Chapter 9 Assignments Part 1 ACCOUNTING
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Chapter 9 Assignments Part 1
Alreen Sorathiya
University of the Cumberlands
Strategic Mgmt Accounting (BACC-532-B01)
Dr. Margaret Combs
11/26/2023
2
Chapter 9 Assignments Part 1
P 9–4: MacGiver Brass
MacGiver Brass is a brass plating firm with sales of $8 million and profits before taxes of
$625,000. MacGiver has a loan outstanding at its local bank for working capital purposes.
As the loan officer reviewing MacGiver’s loan application, you are charged with making a
recommendation as to whether the $608,000 loan should be renewed for another year.
Upon reviewing MacGiver’s most recent annual report, you find the following footnote:
“Underabsorbed overhead of $462,000 was prorated to inventories (2/3) and cost of goods
sold (1/3).”
Required:
a. How should you evaluate MacGiver’s annual report in light of this footnote? In
particular, how does this footnote affect your recommendation regarding the loan?
Sales =8 millions
Profits before tax =625000
Loan 608000
462000
foot note valuation:
inventories =308000
COGS =154000
the foot note recommends to renew the loan
3
b. In preparing for your meeting with MacGiver’s president and chief financial officer,
what questions do you want to ask regarding this footnote?
I will ask the financial officer whether they need the additional capital to generate more income
than the interest or not?
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Related Questions
5
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Assets
Liabilities
Reserves $2,000
Deposits $10,000
Loans 8,000
Refer to Table.
Starting from the situation as depicted by the T-account, if someone deposits $9,000 into the First Bank of Fairfield, and if the bank makes new loans so as to keep its reserve ratio unchanged, then the amount of new loans that it makes will be
a.
$1,800
b.
$6, 750
c.
$0
d.
$2, 250
e.
$7,200
f.
$9,000.
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Financial Accounting
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11.
Bank West's Balance Sheet
Assets
Liabilities
Cash
$600
Deposits
$20 000
Deposits at Bank of Canada
$700
Capital
$1 100
Loans and Mortgages
$19 800
$21 100
$21 100
TABLE 26-3Refer to Table 26-3. Assume that Bank West is operating at its target reserve ratio and has no excess reserves. If Bank West receives a new deposit of $1500, it can immediately expand its loans by ________ while maintaining its target reserve ratio.
$1478
$1356.50
$1436
$1402.50
$1410
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Only typed answer
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Get correct answer general accounting
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Problem 23-9 (LG 23-3)
Use the data provided for Gotbucks Bank, Incorporated, to answer this question.
Gotbucks Bank, Incorporated (dollars in millions)
Assets
Liabilities and Equity
$ 45 Core deposits
35 Federal funds
$ 28
Cash
Federal funds
Loans (floating)
Loans (fixed)
65
120 Euro CDs
145
80 Equity
$ 280 Total liabilities and equity
42
Total assets
$ 280
Notes to the balance sheet: Currently, the fed funds rate is 10 percent. Variable-rate loans are priced at 3 percent over LIBOR (currently
at 11 percent). Fixed-rate loans are selling at par and have five-year maturities with 12 percent interest paid annually. Assume that fixed
rate loans are non-amortizing. Core deposits are all fixed rate for two years at 8 percent paid annually. Euro CDs currently yield 9
percent.
a. What is the duration of Gotbucks Bank's (GBI) fixed-rate loan portfolio if the loans are priced at par? (Do not round intermediate
calculations. Round your answer to 3 decimal places. (e.g., 32.161))
b. If the…
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9. Bank leverage
Use the information presented in Southwestern Mutual Bank's balance sheet to answer the following questions.
Bank's Balance Sheet
Assets
Liabilities and Owners' Equity
Reserves
$150
Deposits
$1,200
Loans
$600
Debt
$200
Securities
$750
Capital (owners' equity)
$100
Suppose a new customer adds $100 to his account at Southwestern Mutual Bank, which the owners of the bank then use to make $100 worth of new
loans. This would increase the loans account and
the
account.
This would also bring the leverage ratio from its initial value of
to a new value of
Which of the following do bankers take into account when determining how to allocate their assets? Check all that apply.
The total value of liabilities
The riskiness of each asset
The size of the monetary base
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Am. 113.
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The First Bank of Fairfield
Assets
Liabilities
Reserves $8,000
Deposits $30,000
Loans $22,000
If $3,000 is deposited into the First Bank of Fairfield, and if the bank has loaned out as much as it
could,
a. reserves will decrease by 26.7%
b. liabilities will increase by $800
c. Jassets will decrease by $3,000
d. loans will increase by $2,200
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Accounts payable $466,000Notes payable $250,000Current liabilities $716,000Long-term debt $1,166,000Common equity $4,883,000Total liabilities and equity $6,765,000
a. What percentage of the firm's assets does the firm finance using debt (liabilities)?
b. If Campbell were to purchase a new warehouse for
$1.1
million and finance it entirely with long-term debt, what would be the firm's new debt ratio?
Question content area bottom
Part 1
a. What percentage of the firm's assets does the firm finance using debt (liabilities)?
The fraction of the firm's assets that the firm finances using debt is
27.827.8%.
(Round to one decimal place.)
Part 2
b. If Campbell were to purchase a new warehouse for
$1.1
million and finance it entirely with long-term debt, what would be the firm's new debt ratio?
The new debt ratio will be
enter your response here%.
(Round to one decimal place.)
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Please give me answer general accounting
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Bank North's Balance Sheet
Assets
Liabilities
Reserves
$250
Deposits
$1,500
Loans
$1,550
Capital
$300
$1,800
$1,800
Refer to table above. If Bank North receives a new deposit of
$400, its actual reserve ratio immediately becomes ___.
(Thank you)
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ONLY ANS PART C PLZ THX
Old Bank started its first day of operations (11 March, 2021) with $6 million in capital. $100 million in checkable deposits is received. The bank issues a $30 million commercial loan and another $30 million in mortgages.
(a) If required reserves are 8%, what does the bank balance sheets look like?
(b) On the first day of operation (11 March, 2021), Clive withdraw his checkable deposits $40 million with the Old Bank. What does the balance sheet look like? Are there any problems?
(c) Suggest one way that the Old Bank can solve the problem and show how does the bank balance sheet changed afterwards
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45
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I need help with this
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three
7. New Comers State Bank has recorded the following financial data for the
years (dollars in millions):
past
Two Years Ago
$ 78.00
68.00
400.00
Current Year
Previous Year
$ 82.00
$ 80.00
66.00
Interest revenues
Interest expenses
64.00
Loans (excluding nonperforming)
450.00
425.00
Investments
200.00
195.00
200.00
400.00
450.00
150.00
425.00
Total deposits
Money market borrowings
125.00
100.00
What has been happening to the bank's net interest margin? What do
caused the changes you have observed? Do you have any recommendations for New
Comers' management team?
you
think
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SETUP FOR QUESTIONS 6:
Titan Bank is a community bank and its balance sheet is reported below.[1] The "total equity/total asset
ratio" is 9.91 percent ($11.00/S120.00) and is defined as the capital ratio. Assume bank regulators require
the capital ratio to be at least 8.00 percent at all times. If the capital ratio falls below 8.00 percent, the bank
regulators immediately shut down the bank and fire the managers. Thus, the capital ratio is very important
to the managers who are constantly evaluating "what if" scenarios to make sure they are not shut down.
Use Titan Bank's balance sheet to evaluate the two scenarios described below.
Balance Sheet
(as of 12/31/2020 and in millions)
Assets
Liabilities
Assets have a duration of 4.00 years and a
Liabilities have a duration of 1.00 years and a
yield to maturity of 3.00%.
yield to maturity of 6.00%.
Total Assets
$111.00
Total Liabilities
$100.00
Equity
Total Equity
$11.00
Scenario 2: Federal Reserve actions force an immediate non-parallel…
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Related Questions
- 5arrow_forwardAssets Liabilities Reserves $2,000 Deposits $10,000 Loans 8,000 Refer to Table. Starting from the situation as depicted by the T-account, if someone deposits $9,000 into the First Bank of Fairfield, and if the bank makes new loans so as to keep its reserve ratio unchanged, then the amount of new loans that it makes will be a. $1,800 b. $6, 750 c. $0 d. $2, 250 e. $7,200 f. $9,000.arrow_forwardFinancial Accountingarrow_forward
- 11. Bank West's Balance Sheet Assets Liabilities Cash $600 Deposits $20 000 Deposits at Bank of Canada $700 Capital $1 100 Loans and Mortgages $19 800 $21 100 $21 100 TABLE 26-3Refer to Table 26-3. Assume that Bank West is operating at its target reserve ratio and has no excess reserves. If Bank West receives a new deposit of $1500, it can immediately expand its loans by ________ while maintaining its target reserve ratio. $1478 $1356.50 $1436 $1402.50 $1410arrow_forwardOnly typed answerarrow_forwardGet correct answer general accountingarrow_forward
- Problem 23-9 (LG 23-3) Use the data provided for Gotbucks Bank, Incorporated, to answer this question. Gotbucks Bank, Incorporated (dollars in millions) Assets Liabilities and Equity $ 45 Core deposits 35 Federal funds $ 28 Cash Federal funds Loans (floating) Loans (fixed) 65 120 Euro CDs 145 80 Equity $ 280 Total liabilities and equity 42 Total assets $ 280 Notes to the balance sheet: Currently, the fed funds rate is 10 percent. Variable-rate loans are priced at 3 percent over LIBOR (currently at 11 percent). Fixed-rate loans are selling at par and have five-year maturities with 12 percent interest paid annually. Assume that fixed rate loans are non-amortizing. Core deposits are all fixed rate for two years at 8 percent paid annually. Euro CDs currently yield 9 percent. a. What is the duration of Gotbucks Bank's (GBI) fixed-rate loan portfolio if the loans are priced at par? (Do not round intermediate calculations. Round your answer to 3 decimal places. (e.g., 32.161)) b. If the…arrow_forward9. Bank leverage Use the information presented in Southwestern Mutual Bank's balance sheet to answer the following questions. Bank's Balance Sheet Assets Liabilities and Owners' Equity Reserves $150 Deposits $1,200 Loans $600 Debt $200 Securities $750 Capital (owners' equity) $100 Suppose a new customer adds $100 to his account at Southwestern Mutual Bank, which the owners of the bank then use to make $100 worth of new loans. This would increase the loans account and the account. This would also bring the leverage ratio from its initial value of to a new value of Which of the following do bankers take into account when determining how to allocate their assets? Check all that apply. The total value of liabilities The riskiness of each asset The size of the monetary basearrow_forwardAm. 113.arrow_forward
- The First Bank of Fairfield Assets Liabilities Reserves $8,000 Deposits $30,000 Loans $22,000 If $3,000 is deposited into the First Bank of Fairfield, and if the bank has loaned out as much as it could, a. reserves will decrease by 26.7% b. liabilities will increase by $800 c. Jassets will decrease by $3,000 d. loans will increase by $2,200arrow_forwardAccounts payable $466,000Notes payable $250,000Current liabilities $716,000Long-term debt $1,166,000Common equity $4,883,000Total liabilities and equity $6,765,000 a. What percentage of the firm's assets does the firm finance using debt (liabilities)? b. If Campbell were to purchase a new warehouse for $1.1 million and finance it entirely with long-term debt, what would be the firm's new debt ratio? Question content area bottom Part 1 a. What percentage of the firm's assets does the firm finance using debt (liabilities)? The fraction of the firm's assets that the firm finances using debt is 27.827.8%. (Round to one decimal place.) Part 2 b. If Campbell were to purchase a new warehouse for $1.1 million and finance it entirely with long-term debt, what would be the firm's new debt ratio? The new debt ratio will be enter your response here%. (Round to one decimal place.)arrow_forwardPlease give me answer general accountingarrow_forward
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