Answer: d. $25,000 loss
Explanation:
Based on the information given in the question, the amount of gain or loss recognized by Robert on the distribution will be gotten by subtracting the liability of $325,000 from the land basis of $300,000. This will be:
= $325,000 - $300,000
= $25,000
This will be a loss since the liability is higher than the asset which is the land basis. Therefore, the amount of loss recognized by Robert on the distribution will be $25,000 loss.
The correct option is D.
Which of the following are frequently mentioned goals of the Federal Reserve? Check all that apply.
Answer:
Stability in the financial system
– Price stability—fighting inflation
– Full employment
– Economic growth
– Interest rate stability
– Currency stability
The wages payable related to the factory workers for Larkin Company during the month of January are $76,000. The employer's payroll taxes for the factory payroll are $8,000. The fringe benefits to be paid by the employer on this payroll are $6,000. Of the total accumulated cost of factory labor, 85% is related to direct labor and 15% is attributable to indirect labor.
Prepare entries for factory labor.
Instructions
a. Prepare the entry to record the factory labor costs for the month of January.
b. Prepare the entry to assign factory labor to production.
(Weygandt, 12/2017, p. 20-31) Weygandt, J. J., Kimmel, P. D., Kieso, D. E. (2017). Accounting Principles, 13th Edition. [[VitalSource Bookshelf version]]. Retrieved from vbk://9781119411017 Always check citation for accuracy before use.
Answer:
a. Date Account Titles and Explanation Debit Credit
Factory labor $90,000
Factory wages payable $76,000
Employer payroll taxes payable $8,000
Employer fringe benefits payable $6,000
b. The entry to assign factory labor to production is the following
Date Account Titles and Explanation Debit Credit
Work in process inventory $76,500
(85% of $90,000)
Manufacturing overhead $13,500
(15% of $90,000)
Factory labor $90,000
In the country of Marzipana, total consumption in Year 1 was $56,000 million and in Year 2 was $60,000 million. It has been observed that each time disposable income changes in this country by $100, consumption changes by $70. Using this information compute the change in disposable income from Year 1 to Year 2.
A. Disposable income increased by $2,800 million in Year 2.
B. Disposable income decreased by $2,000 million in Year 2.
C. Disposable income increased by $2,000 million in Year 2.
D. Disposable income increased by $4,500 million in Year 2.
E. Disposable income decreased by $2,600 million in Year 2.
Answer: A. Disposable income increased by $2,800 million in Year 2.
Explanation:
Disposable income is gotten when the personal current taxes has been deducted from the total personal income of an individual.
Total consumption in year 1 = $56,000 million
Total consumption in year 2 = $60,000 million.
The above shows that there was an increase in total consumption of:
= $60,000 million - $56,000 million
= $4,000 million
From the question, we can also deduce that there's a 0.7 (70/100) change in consumption as a result of a $1 change in disposable income.
Therefore, the increase in the disposable income in year 2 will be:
= $4,000 million × 0.7
= $2,800 million
Therefore, the correct option is A.
g A decline in the quantity of real output demanded along the aggregate demand curve is a result of a(n):
Answer:
Increase in the price level.
Explanation:
A decline in the quantity of real output demanded along the aggregate demand curve is a result of an increase in the price level.
This ultimately implies that, an increase in the price level of a product usually results in a decrease in the quality of real output demanded along the aggregate demand curve.
According to the law of demand which states that, there exist a negative relationship between the quantity of goods demanded and the price of a good. This simply means that, when the prices of goods and services in the market increases or rises: there would be a significant decline or fall in the demand for this goods and services.
You decide to invest $20,500 in Bank of America and $14,500 in Twitter. What is the portfolioâs beta? Bank of America beta: 1.27 Twitter beta: 1.96
Answer:
Portfolio Beta = 1.555857143 rounded off to 1.56
Explanation:
The portfolio beta is the function of the weighted average of the individual stock betas that form up the portfolio. The formula to calculate the beta of a portfolio containing two stock is as follows,
Portfolio Beta = wA * Beta of A + wB * Beta of B
Where,
w is the weight of each stock
As the investment in Stock of Bank of America is 20500 and the investment in stock of Twitter is 14500, the total investment in the portfolio will be,
Total investment = 20500 + 14500 = 35000
Portfolio Beta = 20500 / 35000 * 1.27 + 14500 / 35000 * 1.96
Portfolio Beta = 1.555857143 rounded off to 1.56
Leach Inc. experienced the following events for the first two years of its operations:
Year 1: Issued $10,000 of common stock for cash.
Provided $100,000 of services on account.
Provided $35,000 of services and received cash.
Collected $65,000 cash from accounts receivable.
Paid $14,000 of salaries expense for the year.
Adjusted the accounting records to reflect uncollectible accounts expense for the year. Leach estimates that 8 percent of the ending accounts receivable balance will be uncollectible.
Year 2: Wrote off an uncollectible account for $680.
Provided $120,000 of services on account.
Provided $25,000 of services and collected cash.
Collected $102,000 cash from accounts receivable.
Paid $30,000 of salaries expense for the year.
Adjusted the accounts to reflect uncollectible accounts expense for the year. Leach estimates that 8 percent of the ending accounts receivable balance will be uncollectible.
Required
a. Record the 2016 and 2017 events in general journal form and post them to T-accounts. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
b. Prepare the income statement, statement of changes in stockholders’ equity, balance sheet, and statement of cash flows for 2016 and 2017. (Statement of Cash Flows and Balance Sheet only: Items to be deducted must be indicated with a minus sign.)
c. What is the net realizable value of the accounts receivable at December 31, 2016 and Dec. 31. 2017?
Answer:
that is too hard check gogle
9.
How is nominal GDP converted into real GDP?
O by eliminating the effects of price increases on GDP growth
O by adding all incomes earned to total expenditures by consumers, businesses, and government
O by adding the contributions of American-owned factories in foreign countries
O by adding up all of the real purchases made in the economy
Answer:
by eliminating the effects of price increases on GDP growth
Explanation:
To correct for an increase in prices, economists establish a set of constant prices by choosing one year as a base year and using this base year to calculate real GDP for other years.
Suppose you invest $1,600 for six years at an annual percentage rate of 9 percent. a. What is the future value if interest is compounded annually? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the future value if interest is compounded semiannually? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. What is the future value if interest is compounded monthly? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) d. What is the future value if interest is compounded continuously? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Answer:
a. Principal amount = $1,600
rate of interest = 9% compounded annually
Period = 6 years
Future value = P (1+r)^t
= $1,400 (1+0.09)^6
= $1,600 * 1.6771
= $2683.36
b. Principal amount = $1,600
rate of interest = 9% compounded semi annually, semi annual rate of interest = 9*6/12 = 4.5%
Time = 6 years, semiannual period = 6*2 =12
Future value = P (1+r)^t = $1,400 (1+0.045)^12
= $1,600 * 1.6959
= $2713.44
c. Principal amount = $1,600
Rate of interest = 9% compounded monthly, monthly rate of interest = 9/12 = 0.75%
Time = 6 years, monthly period = 6*12 =72
Future value = P (1+r)^t
= $1,600 (1+0.0075)^72
= $1,600 * 1.7125
= $2740
d. Principal amount = $1,400
Rate of interest = 9% compounded continuously
Period = 6 years
Future value = P * e^rt
= $1,600 (2.71828)^(0.09*6)
= $1,600 * 1.7160
= $2745.60
Selected transactions for Windsor, Inc., an interior decorating firm, in its first month of business, are as follows.
Jan. 2
3
9
11
Invested $18,481 cash in the business in exchange for common stock.
Purchased used car for $10,103 cash for use in the business.
Purchased supplies on account for $616.
Billed customers $2,218 for services performed.
Paid $246 cash for advertising.
Received $961 cash from customers billed on January 11.
Paid creditor $370 cash on balance owed.
Declared and paid a $616 cash dividend.
16
20
23
28
Journalize the transactions. (Credit account titles are automatically indented when the amount is entered. Do not indent
manually. Record journal entries in the order presented in the problem. If no entry is required, select "No Entry" for the
account titles and enter o for the amounts.)
16 28 24 29-$4&3 gfrrffttttttru
Entity A supplies planed timber, paint, varnish, springs, upholstery, and cushioning to EntityB, which produces a ready to use furniture. Entity C is the marketing department of Entity B. In this context, ______.a. A is an upstream supply chain member, while C is the downstream chain memberb. C is an upstream supply chain member, while A is the downstream chain memberc. B is an upstream supply chain member, while A is the downstream chain memberd. C is an upstream supply chain member, while B is the downstream chain member
Answer:
a. A is an upstream supply chain member, while C is the downstream chain member
Explanation:
Supply chain management can be defined as the effective and efficient management of the flow of goods and services as well as all of the production processes involved in the transformation of raw materials into finished products that meet the insatiable want and need of the consumers. Generally, the supply chain management involves all the activities associated with planning, execution and supply of finished goods and services to the consumers.
The key principle of supply chain management can be best summed up as collaboration between multiple firms. These multiple firms include a company that is saddled with the responsibility of manufacturing, a wholesaler, and a retailer who typically sells the products to the customers or consumers.
Basically, these three (3) firms or individuals are required to collaborate with each other so as to meet the needs of the customers in a timely manner or fashion and at a fair price too.
Entity A supplies planed timber, paint, varnish, springs, upholstery, and cushioning to Entity B, which produces a ready to use furniture. Entity C is the marketing department of Entity B.
In this context, Entity A is an upstream supply chain member, while Entity C is the downstream chain member.
The upstream supply chain member are the suppliers of raw materials to another organization for its production line while the downstream chain member are the intermediary between the manufacturer and the consumer.
The debt-to-equity ratios for Firm 1, Firm 2, Firm 3, and Firm 4 are 0.2, 0.3, 0.35, and 0.4, respectively. The earnings per share for Firm 1, Firm 2, Firm 3, and Firm 4 are $4, $3, $2.5, and $2, respectively. Everything else equal, which firm is placing more burdens on its borrowing?A. Firm 1.B. Firm 2.C. Firm 3.D. Firm 4.
Answer:
D. Firm 4.
Explanation:
To determine this, the debt-to-equity ratio is the relevant measure to use.
The debt-to-equity ratio can be described as a ratio that compares the total debt of company to its total equity.
The debt-to-equity ratio tells us the percentage of the financing of the firm that is obtained from borrowing from creditors and investors.
The debt-to-equity ratio is a ratio that gives an idea of the extent of burden that the company places on its borrowing and the ability of the company to repay its debt in future.
When a company has the highest debt-to-equity ratio compared to other companies, it implies that more financing of the company comes from creditors and bank loans than from the shareholders of the company.
From the question, Firm 4 has the highest debt-to-equity ratio which 0.4. Based on the explanation above, it therefore implies that Firm 4 is placing more burdens on its borrowing.
John wants to purchase a new motorcycle that costs $10,000 in five years. If John wants to have $10,000 in five years, how much would he have to deposit at the end of each of the next five years?
Answer:
2.ooo
Explanation:
On May 1, 2017, Crane Company purchased the copyright to Blue Spruce Corp. for $112800. It is estimated that the copyright will have a useful life of 4 years. The amount of amortization expense recognized for the year 2017 would be:_______. a) $28200 b) $15040 c) $18800. d) $14100.
Answer:
$18,800
Explanation:
The amortization expense can be calculated by dividing the cost of copyright to purchase by the estimated useful life and then multiplied by the number of months covered until May 1, 2017.
Amortization expense = Cost to purchase / Estimated useful life) x 8/12 Amortization expense = ($112,800 / 4 years) * 8/12
Amortization expense = $18,800
As the copyright is purchased on may 1 it will cover 8 months till 31 december 2017
At which stage of the business cycle would the economy be at when GDP begins to rise and the unemployment rate begins to fall?
A)
Peak
B)
Contraction
Trough
D)
Expansion
Answer: A - peak
Explanation:
Just took the test the other answer is wrong!!!
Larkspur, Inc. reports net income of $91,800 in 2022. However, ending inventory was understated $7,800. What is the correct net income for 2022?
Answer:
$99,600
Explanation:
If the ending inventory was understated that means that they have less of the inventory than they had originally expected, this means that they sold more than they have calculated and therefore have not included the $7,800 in the net income. Therefore, we would need to add this amount to the actual reported net income to get the correct net income for 2022...
$91,800 + $7,800 = $99,600
The correct net income for 2022 is $99,600
If during the year the portfolio manager sells all of the holdings of stock D and replaces it with 200,000 shares of stock E at $50 per share and 200,000 shares of stock F at $25 per share, what is the portfolio turnover rate?The composition of the Fingroup fund portfolio is as follows:Stock shares PriceA 200,000 $35B 300,000 40C 400,000 20D 600,000 25 The fund has not borrowed any funds but its accrued management fee with the portfolio manager currently totals 30,000. there are 4 million funds outstanding ? What is the net asset value of the fund?
Answer:
$10.49
Explanation:
The computation of the net asset value of the fund is shown below:
= (Market value of the assets - market value of the liabilities) ÷ number of oustanding shares
where,
Market value of assets is
= (200,000 × $35) + (300,000 × $40) + (400,000 × 20) + (600,000 × 25)
= $42,000,000
So, the net asset value of the fund is
= ($42,000,000 - $30,000) ÷ (4,000,000)
= $10.49
Ivanhoe Company sublet a portion of its warehouse for five years at an annual rental of $71100, beginning on May 1, 2020. The tenant, Barbara Jones, paid one year's rent in advance, which Ivanhoe recorded as a credit to Unearned Rent Revenue. Ivanhoe reports on a calendar-year basis. The adjustment on December 31, 2020 for Ivanhoe should be:________.
Answer and Explanation:
The adjustment should be as follows
Unearned Rent Revenue $47,400
To Rent Revenue $47,400
(Being recording of revenue earned is recorded)
Here unearned rent revenue is debited as it decreased the liabilities and the rent revenue is credited as it increased the revenue. Also liabilities and revenue contains the normal debit balance
The working is shown below:
= $71,100 × 8 months ÷ 12 months
= $47,400
The eight months are calculated from May 1 to December 31
The most recent price activity in this chart is a quadruple top breakout. The box size is $0.50 and the reversal size is three boxes. What is the price objective for the breakout using the horizontal count method?a. $19.00b. $21.50c. $12.50d. $22.00
Answer:
a. $19.00
Explanation:
Note: The graph is as attached below
The low of the column where a quadruple top breakout occurs is $8.5 and width is 7 and box size is 0.5
The width of the pattern is 7 which is multiplied by 0.5 which is the box size and the reversal size of 3 for an Extension estimate (7 x 0.5 x 3 = $10.5).
Now, $10.5 is added to the low of the column and hence price objective is $10.5 + $8.5 = $19
Suppose that you buy a 1-year maturity bond with a coupon of 7.2% paid annually. If you buy the bond at its face value, what real rate of return will you earn if the inflation rate is 2%? 4%? 8.30%? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Negative amount should be indicated by a minus sign.)
Answer:
Explanation:
The Real rate of return would be calculated as:
= (1 + Coupon rate)/(1 + Inflation rate) - 1
a. When inflation rate = 2%
Coupon rate = 7.2%
= (1+7.2%) / (1+2%) -1
= (1 + 0.072) / (1 + 0.02) - 1
= 5.10%
b. When inflation rate = 4%
= (1+7.2%) / (1+4%) -1
= (1 + 0.072) / (1 + 0.04) - 1
= 3.08%
3) When inflation rate = 8.30%
= (1+7.2%) / (1+8.3%) -1
= (1 + 0.072) / (1 + 0.083) - 1
= -1.02%
Selling and administrative expenses include all of the following except:____________. a. shipping document preparation. b. post-sale technical support. c. factory overhead. d. customer return processing.
Answer:
c. factory overhead.
Explanation:
Selling and administrative expenses can be defined as the operating expenses which comprises of all the costs incurred in the smooth running of a business.
Selling and administrative expenses include all of the following shipping document preparation, post-sale technical support, and customer return processing except factory overhead.
A factory overhead can be defined as the amount of money incurred by a company or business entity in the course of its manufacturing process.
This ultimately implies that, factory overhead refers to cost incurred in the manufacturing process of finished goods and cannot be linked directly to the goods.
The factory overhead costs include costs such as indirect labor, rent, depreciation, utility bills, property taxes etc.
If any portion of a long-term debt is to be paid in the next year, the entire debt should be classified as a current liability. A. True B. False
Answer:
B. False
Explanation:
The portion of a long term liability that is due within one year is called current portion of long-term debt (CPLTD). The name basically explains everything. E.g. you owe a note receivable worth $100,000 and every year you must pay an installment of $10,000 plus interest. The CPLTD (current liability) = $10,000, and the long term debt = $90,000.
theory of production
Answer:
Theory of production, in economics, an effort to explain the principles by which a business firm decides how much of each commodity that it sells (its “outputs” or “products”) it will produce, and how much of each kind of labour, raw material, fixed capital good, etc., that it employs (its “inputs” or “factors of .
Explanation:
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Determine whether the following bonds payable will be issued at par value, at a premium, or at a discount. a. Evergreen Company issued bonds payable that pay stated interest of 6 1/4%. On the date of issuance, the market interest rate was 6 3/4%.b. Seven Hills, Inc., issued 3% bonds payable when the market rate was 3 3/4%. c. Flagstaff Corporation issued 5% bonds when the market interest rate was 5%. d. The market interest rate is 4%. Rainforest Corp. issues bonds payable with a stated rate of 5 1/2%.
Answer:
b is you answer
Explanation:
Mohave Corp. is considering outsourcing production of the umbrella tote bag included with some of its products. The company has received a bid from a supplier in Vietnam to produce 9,000 units per year for $8.00 each. Mohave has the following information about the cost of producing tote bags:
Direct materials $5.00
Direct labor 1.00
Variable manufacturing overhead 1.00
Fixed manufacturing overhead 2.00
Total cost per unit $9.00
Mohave has determined that all variable costs could be eliminated by outsourcing the tote bags, while 70 percent of the fixed overhead cost is unavoidable. At this time, Mohave has no specific use in mind for the space currently dedicated to producing the tote bags.
Required:
a. Compute the difference in cost between making and buying the umbrella tote bag.
b. Based strictly on the incremental analysis, should Mohave buy the tote bags or continue to make them?
Answer:
Please see below
Explanation:
1. The level of production for the subject analysis is 9,000 units per year
Options for outsourcing
Variable unit costs = $8.00
Unavoidable unit fixed costs = 70% × $2 = $1.4
Total : $8 + $1.4 = $9.4 per unit
In house option:
Direct materials = $5
Direct labor = $1
Variable manufacturing overhead = $1
Fixed manufacturing overhead = $2
Total : $9
The cost of buying the umbrella outside is $9.4 , which is $0.4 higher than making it in-company.
2. Mohave should continue to make the tote bags instead of buying them.
___________________ includes the process, content, and outcome of refreshment or replacement of attributes that have the potential to substantially affect its long-term prospects in a company.a) vertical integrationb) general managementc) strategic renewald) corporate governance
Answer:
Strategic renewal
Explanation:
Strategic renewal includes the process, content, and outcome of refreshment or replacement of attributes that have the potential to substantially affect its long-term prospects in a company. It is also the process of change and the outcome of adjustment in strategic direction that has the vital potential to determine the long-term competitiveness of a company in its industry
Crawford Corporation incurred the following transactions.
1. Purchased raw materials on account $46,300.
2. Raw materials of $36,000 were requisitioned to the factory. An analysis of the materials requisition slips indicated that $6,800 was classified as indirect materials.
3. Factory labor costs incurred were $59,900, of which $51,000 pertained to factory wages payable and $8,900 pertained to employer payroll taxes payable.
4. Time tickets indicated that $54,000 was direct labor and $5,900 was indirect labor.
5. Manufacturing overhead costs incurred on account were $80,500.
6. Depreciation on the company's office building was $8,100.
7. Manufacturing overhead was applied at the rate of 150% of direct labor cost.
8. Goods costing $88,000 were completed and transferred to finished goods.
9. Finished goods costing $75,000 to manufacture were sold on account for $103,000.
Requried:
a. Journalize the transactions.
b. Prepare entries for manufacturing and nonmanufacturing costs.
Answer:
No. Account Titles and Description Debit$ Credit$
1 Raw Material Inventory 46300
Account Payable 46300
(To record purchase on credit)
2 . Work in Process Inventory 29200
Manufacturing overhead 6800
Raw Material Inventory 36000
(To record acquisition of raw materials)
3 . Factory Labor 59900
Factory Wages Payable 51000
Employer Payroll Taxes Payable 8900
(To record wages and payroll taxes payable)
4 Work in Process Inventory 54000
Manufacturing overhead 5900
Factory Labor 59900
(To record direct and indirect labor)
5 . Manufacturing overhead 80500
Account payable 80500
(To record manufacturing overhead on credit)
6 . Depreciation Expense 8100
Accumulated Depreciation—Building 8100
(To record depreciation)
7. Work in Process Inventory 81000
($54,000 X 150%)
Manufacturing overhead applied 81000
( To record the application of overhead)
8 Finished Goods 88000
Work in Process Inventory 88000
(To record the goods transferred to finished goods)
9. Accounts Receivable 103000
Sales Revenue 103000
(To record sales made on credit)
Cost of Goods Sold 75000
Finished Goods Inventory 75000
(To record cost of goods sold)
Which of the following is not an exemption from minimum essential coverage for health insurance:
a. the taxpayer had coverage for all but 1 month during the year
b. the taxpayer’s income is less than 200% of the federal poverty level
c. the taxpayer was in jail
d. the taxpayer spent 350 days out of the United States during the year
Answer:
c. the taxpayer was in jail
Explanation:
The minimum eligibility for cover in the health insurance exemption is as follows:
1. Tax payer should cover for all month but for one month
2. The income of the taxpayer should be lower than 200 of the federal level of the poverty
And,
3. The taxpayer should spent 350 days out of the total days avaiiable in the united states
Therefore the option c is to be selected as it not come under the exemption criteria
The Fremont Company uses the weighted-average method in its process costing system. The company recorded 43,500 equivalent units for conversion costs for November in a particular department. There were 7,400 units in the ending work-in-process inventory on November 30, 80% complete with respect to conversion costs. The November 1 work-in-process inventory consisted of 9,400 units, 50% complete with respect to conversion costs. A total of 39,000 units were completed and transferred out of the department during the month. The number of units started during November in the department was:________
Answer:
37,000 units
Explanation:
Calculation for the number of units started during November in the department
Using this formula
Number of Units started = Units completed and transferred out + Units in ending work-in-process − Units in beginning work-in-process
Let plug in the formula
Number of Units started= 39,000 units+7,400 units − 9,400 units
Number of Units started= 37,000 units
Therefore number of units started during November in the department was 37,000 units
Gomez runs a small pottery firm. He hires one helper at $14,500 per year, pays annual rent of $7,500 for his shop, and spends $18,000 per year on materials. He has $40,000 of his own funds invested in equipment (pottery wheels, kilns, and so forth) that could earn him $5,000 per year if alternatively invested. He has been offered $23,000 per year to work as a potter for a competitor. He estimates he could use his talents to earn an additional $6,000 per year in consulting fees if he were working full time as a potter. Total annual revenue from pottery sales is $86,000.
Instructions:
A. Calculate the accounting profit for Gomez’s pottery firm.
B. Now calculate Gomez's economic profit.
Answer:
Gomez
Accounting Vs. Economic Profit
Accounting profit:
Sales revenue $86,000
Business cost 40,000
Profit $46,000
Economic profit:
Accounting profit $46,000
Opportunity cost 34,000
Profit $ 12,000
Explanation:
a) Data and Calculations:
Annual Wages for helper = $14,500
Annual Rent = $7,500
Annual Direct materials = $18,000
Business cost = $40,000
Funds investment = $40,000
Opportunity cost (alternative option)
Interest on funds = $5,000
Wages 23,000
Consulting fees 6,000
Total opportunity costs = $34,000
Total annual sales revenue = $86,000
b) Gomez's economic profit equals the accounting profit minus the expenses incurred for lost opportunities (alternative uses) of resources. This means that the economic profit is always less than the accounting profit, which does not consider opportunity costs.
The Economy Tomorrow Suppose a person who is developing an app crowdfunds $20,000 and holds this as cash for future expenses. If this $20,000 comes from donors' checking accounts, by how much will the money supply fall of the reserve ratio is 10 percent? Instructions: Enter your response as a whole number The money supply will decrease by $___________.
Answer:
Decrease in money supply = $200,000
Explanation:
Given:
Check account balance = 20,000
Reserve ratio = 10 percent
Find:
Money supply will decrease
Computation:
Decrease in money supply = Decrease in check account balance[1/reserve ratio]
Decrease in money supply = $20,000[1/0.10]
Decrease in money supply = $200,000