Answer:
16.7
Explanation:
Let's assume that in a hypothetical economy currency in circulation is $600 billion, the amount of checkable deposits is $900 billion, excess reserves are $15 billion and required reserve ratio is 10%. a. Calculate money supply, currency to deposit ratio, excess reserve ratio and money multiplier. b. Suppose Fed conducts very large open market purchase of $1400 billion due to a sharp recession. Assuming the ratios hold, what will be the effect on money supply? c. Now suppose the Fed conducts the same open market purchase as in part (b) except banks choose to hold all the proceeds as excess reserves. Assuming currency to deposit and required reserve ratios stay the same, what happens money multiplier and money supply? d. Can you draw parallels between part (c) and what happened during the financial crisis of 2008?
The article examines the effects on a hypothetical economy of a set of fiscal and tax policies that are both long-term unsustainable and acknowledged by the general public.
Briefing:-a) Money Supply = Currency + Checkable Deposit = $600 billion + $900 billion = $1500 billion.
$600 billion compared to $900 billion is 66.7% of the currency deposit ratio.
Checkable deposit to excess reserve ratio is $15 billion to 900 billion, or 1.7%.
Money supply plus total reserves is $705 billion ($600 billion plus $15 billion plus $900 billion multiplied by 10%).
Money Supply/Monetary Base = $1500B/$705B = 2.13 Money Multiplier.
b). The Federal Reserves' purchase of $1400 billion through an open market transaction will add $1400 billion to the nation's monetary base. With a money multiplier of 2.13, this will result in a $1400B*2.13=$2982B rise in the money supply.
c). Given that the Fed makes the open market purchase and that the banks store all of the proceeds in excess reserves rather than lending them out because of concern about a financial disaster, the excess reserves held by the banks equal $15 billion plus $1400 billion, or $1415 billion.
The surplus reserve ratio is equal to $1415 billion divided by 900 billion, or 157.22%.
Money supply = $600B + $900B = $1500B
The monetary basis is equal to $600 billion plus $1415 billion plus $900 billion multiplied by 10% to equal $2105 billion.
The money multiplier equals money supply/monetary base and is 7.71.
d). The federal reserves significantly increased the quantity of liquidity in the banking sector during the financial crisis. But rather than using them to make new loans, banks decided to keep them as reserves. As a result, for the most of the time from October 2008 and until 2011, the money supply M1 multiplier remained below 1. This condition is indicated by the computation in 2c).
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What is the opportunity cost in this scenario?
Harry has been very busy at work for the past two weeks. He has been working weekends too. Finally, he is going to get a weekend off.
Originally, he planned to paint his apartment that weekend. He also considered going fishing for the weekend
But then his parents called and asked him to come for dinner because it has been a while since they have seen each other
Later on, his friend Theo informed him about a surprise birthday party for another friend. Theo plans to reserve a room at a restaurant for the
celebration, with the cost to reserve the room split between Theo, Harry, and three other friends.
Now Harry is confused about what he should do over the weekend. He decides that, for him, the most important commitments are going over to
his parent's house and attending his friend's birthday party. In the end, Harry decides to see his parents.
When the labor market is doing very well and jobs are easy to get, we would expect:
The labor force to increase as previously discouraged workers re-entered the labor force.
The labor force to decrease as previously discouraged workers choose to remain unemployed.
The labor force to stay the same because the labor market is in equilibrium at that point
The labor force to increase because the overall population of the country should shrink.
The labor force to increase because the overall population of the country should increase because of immigration
Answer:
A. The labor force to increase as previously discouraged workers re-entered the labor force.
Explanation:
When the labor market is doing very well and jobs are easy to get, we would expect the labor force to increase as previously discouraged workers re-entered the labor force.
This ultimately implies that, when the labor market is performing exceptionally or excellently and the unemployment rate is very low because people are able to secure employment easily, there would be a significant increase in the number of people employed and as such leading to an increase in the labor force as more people would be motivated to join the labor force.
Hence, an optimal and efficient economy is one that is characterized mainly by a low unemployment rate with previously discouraged workers being motivated to come back into the labor force.
If scientists discover that steamed milk, which is used to make lattés, prevents heart attacks, what would happen to the equilibrium price and quantity of lattes?
a. Both the equilibrium price and quantity would increase.
b. Both the equilibrium price and quantity would decrease.
c. The equilibrium price would increase, and the equilibrium quantity would decrease.
d. The equilibrium price would decrease, and the equilibrium quantity would increase.
Answer:
a. Both the equilibrium price and quantity would increase.
Explanation:
The point on a demand-supply graph where the demand curve and the supply curve intersects is known as the point of equilibrium.
If scientists discover that steamed milk, which is used to make lattés, prevents heart attacks, what would happen to the equilibrium price and quantity of lattés is that, both the equilibrium price and quantity would increase.
This simply means that, whatever makes the factors of production such as, land, labor, entrepreneurship, capital, or efficiency to either go up or down would certainly result in fluctuations in the economy of a particular country.
Aggregate supply (AS) refers to the total quantity of output (goods and services) that firms are willing to produce and sell at a given price in an economy at a particular period of time.
Aggregate demand (AD) can be defined as the total quantity of output (final goods and services) that is demanded by consumers at all possible price levels in an economy at a particular time.
On a standard Aggregate demand (AD)-Aggregate supply (AS) curve, the y axis denotes the Price (P) of goods and services while the x axis typically denotes the Output (Q) of final goods and services.
In the short-run, a rightward shift in the aggregate supply (AS) curve causes output to increase and result in a price fall (lower price) while a rightward shift in the aggregate demand (AD) curve also cause output to increase and rise in prices.
The short-run nominal fluctuations basically cause a change in the level of production. In the short-run, as a result of a shift in the aggregate supply; an increase in money consequently to result in increase the level of production (output).
Hence, more goods are produced as a result of the increased output (supply) and more goods would be purchased as a result of their lower prices.
On January 1, Boston Enterprises issues bonds that have a $1,850,000 par value, mature in 20 years, and pay 7% interest semiannually on June 30 and December 31. The bonds are sold at par. 1.
Required:
1. How much interest will Boston pay (in cash) to the bondholders every six months?
2. Prepare journal entries to record (a) the issuance of bonds on January 1; (b) the first interest payment on June 30; and (c) the second interest payment on December 31.
3. Prepare the journal entry for issuance assuming the bonds are issued at (a) 95 and (b) 105.
Answer:
1. How much interest will Boston pay (in cash) to the bondholders every six months?
coupon payment = $1,850,000 x 7% x 1/2 = $64,750
2. Prepare journal entries to record (a) the issuance of bonds on January 1; (b) the first interest payment on June 30; and (c) the second interest payment on December 31.
January 1, bonds issued at par
Dr Cash 1,850,000
Cr Bonds payable 1,850,000
June 30, first coupon payment
Dr Interest expense 64,750
Cr Cash 64,750
December 31, second coupon payment
Dr Interest expense 64,750
Cr Cash 64,750
3. Prepare the journal entry for issuance assuming the bonds are issued at (a) 95 and (b) 105.
a)
Dr Cash 1,757,500
Dr Discount on bonds payable 92,500
Cr Bonds payable 1,850,000
b)
Dr Cash 1,942,500
Cr Bonds payable 1,850,000
Cr Premium on bonds payable 92,500
A family of open-end investment company funds permits investors to switch from one fund to another for a nominal service fee. What are the tax consequences of such an exchange
Answer:
Explanation:
Exchange privilege could be described as an opportunity to give mutual fund shareholders the ability to exchange their funds in another fund within the same fund.
The consequences following this is, if you exchange the fund one year or less from when you bought it you'll pay taxes at a short term capital gain, while if you held it longer you'll have long term capital gains. The longer the investment the longer the capital and vice versa
Novak Corporation commenced operations in early 2020. The corporation incurred $53,000 of costs such as fees to underwriters, legal fees, state fees, and promotional expenditures during its formation. Prepare journal entries to record the $53,000 expenditure and 2020 amortization, if any.
Answer:
S/n Date Account Titles and Explanation Debit Credit
1. 2020 Organization expenses $53,000
Cash $53,000
(Being amount paid to underwriters recorded)
2. No Entry
No Entry
(For amortization)
What is the main impact of 24/7 digital media on isssue monitoring, managing, and reporthing, on pr planning?
Answer:
I genuinely don't know
Data were collected for a sample of 12 pharmacists to determine if years of experience and salary are related. A regression was run with the dependent variable Salary (thousands of dollars) and independent variable Experience (years). Suppose the P-value associated with the calculated t-statistic is <.001. What is the conclusion at the .05 level of significance?
a. Conclude that years of experience is significant in explaining pharmacists' salary.
b. Reject the null hypothesis and we conclude that years of experience is significant in explaining pharmacists' salary
c. Do not reject the null hypothesis and we conclude that years of experience is significant in explaining pharmacists' salary.
d. Reject the null hypothesis.
Answer:
b. Reject the null hypothesis and we conclude that years of experience is significant in explaining pharmacists' salary
Explanation:
We are given p-value less than 0.001, which means p-value less than given level of significance or alpha value 0.05, so we reject the null hypothesis and conclude that years of experience is significant in explaining pharmacists’ salary.
The conclusion at the level of significance that's given will be B. Reject the null hypothesis and we conclude that years of experience is significant in explaining pharmacist salary.
The null hypothesis simply means that statistical theory that suggests that there's no significance between the variables.
In this case, the p-value that's given is less than the level of significance. Therefore, the null hypothesis will be rejected. It can then be concluded that the years of experience is significant in explaining the salary of the pharmacist.
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Findell Corporation is considering two projects, A and B, and it has gathered the following estimates for the projects Project A Project B Useful life 5 Years 5 Years Present value of cash inflows $84,360 $55,100 Present value of cash outflows 77,000 49,000 What is the present value index for Project A?a. 1.096.b. 0.913.c. 1.124.d. 0.889.
Answer:
a. 1.096
Explanation:
The present value index is the same as the profitablility index(PI), which is computed by dividing the present value of future cash inflows by the initial investment(the present value of cash outflows). A profitability of above 1 means that the project is viable as the numerator(PV of cash inflows) exceeds the denominator( initial cash outlay).
Project A PI index= Present value of cash inflows/Present value of cash outflows
Project A PI index= $84,360/$77,000
Project A PI index= 1.096
prepare adjusting entry
florenda quino forwarders borrowed 600,000 from the bank on September 1 2013. The note carried an % annual rate of interest and was set to mature on feb 28, 2014 interest and principal we're paid in cash on the maturity date
required
1. what was the amount of interest expense paid in cash in 2013?
2. what was the amount of interest expense recognized on the 2013 income statement ?
3.what was the amount of the total liabilities shown on the 2013 balance sheet ?
4. what was the total amount of cash that was paid to the bank on feb 28, 2014 for principal and interest?
5. what was the amount of interest expense shown on the 2014 income statement?
Answer:
the interest rate is missing, so I looked for similar questions and found that it is 8%:
1. what was the amount of interest expense paid in cash in 2013?
interest expense = $600,000 x 8% x 4/12 = $16,000
2. what was the amount of interest expense recognized on the 2013 income statement ?
$16,000
3.what was the amount of the total liabilities shown on the 2013 balance sheet ?
notes payable $600,000
interest payable $16,000
total $616,000
4. what was the total amount of cash that was paid to the bank on feb 28, 2014 for principal and interest?
total interest expense = $600,000 x 8% x 6/12 = $24,000
total cash paid = $624,000
5. what was the amount of interest expense shown on the 2014 income statement?
interest expense 2014 = $24,000 - $16,000 = $8,000
1. The amount of interest that Florenda Quino Forwarders paid in 2013 was $0.
2. The amount of interest that Florenda Quino recognized on the 2013 income statement was $16,000.
3. The amount of the total liabilities that Florenda Quino showed on its 2013 balance sheet for this bank loan was $616,000.
4. The total amount of cash that Florenda Quino paid to the bank on February 28, 2014, was $624,000.
5. The amount of interest expense shown on Florenda Quino's 2014 income statement was $8,000.
Data and Calculations:
Bank loan on Sept. 1, 2013 = $600,000
Annual interest rate = 8%
Maturity date = February 28, 2014
Maturity period = 6 months
Interest recognized in 2013 = $16,000 ($600,000 x 8% x 4/12)
Interest for one month = $4,000 ($600,000 x 8% x 1/12)
Interest for six months = $24,000 ($600,000 x 8% x 6/12)
Interest recognized in 2014 = $8,000 ($600,000 x 8% x 2/12)
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Which scenario is an example of demand pull inflation
Answer:
Consumers have more money to buy cars, and the prices of cars and car accessories rise as a result. an increase in prices for computers and computer accessories.
Explanation:
Answer:
a
Explanation:
Morgan (age 45) is single and provides more than 50% of the support of Tammy (a family friend), Jen (a niece, age 18), and Jerold (a nephew, age 18). Both Tammy and Jen live with Morgan, but Jerold (a French citizen) lives in Canada. Morgan earns a salary of $95,000, contributes $5,000 to a traditional IRA, and receives sales proceeds of $15,000 for an RV that cost $60,000 and was used only for vacations. She incurs $8,200 in itemized deductions.
A. Morgan's taxable income is $_____.
B. Using the Tax Rate Schedules (click here), tax liability for Morgan is $_____for 2019.
C. Compute Morgan's dependent tax credit.
Answer:
A) $71350
B) $10045
Explanation:
A) Morgan's taxable income
= Salary - IRA deduction - Greater of standard and itemized deduction
= $95000 - $5000 - $18650
= $71350
B) Tax liability for Morgan ( using tax rate schedules )
= ( 6162 ) + ( 71350 - 53700 ) * 22%
= $10045
Using _____ requires gathering a lot of information about customers’ preferences and shopping patterns, and some customers get impatient with answering long surveys about their preferences.
Answer:
Personalization.
Explanation:
Using personalization in customer relationship management (CRM) requires gathering a lot of information about customers’ preferences and shopping patterns, and some customers get impatient with answering long surveys about their preferences.
This ultimately implies that, personalization deals with gathering information about a specific customer's choice such as taste, requirements, product preferences, shopping styles or patterns in order to be able to serve him or her better, through the provision of goods and services that meets their needs.
can you help with this riddle : he married many woman but has never married
Answer:
A priest
Explanation:
If you know the company that you want to work for, you should check the on the company’s website as you perform your job search
Answer: Investigating the website of a company allows me to have a general idea about what this consists of.
Explanation: In the job search process one of the ways to learn more about the company of interest is to investigate on its website. The website of a company offers general information about the company such as mission, vision, values, the services or products they offer, the work team that makes up the company, and that they look for when recruiting a person.
Assume your gross pay per pay period is $2,600 and you are in the 28 percent tax bracket. Calculate your net pay and spendable income if you save $260 per pay period after paying income tax on $2,600.
Answer:
$1,612
Explanation:
Calculation for net pay and spendable income
Gross Pay: $2,600
TSA: ($260)
Taxable Income: $2,340
($2,600-$260)
Tax: ($728)
(28%*$2,600)
Net Pay and Spendable Income: $1,612
($2,340-$728)
Therefore the Net Pay and Spendable Income will be $1,612
a. On April 1, the company hired an attorney for a flat monthly fee of $500. Payment for April legal services was made by the company on May 12.
b. As of April 30, $2,007 of interest expense has accrued on a note payable. The full interest payment of $6,020 on the note is due on May 20
c. Total weekly salaries expense for all employees is $14,000. This amount is paid at the end of the day on Friday of each five-day workweek. April 30 falls on a Tuesday, which means that the employees had worked two days since the last payday. The next payday is May 3.
The above three separate situations require adjusting journal entries to prepare financial statements as of April 30.
For each situation, present both the April 30 adjusting entry and the subsequent entry during May to record payment of the accrued expenses. (Do not round intermediate calculations.)
Answer and Explanation:
The journal entries are shown below:
1 Legal fees expense $500
To Legal fees payable $500
(Being accrued expense is recorded)
2 Legal fees payable $500
To Cash $500
(Being amount paid is recorded)
3 Interest expense $2,007
To Interest payable $2,007
(Being accrued interest is recorded)
4 Interest payable $2,007
Interest expense $4,013
To Cash $6,020
(Being interest paid is recorded)
5 Salaries and wages expense $11,200
To Salaries and wages payable $11,200
(Being accrued expense is recorded)
6 Salaries and wages payable $11,200
Salaries and wages expense $2,800
To Cash $14,000
(Being salaries and wages paid is recorded)
The new owner of a beauty shop is trying to decide whether to hire one, two, or three beauticians. She estimates that profits next year (in thousands of dollars) will vary with demand for her services, and she has estimated demand in three categories, low, medium, and high. NUMBER OF BEAUTICIANS DEMAND LOW MEDIUM HIGH One 50 75 100 Two 0 100 100 Three (100 ) 70 300 If she feels the chances of low, medium, and high demand are 50 percent, 20 percent, and 30 percent respectively, what are the expected annual profits for the number of beauticians she will decide to hire?
Answer:
the expected annual profit for the number of beauticians is $70,000
Explanation:
The computation of the expected annual profit for the number of beauticians is shown below:
= 50 × 0.50 + 75 × 0.20 + 100 × 30
= 25 + 15 + 30
= 70
= $70,000
hence the expected annual profit for the number of beauticians is $70,000. The same is to be considered
All other information that are mentioned should be ignored
14. Sabino Inc. manufactures widgets at a variable
cost of $1.05 per unit and has a fixed cost of
$404,000. If the sales price is $2.50, how many must
be made and sold to break even?
A. 156,992
B. 278,621
C. 287, 301
D. Impossible to break even
Answer:
B. 278,621
Explanation:
The break-even point is equal to fixed cost divided by contribution margin per unit from the contribution margin concept.
Break-even point = Fixed costs/ contribution margin per unit
contribution margin per unit = selling price- variable cost
In this case,
fixed costs are $404,000.
selling price $2.50,
variable cost $1.05
Contribution margin per unit : $2.50-$1.05= $1.45
Break-even point = $404,000/ $1.45
=278,620.689
=278,621 units
PQR Corporation has a Beta of 1.5. The risk-free rate is 6%, and the market risk premium is 9%. What is the required rate of return of PQR?
Josh has a portfolio of two stocks, Stocks A has a Beta of 2.4 and stock B has a Beta of 0.9. Funds are allocated with 60% in Stock A and 40% in Stock B. If the T-bill rate is 4%, and the market expected return is 13%, what is the required return on the portfolio?
A stock provides the following returns:
Year 1 6%
Year 2 10%
Year 3 -6%
What is the geometric average return?
Answer:
1. Using CAPM, the required return is;
Required return = risk free rate + beta * market risk premium
= 6% + 1.5 * 9%
= 19.5%
2. First find the portfolio beta which is a weighted average of the individual betas;
= (60% * 2.4) + (40% * 0.9)
= 1.8
Now use CAPM
= risk free rate + beta * (Market return - risk free rate)
= 4% + 1.8 * (13% - 4%)
= 20.2%
3.Geometric average can be calculated by;
=( ((1 + r1) * (1 + r2) * (1 + r3)) ^1/n) - 1
= (((1 + 6%) * (1 + 10%) * (1 - 6%)) ^ 1/3) - 1
= (1.09604^1/3) - 1
= 3.1%
One of Hartman Company's activity cost pools is inspecting, with estimated overhead of $140,000. Hartman produces throw rugs (700 inspections) and area rugs (1,300 inspections). How much of the inspecting cost pool should be assigned to area rugs?
a. 75,384
b. 70,000
c. 140,000
d. 49,000
The options provided are incorrect. The correct answer is as follows
Answer:
Area rugs = $91000
Explanation:
The overheads of the cost pool should be divided among the rugs based on the number of inspections carried out under each category divided by the total number of inspections in the cost pool. The division should be such that,
Inspection cost division
Throw rugs = 140000 * 700 / (700+1300)
Throw rugs = $49000
Area rugs = 140000 * 1300 / (700+1300)
Area rugs = $91000
Turner Company owns 10% of the outstanding stock of ICA Company. During the current year, ICA paid a $5.10 million cash dividend on its common shares.
What effect did this dividend have on Turner's 2021 financial statements? (Enter your answers in whole dollars, not in millions. Amounts to be deducted should be indicated with a minus sign.)
Balance Sheet
Cash $510,000
xxxx $
Income Statement
Dividend Revenue $510,000
I do not know what the second Balance Sheet account should be and the amount.
Answer:
Turner Company
The effect that this dividend had on Turner's 2021 financial statements are:
Balance Sheet
Cash $510,000
Retained Earnings $510,000
Income Statement
Dividend Revenue $510,000
Explanation:
a) Data and Calculations:
Shareholding in ICA Company = 10%
ICA paid cash dividend amounting to $5.10 million
Turner's share of the dividend = $510,000 ($5,100,000 * 10%)
b) The receipt of the cash dividend by Turner will increase its Cash balance by $510,000. It will also increase the Dividend Revenue by $510,000, thereby increasing the profit for the year. If Turner does not pay dividends, it will also increase the Retained Earnings by the same amount.
Grayson Company is considering a purchase of equipment that costs $49,000 and is expected to offer annual cash inflows of $13,000. Grayson's minimum required rate of return is 10%. How many years must the cash flows last for the investment to be acceptable?A) 3 Years.
B) 4 Years.
C) 5 Years.
D) 6 Years.
Answer: c is correct
Explanation:pls give brainlist
Dee's credit card has an APR of 17%, calculated on the previous monthly
balance, and Dee makes a payment of $50 every month. Her credit card
record for the last 7 months is shown in the table below.
End of Previous New Payment Finance Principal New
month
balance charges received charges
paid balance
$0.00 $122.00 $0.00
$0.00
$0.00 $122.00
2. $122.00 $56.00
$50.00
?
$48.27 $129.73
3
$129.73 $98.00 $50.00
$1.84 $48.16 $179.57
4
$179.57 $237.00 $50 00 $2.54 $47 46 $369.11
5
$369.11 $75.00 $50.00
$5.23 $44.77 $399.34
6
$399.34 $39.00 $50.00
$5.66 $44.34 $394.00
7 $394 00 $118.00 $50.00 $5.58 $44 42 $467.58
What were the finance charges in month 2?
Answer:
d
Explanation:
Answer: $1.73
Explanation:
The AstroNews has experienced a decline in the number of subscriptions to its printednewspaper over the last 5 years. It seems people prefer news feeds sent directly to their smartphones than a printed paper delivered to their homes. (12 Marks)
a)Which component in the externalenvironmentmay havecaused it? Write in detail (Please mention and highlight the name of that element in bold).(2 marks) (100 words minimum)
b) If you think it’s a demographical change, write down all the detail of its further elements for instance age,gender,family size etc. Also discuss what and how each of it has created a change in the environment. Ifno, suggest some other factor.
Answer:
a) I believe that it is a combination of changes in both the demographic component of the business environment and technological changes that made this possible. Every time I think about how many things were replaced by the smartphone, it just amazes me. When I was little, my father used a camcorder to make videos, a camera to take photos, he needed a watch, a lantern, a telephone, an agenda, a calculator, and a long list of other things.
If I had to carry all these around with me, I would need a huge backpack. Instead, I use a smartphone and everyone I know uses one also. I doubt that there is any person under 40 or 50 years old that could "survive" without their smartphone.
Who needs printed news? The only possible answer is people who do not know how to use a smartphone. This is a good change from an environmental point of view, i.e. less paper = less trash = less trees cut down = happier planet.
b) As I said before, no one under 50 (or maybe even older) can manage to live without their smartphone. Technology has become part of our lives, and it doesn't matter if you are a man or a woman, the effect is the same. Smartphones have become such an important part of our lives that 81% of adults in America own one. If you could segregate that statistic by decades, I'm sure that over 99% of people under 50 use them.
It doesn't matter if you are poor or rich. If your family is large or small. If you graduated from college or not. Everyone uses smartphones and what happened to AstroNews happened to the New York Times, Washington Post, and every other single newspaper. It is also affecting news channels like CNN or Fox news, so even cable TV is obsolete compared to smartphone apps.
Balance sheet is a statement of what?
Answer:
I need points sorry
Explanation:
ILL GIVE BRAINLIEST!! HELP ASAP!!
Answer:
Fedurary
Explanation:
I think it is Fedurary
Answer:
April
Explanation:
I searched it up on Google and this is what it said:
"April 15 is supposed to be the official tax deadline to file your federal income tax return each year, but that date isn't carved in stone. "
Is a ledger a group of accounts and their balances?
The cost of a piece of equipment is $80,000; it has a 5 year life, and an estimated salvage value of $5,000.
Required:
a. What is the amount of depreciation expense for the first full year the company owns the equipment if the company adopts the straight-line method?
b. What is the journal entry the company would make to record depreciation expense?
c. What is the book value of the equipment after it has been owned for 1 full year (hint use part a)?
d. What is the amount of depreciation for the first year if the company did not purchase the equipment until July 1st and uses the straight-line method?
e. What is the book value of the equipment after it has been owned for 1/2 years?
Answer:
a. What is the amount of depreciation expense for the first full year the company owns the equipment if the company adopts the straight-line method?
depreciable value = $80,000 - $5,000 = $75,000
depreciation expense per year = $75,000 / 5 years = $15,000
b. What is the journal entry the company would make to record depreciation expense?
December 31, 202x, depreciation expense
Dr Depreciation expense 15,000
Cr Accumulated depreciation - equipment 15,000
c. What is the book value of the equipment after it has been owned for 1 full year (hint use part a)?
book value = purchase price - accumulated depreciation = $80,000 - $15,000 = $65,000
d. What is the amount of depreciation for the first year if the company did not purchase the equipment until July 1st and uses the straight-line method?
depreciation expense = $15,000 x 1/2 = $7,500
e. What is the book value of the equipment after it has been owned for 1/2 years?
book value = $80,000 - $7,500 = $72,500