GPL_HW_Solutions_08

# GPL_HW_Solutions_08 - Beg bal \$ 23,000 125/100 \$ 28,750...

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GPL Model: Exercise Solutions 1.a. Annual purchases: 2005 15(\$80) + 3(\$10,000) + 3(\$4,000) = \$43,200 2006 15(\$90) + 3(\$10,600) + 3(\$4,400) = \$46,350 2007 15(\$100) + 3(\$11,400) + 3(\$4,900) =\$50,400 b. If 2005 is the base year, the indexes are: 2005 index = \$43,200/\$43,200 = 1.000 2006 index = \$46,350/\$43,200 = 1.073 2007 index = \$50,400/\$43,200 = 1.167 c. If 2007 is the base year, the indexes are: 2005 index = \$43,200/\$50,400 = .857 2006 index = \$46,350/\$50,400 = .919 2007 index = \$50,400/\$50,400 = 1.000 2. Price level adjusted time series: Constant purchasing power 20X5 (\$12,000) (142/105) \$16,229 20X6 (\$14,000) (142/120) 16,567 20X7 (\$15,000) (142/130) 16,385 20X8 (\$15,800) (142/135) 16,619 20X9 (\$16,000) (142/142) 16,000 While the revenue stream has grown in nominal terms by a third, it has not grown in real terms. Indeed, it has declined somewhat.

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3. Monetary Loss on Accounts Receivable _______________________________________________________________ Nominal Adjustment Price-level amount factor adjusted amounts __________________________________________________________________
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Unformatted text preview: Beg. bal. \$ 23,000 125/100 \$ 28,750 Credit sales 172,000 125/112.5 191,111 Collections (160,000 ) 125/112.5 (177,778 ) End. bal. \$ 35,000 \$ 42,083 Less actual bal. 35,000 Monetary loss \$ 7,083 4. Beg. End Net monetary assets: Cash Z2,500 Z5,100-Current liabilities 1,000 1,200-LT debt 3,000 4,000 Z(1,500 ) Z (100 ) Change in net monetary assets = Z(100) – Z(1,500) = Z1,400. Price level adjusted net income: Nominal Adj factor PLA amount Revenue 10,000 36,000/32,900 10,942-Operating expenses 7,700 36,000/32,900 8,426-Depreciation 500 36,000/30,000 600-Other 900 36,000/32,900 985 Price level adjusted (PLA) Operating income 931 +Net monetary gains * 168 PLA net income Z1,099 ____________________________________________________________ * Beg. Net monetary assets (1,500) 36,000/30,000 (1,800) Actual (1,500 ) Monetary gain 300 Change in net monetary assets 1,400 36,000/32,900 1,532 Actual 1,400 Monetary loss (132) Net monetary gain 168...
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GPL_HW_Solutions_08 - Beg bal \$ 23,000 125/100 \$ 28,750...

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