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.

The University of

BostonBoston

Press is wholly owned by the university. It performs the bulk of its work for other university​ departments, which pay as though the press were an outside business enterprise. The press also publishes and maintains a stock of books for general sale. The press uses normal costing to cost each job. Its​ job-costing system has two​ direct-cost categories​ (direct materials and direct manufacturing​ labor) and one​ indirect-cost pool​ (manufacturing overhead, allocated on the basis of direct manufacturing labor​ costs). The following data​ (in thousands) pertain to 2017:

Direct materials and supplies purchased on credit $840

Direct materials used 740

Indirect materials issued to various production departments 140

Direct manufacturing labor 1,350

Indirect manufacturing labor incurred by various production departments 950

Depreciation on building and manufacturing equipment 440

Miscellaneous manufacturing overhead* incurred by various production departments

(ordinarily would be detailed as repairs, photocopying, utilities, etc.) 540

Manufacturing overhead allocated at 170% of direct manufacturing labor costs ?

Cost of goods manufactured 4,130

Revenues 8,900

Cost of goods sold (before adjustment for under- or overallocated manufacturing overhead) 4,050

Inventories, December 31, 2016 (not 2017):

Materials Control 160

Work-in-Process Control 60

Finished Goods Control 530

*The term manufacturing overhead is not used uniformly. Other terms that are often encountered in printing companies include job overhead and shop overhead.

The University of

ManchesterManchester

Press is wholly owned by the university. It performs the bulk of its work for other university​ departments, which pay as though the press were an outside business enterprise. The press also publishes and maintains a stock of books for general sale. The press uses normal costing to cost each job. Its​job-costing system has two​ direct-cost categories​ (direct materials and direct manufacturing​ labor) and one​ indirect-cost pool​ (manufacturing overhead, allocated on the basis of direct manufacturing labor​ costs). The following data​ (in thousands) pertain to

20172017​:

LOADING...

Direct materials and supplies purchased on credit

$840

Direct materials used

720

Indirect materials issued to various production departments

100

Direct manufacturing labor

1,310

Indirect manufacturing labor incurred by various production departments

980

Depreciation on building and manufacturing equipment

430

Miscellaneous manufacturing overhead* incurred by various production departments

(ordinarily would be detailed as repairs, photocopying, utilities, etc.)

530

Manufacturing overhead allocated at 160% of direct manufacturing labor costs

?

Cost of goods manufactured

4,130

Revenues

8,100

Cost of goods sold (before adjustment for under- or overallocated manufacturing overhead)

4,030

Inventories, December 31, 2016 (not 2017):

Materials Control

180

Work-in-Process Control

50

Finished Goods Control

580

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.Requirement 1. Identify the components of the overview diagram of the​ job-costing system at the University of

ManchesterManchester

Press.

Requirement 2. Prepare journal entries to summarize the

20172017

transactions. As your final​ entry, dispose of the​ year-end under- or overallocated manufacturing overhead as a​ write-off to Cost of Goods Sold. Number your entries. Explanations for each entry may be

omitted.​(Record

debits​ first, then credits. Exclude explanations from any journal​ entries.)Direct materials and supplies purchased on​ credit,

$ 840$840.

Choose from any list or enter any number in the input fields and then click Check Answer.

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

Assignment: You are the audit senior in charge of field work for the 2017 audit of Curl Up and Dye, Inc., a chain of women’s beauty parlors. Substantive tests reveal that CU&D’s Accounts Receivable account as of December 31, 2017 includes $184,900 due from officers. Minutes indicate that the Board of Directors approved those loans. A member of the audit committee gives you copies of the “demand notes” which appear to be properly signed and dated by the officers who borrowed from the company. You ask the CEO, an officer who owes approximately half of $184,900 due to the company, whether the company will require officers to repay these loans. He replies that officers might someday repay the loans, but it is possible that the Board of Directors will eventually forgive the loans as part of officers’ annual bonuses. $184,900 is a material amount for this audit.

1) What other questions, if any, would you ask for information, if any, would you like to obtain for the existence and valuation assertions?

2) What disclosure is necessary in the company’s financial statements, including notes to the financial statements? Search FASB Acccounting Standards Codification for required disclosure (See below for search method). Cite the Code section(s) that you think is (are) relevant.

3) What journal entry(ies), if any, would you propose?

Vigor Corporation reports a net income before tax for 2020 of $512,800, has a tax rate of 21% and provides the following selected information (covers the three tax difference items) from its ledger as at December 31, 2019 and 2020:

                                                                                                    2019             2020

                        Equipment, at cost                                  900,000 DR 900,000 DR

                        Accumulated depreciation, equipment    450,000 CR 525,000 CR

                        Deferred Tax Asset                                   10,080 DR                   ?

                        Warranty Liability                                     48,000 CR    56,000 CR

                        Deferred Tax Liability                              47,250 CR                   ?

                        Depreciation expense, equipment             75,000 DR   75,000 DR

                        Warranty expense                                     27,000 DR   30,000 DR

                        Municipal bond interest (tax exempt)       17,800 CR    18,800 CR

The tax basis of the equipment (book value for tax purposes or the amount of the cost of the asset not yet deducted for tax purposes) is $225,000 at December 31, 2019 and $112,500 as at December 31, 2020. The tax deduction for warranties is limited to actual warranty payments.

Required:

1. What is the tax deduction for warranties on Vigor’s 2020 tax return?
2. What is taxable income for 2020?
3. What is income tax expense/benefit, current portion for 2020?
4. What is the amount of the deferred tax asset at December 31, 2020?
5. What is the amount of the deferred tax liability at December 31, 2020?
6. What was income tax expense/benefit, deferred portion for 2020?
7. What is Vigor’s effective income tax rate (ETR) for 2020?