5. Exchange rates and the demand for domestic goods

Piano Palace Co. produces electronic keyboards in the United States. Its most popular keyboard sells for $1,400. KeySharp Co., Piano Palace's primary competitor, is based in Germany and sells keyboards to US customers online. KeySharp sells its keyboards for 825 euros.

Suppose that initially, the exchange rate was $1.60 per euro.

This means that the price of KeySharp’s keyboards to US consumers was 825 euros ×$1.60 per euro =$1,320.

This means that the price of KeySharp’s keyboards to US consumers was _____?

. Because this dollar price of keyboards from KeySharp is(lower or higher)______________ than the dollar price of keyboards from Piano Palace, demand for Piano Palace keyboards is likely(high, low , higher)______ relative to KeySharp’s keyboards in the United States.

Now suppose that the euro weakens relative to the dollar, and the exchange rate changes to $2.00

After this change, the price of KeySharp’s keyboards to US consumers is _______?

. Because this dollar price of keyboards from KeySharp is now (lower or higher
) _________ than the dollar price of keyboards from Piano Palace, demand for Piano Palace keyboards is likely(rise or fall)_______ relative to KeySharp’s keyboards in the United States, due to the change in the exchange rate.

Suppose that Piano Palace not only sells keyboards in the United States but also exports and sells them to France (another country in the eurozone).

When the euro was $1.60, consumers in France paid _______?

euros for keyboards from Piano Palace. At this exchange rate, the euro price of Piano Palace keyboards was (lower or higher)_______ than that of KeySharp keyboards. However, at the newer exchange rate, the euro price of Piano Palace keyboards is now_____?

. This would cause French consumers to increase demand for (KeySharp keyboards, relative to Piano Palace keyboards OR Piano Palace keyboards, relative to KeySharp keyboards)

.

Generalizing from the results of this fictionalized scenario, when other currencies are weak against the dollar, US imports should be relatively (high or low)_____ , while US exports should be relatively (low or high)_____ , leading to a(more or less)_____ favorable position in terms of the balance of trade.

In 2022, Draper Company discovered errors made in 2019-2021, its first three years of operation.

Restated 2020 Net Income will be:

Select one:

a. $25,250

b. $26,600

c. $25,200

d. $24,550

e. $25,450

Exercise 14-20 At December 31, 2017, Grouper Company has outstanding three long-term debt issues. The first is a $2,050,000 note payable which matures June 30, 2020. The second is a $5,920,000 bond issue which matures September 30, 2021. The third is a $12,810,000 sinking fund debenture with annual sinking fund payments of $2,562,000 in each of the years 2019 through 2023. Prepare the required note disclosure for the long-term debt at December 31, 2017. Long-term Debt 2018 $ 2019 $ 2020 $ 2021 $ 2022 $

Lee Furniture Company manufactures office chairs. The 2020 operating budget is based on sales of 50,000 units at $65 per chair. Budgeted variable costs are $40 per unit, fixed costs are $800,000, and operating income is projected to be $450,000. Regarding actual results, 54,000 units were sold at $70 each, actual variable costs were $38 per unit and fixed costs were $750,000. Resulting in 2020 actual income of $978,000.

Required: Prepare a variance analysis report with both flexible-budget and sales-volume variances.

combos Company purchases a delivery truck for $12,000 on January 1, 2019. combos expects to use the truck only two years and to sell it for $4,000. The company’s policy is to use straight-line depreciation but depreciation in 2019 is not recorded. Rather, the accountant charges the entire cost to delivery expense in 2019. The controller discovers the error late in 2020.

REQUIRED:

Provide the 2020 entries to record depreciation and the error correction and indicate the amounts of the prior period adjustments appearing in the 2019 and 2020retained earnings sections of the statement of stockholders’ equity. The tax rate is 25%.

PEI Real Estate company believes that their average house price in 2020 of $290,000 is higher than the mean price of all houses sold in 2019 of $270,000. Assuming that their estimate was based on the first 40 sales in 2020 and the population standard deviation of $70,000, test this hypothesis at the 95% confidence interval.

1. State the hypotheses based on a one-tailed test.

2. What is the level of significance?

3. Select a test statistic.  

4. Formulate the decision rule. Sketch this on a graph.

5. Calculate the test value.

6. What is the decision?

7. Does your conclusion change if the 90% confidence interval is selected? Explain.

Trainor Corporation purchased equipment at a cost of $500,000. The equipment has an estimated residual value of $50,000 and an estimated life of 5 years, or 10,000 hours of operation. The equipment was purchased on January 1, 2020 and was used 2,500 hours in 2020 and 2,100 hours in 2021. On January 1, 2022, the company decided to sell the equipment for $315,000. Trainor Corporation uses the units-of- production method to account for the depreciation on the equipment.

Based on this information, the entry to record the sale of the equipment will show a gain of:

Select one:

A. $45,000

B. $72,000

C. $5,000

D. $22,000

A new van costs $25,000, has an estimated useful life of five years and an estimated salvage value of $5,000 at the end of that time. It is expected that the van will be driven 100,000 miles during its useful or service life.

The Nation Express Company purchases this van on April 1, 2019. During 2019 the van is driven 13,000 miles and during 2020 it was driven 21,000 miles. On January 1, 2021, the van is sold for $7,000.

Calculate the depreciation expense for 2019 and 2020 using:

1. Straight-line

2. Double-declining-balance

3. Units-of-production

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1. Our educational system is reducing the intrinsic motivation to learn and replacing it with extrinsic motivation.

1. What is the difference between intrinsic and extrinsic motivation? What is it that motivates you to learn at University?
2. Make an argument for or against the statement above using examples from theories learned in class and your everyday experience to support your argument.

Congratulations! You have decided to leave your career as a personal tax accountant to pursue a startup idea you have been thinking about for a long time. You are going to launch a new app that tracks all of your personal tax information throughout the year, so that you don’t have to load anything come tax time. You want this app to fully integrate with users payroll, investment accounts, and any other system that creates tax liability. You have validated this as a pain and see tremendous potential. You are an expert on personal taxation with over 10 years in the industry, but you are ready for a new challenge. About You: You do not have skills as a software developer, but you are excellent at tax law and procedures. You have never raised money before, but you have friends that are entrepreneurs that might know some investors. You have some experience in customer relations, but you have never run a full marketing campaign, especially for an online company. You know you cannot launch this company alone and have decided that you want to add at least one partner to the help you build this product. Through extensive networking and interviewing you have narrowed your search down to three individuals. All have expressed interest in joining your team for the right deal. Here are the three individuals:

1) Your former co-worker Jane. Jane has never worked in a startup environment, but she started her career as a very junior software engineer at Turbo Tax, a popular and large online tax program. Jane moved to your accounting firm where she was a software engineer for your firm’s internal accounting software. She has 15 years of experience as a software engineer and is well regarded as a strong engineer. You like Jane but only know her professionally. Jane is open to different roles with the new venture.

2) Your Aunt Jessica has expressed an interest in joining your team. Jessica has 25 years of experience starting and running a successful lifestyle business. Last year, out of nowhere, her company was acquired for $10 million. She wants a new opportunity and is willing to invest her time and some money, but wants an active role in management of the company, meaning you might take more of a product development role.

3) Through a networking event you met a serial entrepreneur named Maya. Maya started her career as a software developer, and has developed several different apps that she has tried to turn into startups. One of her apps, a grocery-tracking program, raised $2.5 million from angel investors and venture capitalists. After 3 years she had to close the company when they were unable to raise additional capital. You have been given positive recommendations from a friend who worked with Maya in the past, but you worry about her focus and if she will be motivated. Maya is looking to be a true co-founder in any venture she undertakes. Question

1A?: Evaluate the following candidates and make a decision on which candidate to hire. Be sure to evaluate the pros and cons of ?each person? in your answer: (20pts) Question

1B:? Based on who you decided to bring on the team, tell me what ?role/title? they should have and ?propose an equity package? that you think would convince them to join the team. ?Be sure to justify why you divided equity this way, it is not enough to just give me numbers?. (20pts)