Answer:
11%
Explanation:
Nominal interest rate = real interest rate + inflation rate
6% + 5% = 11%
Anticipated Inflation rate is the rate at which it is expected that price levels would rise.
Real interest rate is the rate of interest that has been adjusted for the effects of inflation.
I hope my answer helps you
Final answer:
The nominal rate of interest for a risk-free one-year loan, with an anticipated inflation rate of 6 percent and a real interest rate of 5 percent, should be 11 percent.
Explanation:
If inflation is anticipated to be 6 percent during the next year, and the real rate of interest for a one-year loan is 5 percent, then the nominal rate of interest for a risk-free one-year loan can be found using the Fisher equation which states that the nominal interest rate is the sum of the real interest rate plus the expected rate of inflation.
The formula for calculating the nominal interest rate is:
Nominal Interest Rate = Real Interest Rate + Expected Inflation Rate.So, if we plug in the numbers we get:
Nominal Interest Rate = 5% (Real Interest Rate) + 6% (Expected Inflation Rate) = 11%.Therefore, the nominal rate of interest that should be applied to a risk-free one-year loan would be 11 percent.
A price index one year was 145, and the next year it was 167. What is the approximate percentage change in the price level from one year to the next as measured by that index
Answer:
Approximately 15%
Explanation:
Given that
Base index = 145
New index = 167
% change in price level = (new index - base index/base index) × 100
Therefore,
% change = (167 - 145/ 145) × 100
= (22/145) × 100
= 0.1517 × 100
= 15.17 %
Thus, there is Approximately 15% increase in price level.
Note: general increases in price is called inflation and decreases in price level is called deflation.
The approximate percentage change in the price level from one year to the next as measured by that price index is 15.17%.
Explanation:The percentage change in price level from one year to the next can be calculated using the formula for percentage change: ((New Value - Old Value) / Old Value) * 100%. In this case, the old value is the initial price index of 145, and the new value is the final price index of 167. Substituting these values into the formula gives: ((167 - 145) / 145) * 100% = 15.17%. So, the approximate percentage change in the price level from one year to the next as measured by that index is 15.17%.
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Any attempt to verify outcomes and to compare them with standards can be considered a(n) _____ activity, although many smaller firms do not use this word.
Answer:
The correct answer is: auditing,
Explanation:
Procedure whose purpose is to examine the annual accounts of a company to determine if they reflect the faithful image of the company's situation and if they have been presented in accordance with generally accepted accounting principles. The accounting review can be performed by people who are part of the company itself or, on the contrary, by people outside it. Sometimes this term is used as an audit synonym. However, the purpose of the accounting review does not have to be the issuance of a professional opinion as in the case of the latter.
You purchased Hobo Hats stock last year for $60 a share. Today, you received $2 a share dividend and immediately sold the stock for $63. Your realized return, or holding period return, was _________.
Answer:
8.33%
Explanation:
Given that
Income = 2
End of period value = 63
Initial value = 62
Recall that,
Holding period return = income + ( end of period value - initial value) ÷ initial value.
Therefore,
HPR = 2 + (63 - 60) ÷ 60
= 2 +( 3) ÷ 60
= 5 ÷ 60
= 0.0833
OR
= 8.33 %
Answer:
The realized return or holding period return on the stock is 8.33%
Explanation:
The realized return on the share is computed with the below formula:
Realized return=(dividends+capital gains)/initial price of the stock
Dividend paid was $2 a share
Capital gains=Selling price-initial purchase price
Capital gains=$63-$60
Capital gains is $3 a share
Realized return=($3+$2)/$60
Realized gain=0.083333333
Realized gain is 8.33%
This represents the entire return on the stock from date of purchase to the date the shares were disposed of.
When the formal regime in the country of Zoalia collapsed, the growth of many entrepreneurial firms was facilitated by informal constraints based on personal relationships and connections among managers and officials. This is an example of _____.
Answer:
D) informal constraints increasing uncertainty for managers and firms in situations where formal constraints are unclear.
Explanation:
When you don´t have formal restraints and the same rules that apply for all, uncertainty among managers and their firms will increase.
This is a clear example of corruption taking place in a country where formal institutions or governments have collapsed or have been overthrown and the "new leaders" benefit from the situation. In this case the companies or firms which are "friendly" to the new government will flourish because no formal institutions or constraints remain. Instead they are replaced by informal constraints setup to favor specific firms and companies. That means that the "new leaders" may establish new rules for the companies or firms to follow at their will in order to favor whoever they want.
This may benefit the "new leaders" and their "friends" but it hurts all the other companies and firms. In order for a company to keep on doing business as usual, or get a new contract or license, it will probably need to become friends with the new regime and that usually means payments and other types of bribes.
Giorgio Italian Market bought $7,000 worth of merchandise from Food Suppliers and signed a 90-day, 6% promissory note for the $7,000. Food Supplier's journal entry to record the collection on the maturity date is: (Use 360 days a year.)
Answer:
Food Suppliers journal entry to record the collection on the maturity date is,
Debit Cash $7,105;
Credit Interest Revenue $105; Credit Notes Receivable $7,000
Explanation:
The journal entry to record the collection at the maturity date would be,
Account Title Debit Credit
Cash $7,105
Interest Revenue $105
Notes Receivable $7,000
Interest revenue would be calculated as,
7000 * 6% = $420 would be the interest in one year on the note. Since it is a 90-day note,
420 / 4 = $105
On the maturity date, Food supplier will record the collection of cash which is the amount of interest + the worth of merchandise bought. (105+7000) = $7105
The calculation of GDP does NOT include the value of:________1. Michelin tires purchased by Canadian car collectors. 2. Goodyear tires purchased by the United States Secret Service. 3. Bridgestone tires purchased by Ford Motor Co. 4. Firestone tires sold at your local garage.
Answer:
3. Bridgestone tires purchased by Ford Motor Co.
Explanation:
GDP refers to the total value of all the goods and services produced in a country. Calculation of GDP involves adding up all the values of finished goods and services and multiplying them by their prices. For accuracy purposes, and to avoid double-counting, economists consider finished consumable products only.
When capital goods are included in GDP, they are likely to be counted again in the final product. The tires purchased by the car collectors, secret services, and at the garage are for consumption. The customers will use them as the end products. Tires purchased by Ford motors will be used in the production of motor vehicles. They are capital goods or goods used in manufacturing other goods. They are not included in GDP calculation.
The calculation of GDP does not include the value of intermediate goods such as Bridgestone tires purchased by Ford Motor Co for the production of their cars. Therefore, correct option is 3. Bridgestone tires purchased by Ford Motor Co.
GDP, or Gross Domestic Product, is a measure that represents the monetary value of all final goods and services produced within a country's borders in a specific time period. Final goods refer to items that have reached the end-stage of production and are ready to be used by consumers, avoiding any intermediate goods that are used to produce other goods or services. This is to prevent the problem of double counting, where the same good is counted more than once as it moves through different stages of production. Considering the options given, tires bought by car manufacturers like Ford Motor Co are intermediate goods used in the assembly of cars, which will ultimately be sold as final goods. Therefore, these tires should not be included in GDP calculations, as opposed to tires sold to consumers, such as those purchased by car collectors or government agencies like the Secret Service, or those sold at a garage, which are all considered final goods.
Selena fractures the radial bone in her forearm. Her surgeon advises her to undergo a surgery in which a steel plate would be inserted to support the bone. He explains to her that after the surgery there would be only a 70 percent chance of regaining complete movement in the arm and a 30 percent chance of completely losing arm functionality. Selena decides to proceed with the surgery. In this scenario, Selena’s decision making process is an example of
Answer:
Decision making under risk
Explanation:
The reason is that Selena faces one of its biggest risks which is that if she will proceed with the surgery then she might loose her arm. Loosing arm is the risk here. Remember that risk is vulnerability of undesired outcome and which can be measured. And here the risk is the undesired outcome of loosing arm which is measureable in percentage. The chances of loosing arm is 30% and taking decision to proceed with taking this risk of loosing arm is "Decision making under risk".
When conducting a capital budgeting analysis and attempting to account for effects of exchange rate movements for a foreign project, inflation ____ included explicitly in the cash flow analysis, and debt payments by the subsidiary ____ included explicitly in the cash flow analysis.
Answer:
inflation SHOULD BE included explicitly in the cash flow analysis, and debt payments by the subsidiary SHOULD BE included explicitly in the cash flow analysis.
Explanation:
A capital budgeting analysis is carried out in order to determine how a company should invest their capital assets.
The discounted cash flow method is the primary tools used in this type of analysis. Cash flows from foreign countries that have high inflation rates will be negatively affected since high inflation tends to currency depreciation which in turn leads to lower cash flows in US dollars. The same applies to debt payments made by the subsidiaries since they also reduce net cash flows. Lower net cash flows result in lower NPV and IRR.
Economic efficiency is defined as a market outcome in which the marginal benefit to consumers of the last unit produced is equal to the marginal cost of​ production. True or False
Answer: true
Explanation:
Economic efficiency implies an economic state in which every resource is optimally allocated to serve each individual in the best way while minimizing waste and inefficiency.
According to the sociologist Erik Wright's Marxian model, the __________ class consists of self-employed individuals and craftspeople that may hire a small number of employees but largely do their own work.
Answer:
capitalist
Explanation:
Fill in the blanksAccording to the sociologist Erik Wright's Marxian model, the capitalist class consists of self-employed individuals and craftspeople that may hire a small number of employees but largely do their own work.
When Rubberstamp Productions, previously a small-time production house, grew in size, the first thing its chief executive officer (CEO) did was to establish a set of guidelines that detailed all the principles, standards, and procedures to be followed in the company's line of business. The CEO set specific standards on topics ranging from treatment of coworkers to protecting the environment to maintenance of financial records. This scenario illustrates that the CEO developed a _____.
Answer:
The correct answer is code of ethics.
Explanation:
The code of ethics is a document composed of a series of norms, regulations and values that have been established to regulate the behaviors and attitudes of people who are part of the same context, either with respect to a profession, organization or company.
The code of ethics is based on deontology, a branch of ethics from which the duties governing a professional activity are studied.
Which of the following is not an independent contractor relationship? a. one between a corporation and its outside legal counsel b. one between a corporation and its vice president/general counsel c. one between a lawn service company and a homeowner d. All of the above are independent contractor relationships.
Final answer:
The correct answer is b. one between a corporation and its vice president/general counsel.
Explanation:
The correct answer is b. one between a corporation and its vice president/general counsel.
In an independent contractor relationship, the worker is not an employee of the company but rather works as an independent contractor. This means they have more control over how they perform their work and are responsible for their own taxes and benefits.
In option b, the vice president/general counsel is an employee of the corporation and not an independent contractor. The corporation has more control over the vice president/general counsel's work and is responsible for providing benefits and handling taxes.
An increase in output leads to a(n): Group of answer choices decrease in step cost. increase in total variable cost. increase in total fixed cost. decrease in sunk cost.
Answer:
increase in total variable cost.
Explanation:
Variable costs change depending on the company's total output. If the output decreases, the variable costs will decrease, if the output increases, the variable costs will increase, e.g. materials. On the other hand, fixed costs do not vary depending on the company's output, that is why they are fixed, e.g. rent, depreciation.
Which of the following practices are not considered essential for a comprehensive JIT implementation: Uniform production (also known as heijunka) Quick set times, Large lot sizes, Short lead times. A. True B. False
Answer:
B. False ( "Large lot sizes" is not considered essential for JIT )
Explanation:
Just in time is an arrangement and alignment of raw material supply with the production process of the business. It minimizes the holding cost, lead time required for delivery of raw material, the setup times and sizes of orders.
The Large lot sizes is not a characteristics of JIT because it may requires the storage facility to place the large orders until used in production which might increase the holding cost.
So, Large Lot Sizes are not considered essential for a comprehensive JIT implementation.
Sportware, a leading shoe manufacturer, markets sneakers under the brand name "Athletix" and dress shoes under the brand name "Cameo" in order to target the two different market segments. What branding strategy is most likely being used by Sportware?A) brand extensions
B) line extensions
C) multibrands
D) new brands
E) co-brands
Answer:
C) Multibrands
Explanation:
Multibrands is one of the branding strategy used by a company under which a company deals in multiple products with different brand names so as to capture a wide market by putting an end to the competition.
In such a case Sportware a leading shoe manufacturer , sells its two different types of products that is sneakers and dress shoes by two different brand names just in order to capture a wide range of the market thereby proving that it is following multibrand strategy.
Charlie Corp. is purchasing new equipment with a cash cost of $300,000 for an assembly line. The manufacturer has offered to accept $68,900 payment at the end of each of the next six years. How much interest will Charlie Corp. pay over the term of the loan
Answer:
D. $113,400
Explanation:
Given that
Cash cost = 300,000
Installmental payments = $68900 each year for 6 years.
Therefore
Interest = total installment payment - cash cost
= (68900 × 6) - 300,000
= 413,400 - 300,000
= $113,400.
Answer:
The answer is D) 113 400
Explanation:
Interest are the amounts that exceed the capital repayment ( the original $ 300 000 represents the capital repayment ). By multiplying the annual payment by the number of years ( 6 x 68900 ) and subtracting the original capital amount of $300 000 we're left with $ 113 400. This represents the amount of interest expense over the period
Under the USA PATRIOT Act, the Federal Bureau of Investigation (FBI) may now search private records (financial, medical, library, student—any recorded activity) without a warrant and probable cause and without having to reveal to anyone what it has done. This is referred to as what type of search?
Answer:
Sneak and peek searches
Explanation:
A sneak and peek search warrant is a search warrant
authorizing the law enforcement officers executing it to effect physical entry into private premises without the owner’s or the occupant’s permission or knowledge and to clandestinely search the premises; usually, such entry requires a stealthy breaking and entering. It was established in section 213 of the Patriot act mostly to investigate and prevent future terrorist attacks “without tipping off the terrorists.
Which of the following is true?a. Anticipated inflation is an increase in the price level that comes as a surprise, at least to most individuals.b. Unanticipated inflation is a change in the price level that is widely expected.c. Decision makers are generally able to anticipate slow steady rates of inflation with a fairly high degree of accuracy.d. Inflation will increase the prices of goods and services that households purchase but not the wage rates of workers.
Answer:Answer:
C) Decision makers are generally able to anticipate slow steady rates of inflation with a fairly high degree of accuracy
Explanation:
Inflation from definition: Inflation is the persistent rise in the general price of good and services. So one of the factors that can help anticipate and manage inflation is:
Money Supply and Inflation
The quantity theory of money means that as money supply is increases it will lead to increase in inflation. This is because of the correlation between money supply and inflation, illustrated in the equation MV=PT where V and T are autonomous of the Money Supply. Nevertheless, in practise empirical evidence has shown that increased money supply doesn’t certainly cause inflation, as there are other components differentiating money supply and inflation.
But the answer that decision makers are generally able to anticipate slow steady rates of inflation with a fairly high degree of accuracy is because with the money slow level, they can anticipate and manage inflation
The teaching profession in the United States has been understaffed in recent years. The non-profit organization Teach for America identifies, selects, motivates, develops, compensates and evaluates qualified candidates to teach in public schools. This process is known as:______.
a. human resource management.
b. recruiting and developing.
c. scheduling and managing.
d. on-the-job training.
e. management development.
In the office supply store, Brittany bought 17 pens of three kinds: ball pens, gel pens, and ink pens, which cost $0.05, $0.10 and $0.25 each. The total that Brittany paid was $2.05. If Brittany bought twice as many gel pens as ink pens, how many ball pens did she buy?
Answer:
5 ball pens
Explanation:
Let's first assign our variables:
x = number of ball pens = 0.05 each
y = number of gel pens = 0.10 each
z = number of ink pens = 0.25 each
We have three equations there:
She bought 17 pens so this means that if we add all the number of pens together we get 17.
The total cost is $2.05, so if we add the cost of the all the pens we would get $2.05.
Lastly, we know that she bought twice as many gel pens as ink pens.
We can then assume:
x + y + z = 17
0.05x + 0.10y + 0.25 z = 2.05
y = 2z
we will need to use all of these to figure out the number of ball pens:
x + y + z = 17
Substitute the equation we came up for y (y = 2z):
x + 2z + z = 17
x + 3z = 17
x = 17 - 3z
--------------------------
0.05x + 0.10y + 0.25 z = 2.05
0.05x + 0.10(2z) + 0.25z = 2.05
0.05(17-3z) + 0.20z + 0.25z = 2.05
0.85 - 0.15z + 0.20z + 0.25z = 2.05
Combine like terms:
0.85 + 0.3z = 2.05
Subtract both sides by 0.85
0.85 + 0.3z - 0.85 = 2.05 - 0.85
0.3z = 1.2
Divide both sides by 0.3
0.3z/0.3 = 1.2/0.3
z = 4
Now that we have the number of ink pens, let's solve the number of ball pens using one of the formulas we came up with.
x = 17 - 3z
x = 17 - 3(4)
x = 17 - 12
x = 5
If you want to check, just plug in everything that we know.
y = 2x
y = 2(4)
y = 8
---------
5 + 8 + 4 = 17
17 = 17
Answer:
Down below
Explanation:
business ethics chapter 7 vicarious liability is a legal concept that means a party may be held responsible for injury or damage only if he or she were actively involved in an incident true false
Answer:
False
Explanation:
Vicarious Liability is a legal concept that means a party may be held responsible for injury or damage even when he or she was not actively involved in the incident.
For example: An employer can be held responsible if an employee operates equipment or machinery in a negligent or inappropriate way which results in damages to property or personal injury.
According to Cloward and Ohlin, which type of gang emerges in areas where conventional and illegitimate values and behavior are integrated by a close connection of illegitimate and legitimate businesses?
a. conflict gangs
b. criminal gangs
c. innovation gangs
d. retreatist gangs
Answer:
B. Criminal gangs
Explanation:
Cloward and Ohlin are two criminologists who sought to explain the different kind of criminal cultures as it was in their time. The suggested three subcultures which are;
1. Criminal gangs
2. Conflict gangs
3. Retreatist gangs.
In this case, we are concerned with the criminal gangs. The criminal gangs involves organize crime, where youths are being cajoled by criminals into starting their own criminal careers promising wealth and material success. This group is made up of individuals looking for illegal means to make wealth like thieves, mafias and so on.
In areas where conventional and illegitimate values and behavior are integrated through a close connection of illegitimate and legitimate businesses, innovation gangs emerge.
Explanation:According to Cloward and Ohlin, the type of gang that emerges in areas where conventional and illegitimate values and behavior are integrated through a close connection of illegitimate and legitimate businesses is called innovation gangs.
In an innovation subculture, youth learn to adapt and create new methods to achieve success within the existing social structure, even if these methods are considered to be deviant or illegal. This subculture forms in areas where there are opportunities for both legitimate and illegitimate activities to occur simultaneously.
For example, in neighborhoods where there are legitimate businesses that engage in illegal activities, such as drug trafficking, youth may form innovation gangs to exploit these opportunities for material gain.
In 2020, Pharoah Company reported a discontinued operations loss of $1120000, net of tax. It declared and paid preferred stock dividends of $110000 and common stock dividends of $370000. During 2020, Pharoah had a weighted average of 500000 common shares outstanding. As a result of the discontinued operations loss, net of tax, the earnings per share would decrease by
As a result of the discontinued operations loss, net of tax, the earnings per share would decrease by $2.24.
Explanation:
Change in EPS
= $1120000 ÷ 500000 outstanding shares
= $2.24.
A retail company sells products such as agricultural produce and consumer products. The company procures materials from farmers and local producers. This process of obtaining the inputs needed for a business is called ________.
Answer:
Inbound logistics
Explanation:
Inbound logistics is the process of obtaining raw materials, and other goods and services, to the firm, while outbound logistics is the process of delivering the final goods and services from the firm to the customers.
In this case, the retail company is engaging in inbound logistics because it is procuring the raw materials from local farmers. Once these materials reach the firm, it can transform them into the agricultural produce and consumer produce that it sells.
Dr Jones is creating a retail marketing plan for his Dental office services. What is a key challenge in showcasing his main product ? Group of answer choices Competition Accessibility Cleanliness Destination Intangibility
Explanation:
Retail marketing:
It is the strategy used to reach customer directly. It is a kind of product promotion.It concentrates on 4 P's. Product, Price, Place, and PromotionConsidering all the other aspects about retail marketing "Accessibility" would be key challenge. The reason is that, the product has to reach to the customer directly. So, the product promotion mainly concentrates on reaching the direct customer. So upon other given reason, this stands challenging.
When Mr. Lakely, a recruiter for United Health, calls job applicant Leanne Pufall to schedule a second-round interview, he reaches Leanne’s voice mail, which has an offensive joke message. A. Leanne’s message is professional. B. Leanne’s message is unprofessional.
Answer:
B. Leanne’s message is unprofessional.
Explanation:
When setting up a voice mail it should be professional because it could create an impression of the type of person you are and if you inculcate professional values.
Ideally voice mails should state ones name and give a brief instruction on how to leave a message. This will give impression to the caller that one is organised and efficient.
However when voice mail contains offensive content, background music, and other odd sounds it gives impression of disorderliness and a person that cannot take responsibility.
Gina changes the amount of milk she purchases depending on whether it costs $1,$1.50, or $1.75 a pound. What other information do we need to come up with her demand curve for milk
Answer: how much butter she buys at each price point.
Explanation: The demand curve shows how much a person chooses to buy at different prices. In order to graph the curve, we need to know how much butter Jenna buys when it costs $1, $1.50, and $1.75.
Final answer:
To create Gina's demand curve for milk, we need to know the quantities she purchases at various prices. Understanding her price elasticity of demand and how quantity demanded changes with price is essential. We also need to factor in any broader market conditions or personal factors that might shift her entire demand curve.
Explanation:
To come up with Gina's demand curve for milk, we need to know the quantities of milk she purchases at each price point. Gina's behavior, where the quantity she demands changes with price, reflects the concept of the price elasticity of demand, which measures the responsiveness of the quantity demanded to a change in price. Consider the price elasticity of demand for gasoline. When the price increased from $4.00 to $4.25 per gallon, the quantity demanded decreased, illustrating a movement along the demand curve. Similarly, for Gina's demand for milk, we need to know the specific quantities she is willing to buy at the given prices of $1, $1.50, and $1.75 to plot her demand curve. Furthermore, the demand curve can be seen as a marginal benefit curve, indicating the maximum amount consumers are willing to pay for an additional unit. In the case of the ice cream bar example, reducing the price leads to a higher quantity sold, and increasing the price leads to a lesser quantity sold, which directly affects the shape and slope of the demand curve. To complete the curve for Gina, we need the quantity of milk she would purchase at varying price levels beyond the ones mentioned. This data will help us determine the slope of her demand curve and her sensitivity to price changes. If other factors influence Gina's purchase quantity, such as income effects or substitution effects as shown in the apple example, we also need that information. Additionally, changes in market conditions, such as the rising price of milk leading to decreased supply or health studies affecting demand, can shift the entire demand curve. These scenarios would also have to be considered if they apply to Gina's situation.
Hueblue software, an application provider to the gaming industry, decided to enhance its portfolio by developing motion-control-enabled games for the mobile gaming industry. in this scenario, which competitive strategy is hueblue software implementing?
a) establishment of alliances
b) product differentiation
c) raising barriers to market entry
d) locking in buyers
Answer:
b) product differentiation
Explanation:
Based on the scenario being described it can be said that the competitive strategy that Hueblue software is implementing is known as product differentiation. This strategy focuses on making sure that the product that a particular company offers is unique and different from it competitor's products in order to make it more desired by a particular target market. Which is what Hueblue is doing by developing motion-control-enabled games which it's competitors do not have.
The use of money contributes to economic efficiency because
Answer:
it promotes work specialization.
Explanation:
Imagine a world where money didn't exist, and we would be forced to trade using a barter system. That means that we must produce the products that we need or the products that someone else needs, but that someone else must also have the product that we need. It gets a little complicated when you have to match different needs with different productive abilities.
By using money, we can forget about matching our own specific needs with the specific needs of someone else. We exchange our work for money, and with that money we purchase goods and services.
And that is one big advantage on a very small scale, imagine the advantages gained by the whole economy, e.g. the capacity of saving, investing, safe keeping, etc.
Money contributes to economic efficiency by serving as a medium of exchange, a unit of account, and a store of value.
Explanation:The use of money contributes to economic efficiency because it serves as a medium of exchange, a unit of account, and a store of value. As a medium of exchange, money allows for the efficient transfer of goods and services. As a unit of account, money provides a common measure of value, allowing for easy comparison of prices. Finally, as a store of value, money enables individuals to save and accumulate wealth over time.
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On July 22, a company that uses the perpetual inventory system purchased merchandise inventory at a cost of $5,250 with credit terms 2/10, net 30. If the company pays for the purchase on August 1, what would be the appropriate journal entry?A.Merchandise Inventory 5,250Accounts Payable 5,250B.Accounts Payable 5,250Merchandise Inventory 5,250C.Purchase Discount 5,145Accounts Payable 5,145D. Accounts Payable 5,145Cash 5,145E. Accounts Payable 5,250Merchandise Inventory 105Cash 5,145
Answer:
The correct answer is option D
Explanation:
The reason is that the inventory purchases are record at the cost not at the cost less discount value.
When the company gets the settlement discount it must be accounted for as decrease in purchases price not in quantity and must be credited with the discount received against the accounts payable.
Debit Accounts Payable 5,250
Credit Merchandise Inventory 105
Credit Cash 5,145