12000 25000
Balance 28000 40000
5% Interest 6000 19500
AMC 30000 72000
Total 64000 131500
In a Year 21,333 21,917
In the case of NPW analysis Selected Target is best option because it is the better and cheaper investment while EUAM analysis states Walmart kit is better option,
Target is the best option because the cost difference is only around $600 which will last for 6 Years while in walmart case we will need to replace all the furniture in 3 Years .
Hence Target product will be the best option we would advice the management to go for.
Final answer:
To determine which kitchen kit to choose, you can use NPW (Net Present Worth) analysis and EUAW (Equivalent Uniform Annual Worth) analysis. In NPW analysis, calculate the present worth of each option by subtracting the present value of the annual maintenance cost from the sum of the present value of the salvage value and the present value of the first cost. In EUAW analysis, divide the NPW by the present worth factor to calculate the equivalent uniform annual worth. You can extend the analysis to show the EUAW for an extended life of the products. Present the information ethically and transparently, addressing your bias towards the Target kit and presenting the analysis results objectively.
Explanation:
a. In order to determine which kitchen kit to choose using NPW analysis, we need to calculate the present worth of each option. The present worth is calculated by subtracting the present value of the annual maintenance cost from the sum of the present value of the salvage value and the present value of the first cost. You can use the formula: NPW = (-FC + PV(SV) + PV(AMC)) / (1 + i)^n, where FC is the first cost, PV(SV) is the present value of the salvage value, PV(AMC) is the present value of the annual maintenance cost, i is the interest rate, and n is the number of years.
b. To determine which kitchen kit to choose using EUAW analysis, we need to calculate the equivalent uniform annual worth of each option. The EUAW is calculated by dividing the NPW by the present worth factor. You can use the formula: EUAW = NPW / Present Worth Factor, where NPW is the net present worth, and the Present Worth Factor is calculated using the formula: Present Worth Factor = (1 - (1 + i)^-n) / i.
c. To show that the Target option is the better choice, you can extend the analysis from part b and calculate the EUAW for an extended life of the products. Simply substitute the new number of years into the formula and compare the EUAWs of the two options.
d. Since you have a bias towards the Target kit, it is important to present the information ethically and transparently. You can start by explaining your bias and personal preference, and then present the analysis results objectively, showcasing the financial aspects and consequences of each option. It is crucial to provide all the necessary information and allow management to make an informed decision based on the facts presented.
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April $327,000 $42,000
May 292,000 51,000
June 407,000 61,000
Moorcroft’s sales are 40% cash and 60% credit. Credit sales are collected 20% in the month of sale, 50% in the month following sale, and 26% in the second month following sale; 4% are uncollectible. Moorcroft’s purchases are 50% cash and 50% on account. Purchases on account are paid 40% in the month following the purchase and 60% in the second month following the purchase.
Instructions:
(a) Prepare a schedule of expected collections from customers for June.
(b) Prepare a schedule of expected payments for direct materials for June.
(c) Moorcroft's assistant controller suggested that Moorcroft hire a part-time collector to encourage customers to pay more promptly and to reduce the amount of uncollectible accounts. Sales are still 40% cash and 60% credit but the assistant controller predicted that this would cause credit sales to be collected 30% in the month of the sale, 50% in the month following sale, and 18% in the second month following sale; 2% are uncollectible.
Prepare a schedule of expected collections from customers for June How did these changes impact cash collections? Would it be worth paying the collector $1,000 per month?
(d) The assistant controller also suggested that the company switch their purchases to 40% cash and 60% on account to help stretch out their cash payments. There is no additional interest charge to do this and Moorcroft is still paying their bills on time. There is no change to the company's payment pattern.
Prepare a schedule of expected payments for direct materials for June. How did these changes impact the cash payments for June?
Answers
Answer:
Moorcroft Company
a) A Schedule of Expected Collections from Customers for June:
June Sales - 40% of $407,000 cash = $1,628,000
June Sales - 20% of 60% of $407,000 = $48,840
May Sales - 50% of 60% of $292,000 = $87,600
April Sales - 26% of 60% of $327,000 = $51,012
Total = $1,815,452
b) A Schedule of Expected Payments for Direct Materials for June:
June Purchases - 50% of $61,000 cash = $30,500
May Purchases - 40% of 50% of $51,000 = $10,200
April Purchases - 60% of 50% of $42,000 = $12,600
Total = $53,300
c- i)A Schedule of Expected Collections from Customers for June:
June Sales - 40% of $407,000 cash = $1,628,000
June Sales - 30% of 60% of $407,000 = $73,260
May Sales - 50% of 60% of $292,000 = $87,600
April Sales - 18% of 60% of $327,000 = $35,316
Total = $1,824,176
ii) These changes increased cash collections from $1,815,452 to $1,824,176, an increase of $8,724.00
iii) The uncollectible of credit sales was halved, reducing from $9,768 (4% of 60% of $407,000) to $4,884 (2% of 60% of $407,000) for June sales for example.
iv) It is certainly worth paying the collector $1,000 or more per month.
d-i) A Schedule of Expected Payments for Direct Materials for June:
June Purchases - 40% of $61,000 cash = $24,400
May Purchases - 40% of 60% of $51,000 = $12,240
April Purchases - 60% of 60% of $42,000 = $15,120
Total = $51,760
ii) The changes reduced the cash payments for June from $53,300 to $51,760, a difference of $1,540.
Explanation:
a) When sales are made on credit, the finances of the entity will be impacted. While credit sales encourage more sales, there is the risk of uncollectible debts and short-term funding crisis due to non-receipt of payment from customers.
b) To manage this, companies introduce some incentives to encourage early payment, like cash discount. They may also formalize the debt with a note receivable. The note can also be sold for immediate cash.
c) Employing a collector to pursue receivables may be in the best interest of a company. The collector intensifies pressure on the customers to pay.
Final answer:
To prepare schedules of expected collections and payments for Moorcroft Company in June, you need to consider the cash and credit aspects of sales and purchases, as well as collection and payment patterns. The potential changes suggested by the assistant controller requires further financial analysis for the decision of hiring a part-time collector and adjusting purchase patterns.
Explanation:
Firstly, to calculate the expected collections from customers for June, you will have to consider both the cash and credit aspects of sales. For Moorcroft Company, 40% of sales are cash, so in June that would be 0.4*407000 = $162800. 60% of sales are on credit, which would be 0.6*407000 = $244200. Regarding the credit collections, assuming the question refers to June sales, 20% is collected in the same month of sale ($48840), 50% in the following month of sale ($122100) and 26% in the second month following the sale ($63520), summing up to total collections of $385260. For the uncollectable 4%, this amounts to $9768.
Secondly, for the expected payments for direct materials for June, 50% of these purchases are paid in cash ($30500), and if the pattern from the question holds, 40% of the purchases on account are paid in the month following the purchase and 60% in the second month following the purchase. As this is June, you would need the April and May data for this part of the calculation.
Concerning the changes suggested by the assistant controller, the impact on cash collections and payments would need to be recalculated using the proposed figures. If it results in greater collection figures and less payments, or positive cash flows, hiring a part-time collector could be worth the $1000 per month. However, the final decision should also weigh the extra cost against company's financial status and future plans.
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Answers
Alejandro is probably applying the quantitative viewpoint.
What is quantitative viewpoint?
The quantitative viewpoint is the one that lay emphasis on efficiency. This viewpoint means that the questions we form can be best answered with some analytical thinking.
There are different types of managers, however, quantitative viewpoint assumes workers are rational hence focuses on efficiency of workers.
Hence, Alejandro is probably applying the quantitativeviewpoint, which is the type of manager who completely focuses on efficiency, and assumes workers are rational.
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Final answer:
Alejandro is likely applying the Taylorism viewpoint in management, which focuses on work efficiency and views workers as rational beings. This theory, developed by Fredrick Taylor, is also known as scientific management and encourages task standardization to improve productivity.
Explanation:
Alejandro, who focuses on efficiency and assumes workers are rational, is likely applying the Taylorism viewpoint. This management theory, developed by Fredrick Taylor, is also known as scientific management or "stop-watch management."
Taylorism emphasizes the standardization of work tasks to improve efficiency, often at the loss of human interaction and collaborative work environments. Taylor's system sought to improve factory efficiency by reducing tasks to short, repetitive actions.
Therefore, managers who completely focus on efficiency, as Alejandro does, typically follow Taylor's principles of scientific management. This management style views workers as rational beings who are fundamentally driven by the need for efficiency and productivity in their roles.
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Answers
Answer:
This depends on the type of interest charged and the length of the loan. Generally speaking, floating loans should adjust semi-automatically to changes in interest rates. So any change affects them directly.
On the other hand, fixed rate loans, most mortgages and installment loans generally carry a fixed interest rate that doesn't depend on the market interest rate. Some mortgages (around 33% of total) are variable rate mortgages that are affected by changes in the market interest rate, but they adjust on a yearly basis.