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3 years ago

6. The money multiplier formula shows effects of

1 answer:

7 0

Answer: a cash deposit into banking system on the money supply

The money multiplier refers to the ratio of deposits to the reserves in a certain banking system. The money multiplier formula is caused by a cash deposit in a bank on the money supply.

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Jessica Simpson sets up shop to sell “Buffalo Wings.” She observes that if the price drops from $3.50 per order to $2.50 per ord

Sidana [21]

Answer:

(I) Price elasticity = 1/6

(II) the $2.5 price gives the higher revenue: 1,250

Explanation:

(I) price elasticity

$E_s =\frac{\frac{Q2 - Q1}{(Q2+Q1)/2}}{\frac{P2 - P1}{(P2+P1)/2}}$

↑Q (500 - 300)/((500+ 300) / 2)

↑Q 200 / (800/2) = 200/400 = 1/2

↑P (3.5 - 2.5)/((3.5+2.5)/2)

↑P 1/(6/2) = 1/3

$Es = \frac{1/2}{1/3} = 1/6$

(II) total revenue

3.5 x 300 = 1,050

2.5 x 500 = 1,250

7 0

3 years ago

Read 2 more answers

Additional paid-in capital is most likely to appear on the balance sheet of a corporation that:

ArbitrLikvidat [17]

Answer:

b. has no-par value stock.

Explanation:

Additional paid-in capital represents the amount of money that shareholders have paid for their shares of stock, in excess of the par value of the stock. This is most likely to occur with no-par value stock, which has no set value assigned to each share.

7 0

1 year ago

On November 30, Parlor, Inc. purchased for cash at $15 per share all 250,000 shares of the outstanding common stock of Shaw Co.

scoray [572]

Answer:

Value of goodwill = $350,000

Explanation:

In case where is investment in 100% shares of a company then that may give rise to goodwill or rise to capital reserve.

Any amount paid to acquire that interest in company more than the value of such company is recorded as goodwill.

Here, cost of acquisition = $15 $\times$ 250,000 = $3,750,000

Carrying value of net assets of the company = $3,000,000

Increase in value due to fair value = $400,000

Value of goodwill = Purchase price - Fair Value of net assets

Therefore, value of goodwill = $3,750,000 - ($3,000,000 + $400,000) = $350,000

7 0

3 years ago

Outsourcing (Make-or-Buy) Decision

ivann1987 [24]

Answer:

If the company makes the units, it will save $7,000 per period.

Explanation:

Giving the following information:

Make in-house:

Number of units= 16,000

Variable cost per unit= $22

Avoidable fixed cost per unit= $3

Buy:

Number of units= 16,000

Buying price= $27

Rent= $25,000

First, we will determine the total cost of each option:

Make:

Total cost= 16,000*(22 + 3)= $400,000

Buy:

Total cost= 16,000*27 - 25,000= $407,000

If the company makes the units, it will save $7,000 per period.

7 0

3 years ago

g a. Provide the journal entry if the investor purchases the assets and assumes the liabilities of the investee company.

iragen [17]

Answer:

Debit : All assets bought at their Fair Value Amounts

Debit : Goodwill (if Payment is greater than Net Assets acquired)

Credit : All liabilities assumed at their Fair Value Amounts

Credit : Method of payment for example cash

Credit : Gain on acquisition (if Net Assets acquired are greater than Payment)

Explanation:

Hi, your question is incomplete, i tried to look for the full question online but i could not find it.

However, below is an explanation to solving the problem.

An acquisition of investee Assets and Liabilities is not a business combination transaction that requires preparation of consolidated financial statements.

A business combination is a transaction or event in which an ACQUIRER obtains CONTROL of one or more Businesses. So, if it is not a business, it is a mere ASSET ACQUISITION transaction.

Thus said, in our question investor purchases the assets and assumes the liabilities of the investee company, this is an Asset Acquisition transaction and not a Business Combination transaction.

The excess of consideration paid over the net assets acquired at fair value is called goodwill and must be recognized. If not the case the excess of net assets acquired over purchase price (gain on acquisition) must be recognized.

Below are the accounting entries to record an Asset Acquisition transaction.

Debit : All assets bought at their Fair Value Amounts

Debit : Goodwill (if Payment is greater than Net Assets acquired)

Credit : All liabilities assumed at their Fair Value Amounts

Credit : Method of payment for example cash

Credit : Gain on acquisition (if Net Assets acquired are greater than Payment)

5 0

2 years ago