GPL_HW_Solutions_08

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

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
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.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
3. Monetary Loss on Accounts Receivable _______________________________________________________________ Nominal Adjustment Price-level amount factor adjusted amounts __________________________________________________________________
Background image of page 2
Background image of page 3
This is the end of the preview. Sign up to access the rest of the document.

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...
View Full Document

Page1 / 3

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

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online