On June 30, 2020, Buffalo Company issued $4,860,000 face value of 14%, 20-year bonds at $5,591,240, a yield of 12%. Buffalo uses the effective-interest method to amortize bond premium or discount. The bonds pay semiannual interest on June 30 and December 31.

(a) Prepare the journal entries to record the following transactions. (Round answer to 0 decimal places, e.g. 38,548. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) (1) The issuance of the bonds on June 30, 2020. (2) The payment of interest and the amortization of the premium on December 31, 2020. (3) The payment of interest and the amortization of the premium on June 30, 2021. (4) The payment of interest and the amortization of the premium on December 31, 2021. No. Date Account Titles and Explanation Debit Credit (1) June 30, 2020 (2) December 31, 2020 (3) June 30, 2021 (4) December 31, 2021

During 2020, Sandhill Furniture Company purchases a carload of wicker chairs. The manufacturer sells the chairs to Sandhill for a lump sum of $119,700 because it is discontinuing manufacturing operations and wishes to dispose of its entire stock. Three types of chairs are included in the carload. The three types and the estimated selling price for each are listed below.

During 2020, Sandhill sells 400 lounge chairs, 200 armchairs, and 240 straight chairs.

What is the amount of gross profit realized during 2020? What is the amount of inventory of unsold straight chairs on December 31, 2020? (Round cost per chair to 2 decimal places, e.g. 78.25 and final answer to 0 decimal places, e.g. 5,845.)

During 2020, Skysong Furniture Company purchases a carload of wicker chairs. The manufacturer sells the chairs to Skysong for a lump sum of $77,805 because it is discontinuing manufacturing operations and wishes to dispose of its entire stock. Three types of chairs are included in the carload. The three types and the estimated selling price for each are listed below.

During 2020, Skysong sells 260 lounge chairs, 130 armchairs, and 156 straight chairs.

What is the amount of gross profit realized during 2020? What is the amount of inventory of unsold straight chairs on December 31, 2020? (Round cost per chair to 2 decimal places, e.g. 78.25 and final answer to 0 decimal places, e.g. 5,845.)

1. Explain illegal payments under the FCPA, giving at least one specific example from an FCPA case. Are there any exceptions? Discuss advantages and disadvantages of this law in terms of US companies doing business abroad.

2. Give one specific example of an advantage, and a disadvantage, of the NAFTA regional free trade agreement. Discuss the effect of NAFTA on the US/Texas economy, both pro and con. Discuss update recommendations regarding this treaty.

3. Give an example of dumping, and explain why it is illegal. Is it good or bad for the US consumer?

4. Discuss the recent move toward the implementation of tariffs in international trade. Why are they being imposed, what is the effect on the US consumer and US businesses?

1.) Suppose that the US trades goods and services with South Korea. In particular, Jeep produces and sells a Wrangler in South Korea for 30,000 US dollars (USD), and Samsung produces and sells a Galaxy S9 in the US for 960,000 South Korean won (KRW).

(a) Suppose that the exchange rate as is 1,000 won per US dollar.

1.)Obtain the price of a Jeep Wrangler in South Korea in terms of the South Korean won.

2.)Obtain the price of a Samsung Galaxy S9 in the US in terms of the US dollar.

(b) Suppose now that the exchange rate rises to 1,200 won per US dollar.

1.)Obtain the price of a Jeep Wrangler in South Korea in terms of the South Korean won.

2.)Obtain the price of a Samsung Galaxy S9 in the US in terms of the US dollar.

3.)Examine how the increase in the exchange rate affects the price competitive- ness of Jeep in South Korea and of Samsung in the US.

2.)Suppose that you are an investor who is considering investing $10,000 a one-year U.S. government bond that has a 5% interest rate or a one-year Japanese government bond with a 1% interest rate. The exchange rate today is 110 yen per dollar, and you expect the exchange rate to be 105 yen per dollar one year from now.

(a) Which bond would you purchase? Explain detailedly why.

(b) Suppose now that the exchange rate today is 107 yen instead of 110 yen, and you still expect the exchange rate to be 105 yen one year from now. Would you change your decision about which bond to buy? Explain detailedly why.

5) Turkish subsidiary of an US company wants to borrow TL500 mn for 5-years for factory capacity expansion investment. Annual interest rate on a 5-year loan for 5 years is 10% in TL and 5% in USD. Spot rate of USDTL is 7 and TL is expected to appreciate by 5% each year in the next five years. Compare and decide which debt denomination is better (US$ or TL).

A number of experts warn of adverse consequences of a Donald Trump presidency on certain types of foreign companies. Specifically, they are concerned about a 35% tariff imposed on automobile exports into the United States. Describe how the following companies can deal with this kind of risk.

a.General Motors, a US company with operations in Mexico.

b.Toyota Motors, the Japanese automobile MNC with manufacturing plants in many countries such as US Mexico, and Japan.

Provide a forecast on a new product that you will be developing. Often managers are called upon to make forecasts for these new products when they don't have historical sales data inside the company. What secondary sources of data might you find? Who specifically would provide it (e.g.: the US Census, US Dept of Commerce, ComScore, Nelsen, . . .)? How would this data be used to support your forecast?

Long-run Macroeconomic Equilibrium and Stock Market Boom

Let us assume the economy reaches its long-run macroeconomic equilibrium in 2020. When the economy is in the long run macroeconomic equilibrium, the stock market will also reach its boom. This will in turn lead to increases in stock prices more than expected, and the stock prices will stay high for some period.

Answer the following questions based on the scenarios of long macroeconomic equilibrium and consequent stock market boom.

Which curve will shift? Is it AS curve or AD curve? In which direction does the shift occur?

In the short-run, what will happen to the price level and output (real GDP)?

What will happen to the expected price level? What impact does this have on wage bargaining power of workers?

In the long-run, which curve will shift due to the change in price expectations created by the stock market boom? In which direct will it shift?

How does the new long-run macroeconomic equilibrium differ from the original equilibrium?

Macroeconomics study guide