Suppose the Fed purchases $100 million of U.S. securities from security dealers. If the reserve requirement is 20 percent, the c
1 answer:
Answer:
The correct answer is option D.
Explanation:
The reserve requirement is 20 percent.
The Fed purchases $100 million of U.S. securities from security dealers.
The excess reserves with banks are zero.
When fed purchased securities, this open market operation increased the reserves with banks by $100 million.
The increase in money supply
=
=
= 500
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Answer:
warrant expense 51,000 debit
cash 6,000 credit
warranty liability 45,000 credit
--to record warrant-related accounts--
interest payable 16,667 debit
interest expense 3,333 debit
cash 20,000 credit
--to record interest expense for the loan and installment--
Manufacturing Facilities 5,192,772 debit
Cash 5,000,000 credit
Restoration Liability 192,772 credit
-- to record the payment to contractor--
Explanation:
Warranty: the additional expected expense are considered warranty laibility
Loan: we previously recorded accrued interest from March 1st to Dec 31th
That is: 200,000 x 10% x 10/12 months = 16,667 payable
At February 28th we recognize the last two month of interest
200,000 x 10% x 2/12 months = 3,333 expense
in total we have 16,667 + 3,333 = 20,000 cash outlay
Facility: the asset should add to all the cost necessary to acquire it:
As the conversion into community center is mandatory it is part of the cost:
present value of the 500,000 in ten years:
Maturity $500,000.00
time 10.00
rate 0.10000
PV 192,771.6447
Total cost:
5,000,000 cashg + 192,772 liability = 5,192,772