Answer:
The answer is (c) First National Bank is not in a position to extend additional loans.
Explanation:
Please find the below for detailed explanation and calculations:
The First National Bank current reserve ratio is calculated as : Vault cash and deposits of the Bank with the Fed/ Total demand deposits of the Bank = $80 million / $400 million = 20%.
As the First National Bank' reserve ratio is now equal to the Fed's Reserve Requirement, First National Bank can not further extend its loan portfolio's balance, otherwise, its reserve ratio will fall below Fed's requirement which is not acceptable.
So, the answer is (c).
Given:
average inflation rate: 2.7%
average t-bill rate: 5.4%
returns
17%
- 4%
20%
12%
10%
Average returns = (17% - 4% + 20% + 12% + 10%) / 5 = 11%
Average real risk-free rate using the Fisher equation.
The average real risk-free rate was: (1 +R) = (1 +r)(1 +h)
f = <span>(1.054/1.027) – 1
f = 1.0263 - 1
f = 0.0263 or 2.63%</span>
The average real risk-free rate over this time period is 2.63%
Answer:
- The adjustment causes an increase in an asset account and an increase in a revenue account.
- Accounts receivable is usually increased when accruing revenues.
- They refer to revenues that are earned in a period, but have not been received and are unrecorded.
- They refer to earnings which have been earned but not yet billed.
Explanation:
Accrued revenue refers to cash earned for selling a good or delivering a service yet the cash has not been received and the transaction was not recorded in the books as revenue. This means that the cash has been earned but it has not been billed to the customer it was earned from.
When the books are being adjusted for this, the accounts receivable - which is an asset account - will increase to show that cash is owed. Revenue will also increase as this was cash earned from delivering a good or service.
Answer:
consumers are now willing to purchase more of this product at each possible price.
Explanation:
When the demand for a good or service increases, it means that consumers are buying more. In this case, according to the law of supply and demand, increasing demand will decrease inventories of good and will make it scarcer, increasing the price.
<u>Adjusting entry for Rent Revenue:</u>
It is given that a customer rents a vehicle for three months from Commodores rental on November 1, paying $4,050 ($1,350/month). The adjustment is needed to be made for 2 months period (Nov. 1 to Dec. 31)= 1350*2 = $2,700
The adjusting entry for Rent Revenue as on Dec. 31 shall be as follows:
Unearned Rent Revenue Debit $2,700
Rent Revenue Credit $2,700
(Being adjustment made for Rent Revenue)
