QUESTION 4
A eurozone citizen observes the spot rate between euros and pounds is currently £1.04/€. Assume the expected inflation rates over the course of the year in the eurozone and the UK are 3% and 2%, respectively. Suppose the spot rates for euros and pounds at the end of the year are as follows:
$1.15/€, $1.11/£
Which of the following statements is true according to relative PPP?
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The euro appreciated in real terms. |
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The pound appreciated in real terms. |
||
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Neither the euro nor the pound appreciated in real terms. |
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Cannot be determined. |
QUESTION 6
Use the following information to answer the next two questions.
Investors expect inflation rates over the next twelve months in the US and Japan to be 8% and 3%, respectively. The current exchange rates for the two currencies are as follows:
C$.007/¥, C$1.02/$
Suppose that twelve months from now, the exchange rate between US dollars and yen is $.0071/¥. According to relative PPP, what be theimpact of this new exchange rate on the US balance of trade? (Assume the US is the home country and ignore any possible feedback loop.)Round intermediate steps to four decimals.
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The US BOT will increase. |
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The US BOT will decrease. |
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The US BOT will not be affected. |
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Cannot be determined. |
In: Finance
Here are some important figures from the budget of Wise Corporation for the third quarter of 2020:
| --------- | July | August | September |
| Credit sales | $1,275,800 | $1,483,500 | $1,096,300 |
| Credit purchases | 765,480 | 890,160 | 657,780 |
| Cash disbursements | |||
| Wages , taxes and expenses | 348,600 | 395,620 | 337,150 |
| Interest | 29,900 | 29,900 | 29,900 |
| Equipment | 0 | 158,900 | 96,300 |
| Credit sales collection | |||
| Collected in month of sale | 35% | ||
| Collected month after sale | 60% | ||
| Never Collected | 5% | ||
| June Credit sales | $1,135,020 | ||
June Credit purchases | $681,012 |
Beginning Cash balance $425,000
All credit purchases are paid in the following month after the purchase.
Instructions:
a) Using the above information, complete the following cash budget. (15 points)
July | August | September | |
Beginning cash balance | |||
Cash receipts: | |||
Cash collections from credit sales | |||
Total cash available |
Cash disbursements: | |||
Payments for purchases | |||
Wages, taxes, and expenses | |||
Interest | |||
Equipment purchases | |||
Total cash disbursements | |||
Ending cash balance |
b) What are the steps in preparing cash budget? Explain. (5 points)
In: Finance
The Canadian Government withholds $2500 of tax from a payment made to Emilia made in 2020. Under the tax treaty between the United States and Canada, Emelia owes only $1,500 and can claim a refund for the other $1,000. What amount is eligible for the Foreign Tax Credit (regardless of whether or not Emelia applies for the credit) on her United States income tax return?
A. $0
B. $500
C. $1,000
D. $1,500
In: Accounting
“In 2020 Saudi Arabia - the standard rate of VAT increased from 5% to 15%. Discuss the welfare effects of the VAT reform and its implications for business and taxpayers”.
In: Economics
In: Economics
The following list of accounts is taken from the December 31,
2020, unadjusted trial balance of Perdu Sales, a business that is
owned by Eldon Perdu.
| Debit | Credit | |||||
| Cash | $ | 8,000 | ||||
| Merchandise inventory | 9,800 | |||||
| Prepaid selling expense | 8,000 | |||||
| Store equipment | 40,000 | |||||
| Accumulated depreciation, store equipment | $ | 9,800 | ||||
| Accounts payable | 14,840 | |||||
| Salaries payable | 0 | |||||
| Eldon Perdu, capital | 25,360 | |||||
| Eldon Perdu, withdrawals | 3,600 | |||||
| Sales | 858,000 | |||||
| Sales returns and allowances | 33,000 | |||||
| Sales discounts | 8,000 | |||||
| Cost of goods sold | 431,000 | |||||
| Sales salaries expense | 94,000 | |||||
| Utilities expense, store | 12,600 | |||||
| Other selling expenses | 70,000 | |||||
| Other administrative expenses | 190,000 | |||||
Additional information:
Accrued sales salaries amount to $3,200. Prepaid selling expenses
of $5,200 have expired. Depreciation for the period is
$2,500.
Required:
Assuming a perpetual inventory system, complete the
following:
a. Journalize the adjusting journal entries.
b. Prepare a classified multiple-step income
statement for the year ended December 31, 2020.
Analysis Component:
Assume that for the year ended December 31, 2019, net sales were
$600,000; operating expenses were $344,000; and there was a loss of
$14,000. Calculate the company’s gross profit ratios for 2019 and
2020. (Do not round intermediate calculations. Round your
final answers to 2 decimal places.)
2019= gross profit %
2020= gross profit%
In: Accounting
“In 2020 Saudi Arabia - the standard rate of VAT increased from 5% to 15%. Discuss the welfare effects of the VAT reform and its implications for business and taxpayers”
In: Economics
The following trial balance was taken from the books of Venus Corporation at December 31, 2020:
Account Debit Credit
Cash........................................................................................................... $ 40,000
Accounts Receivable.................................................................................... 106,000
Prepaid Rent ............................................................................................... 12,800
Note Receivable................................................................................................ 8,000
Merchandise Inventory................................................................................... 54,000
Unexpired Insurance......................................................................................... 4,800
Furniture and Equipment.............................................................................. 138,000
Accumulated Depreciation........................................................................................ 15,000
Accounts Payable....................................................................................................... 12,600
Common Shares......................................................................................................... 44,000
Retained Earnings...................................................................................................... 65,000
Sales........................................................................................................................... 410,000
Cost of Goods Sold....................................................................................... 128,000
Salaries Expense............................................................................................. 53,000
Totals.................................................................................................. $ 546,600 $ 546,600
At year end, the following items have not yet been recorded.
1. Insurance expired during the year, $ 3,000.
2. Depreciation on furniture and equipment, 10% per year.
3. Interest at 9% is receivable on the note for one full year.
4. Prepaid rent used up during the year, $6,000.
5. Accrued salaries at December 31, $ 6,200.
Instructions
a) Prepare in good form the necessary adjusting entries, adding any new accounts which you may need. Narratives (explanations) are not required for journal entries.
b) Prepare the necessary closing entries.
In: Accounting
The following trial balance was taken from the books of Venus Corporation at December 31, 2020:
Account Debit Credit
Cash......................................................................................................... $ 40,000
Accounts Receivable............................................................................... 106,000
Prepaid Rent ........................................................................................... 12,800
Note Receivable...................................................................................... 8,000
Merchandise Inventory........................................................................... 54,000
Unexpired Insurance............................................................................... 4,800
Furniture and Equipment........................................................................ 138,000
Accumulated Depreciation...................................................................... 15,000
Accounts Payable.................................................................................... 12,600
Common Shares...................................................................................... 44,000
Retained Earnings................................................................................... 65,000
Sales........................................................................................................ 410,000
Cost of Goods Sold................................................................................ 128,000
Salaries Expense...................................................................................... 53,000
Totals................................................................................................ $ 546,600 $ 546,600
At year end, the following items have not yet been recorded.
1. Insurance expired during the year, $ 3,000.
2. Depreciation on furniture and equipment, 10% per year.
3. Interest at 9% is receivable on the note for one full year.
4. Prepaid rent used up during the year, $6,000.
5. Accrued salaries at December 31, $ 6,200.
Instructions
a) Prepare in good form the necessary adjusting entries, adding any new accounts which you may need. Narratives (explanations) are not required for journal entries.
b) Prepare the necessary closing entries.
In: Accounting
In 2020 Saudi Arabia - the standard rate of VAT increased from 5% to 15%. Discuss the welfare effects of the VAT reform and its implications for business and taxpayers
In: Economics