Test Bank Financial Markets And Institutions 8th Edition By Frederic S. Mishkin , Stanley Eakins

/in /by

Test Bank Financial Markets and Institutions 8th Edition by Frederic S. Mishkin , Stanley Eakins 

What Can You Expect From A Test Bank

The study major and field is going to dictate what it is you see inside the test bank. However, in the basic scheme of things, a test bank will include the following questions:

  1. Multiple choice
  2. True/false
  3. Fill in the blank
  4. Matching
  5. Short questions
  6. Essay question

Financial Markets and Institutions 8th Edition by Frederic S. Mishkin , Stanley Eakins Test bank

INSTANT DOWNLOAD 

SAMPLE

Financial Markets and Institutions, 8e (Mishkin)

Chapter 4  Why Do Interest Rates Change?

4.1  Multiple Choice

1) As the price of a bond ________ and the expected return ________, bonds become more attractive to investors and the quantity demanded rises.

A) falls; rises

B) falls; falls

C) rises; rises

D) rises; falls

Answer: A

Topic: Chapter 4.1 Determining Asset Demand

Question Status: Previous Edition

2) The supply curve for bonds has the usual upward slope, indicating that as the price ________, ceteris paribus, the ________ increases.

A) falls; supply

B) falls; quantity supplied

C) rises; supply

D) rises; quantity supplied

Answer: D

Topic: Chapter 4.2 Supply and Demand in the Bond Market

Question Status: Previous Edition

3) When the price of a bond is above the equilibrium price, there is excess ________ in the bond market and the price will ________.

A) demand; rise

B) demand; fall

C) supply; fall

D) supply; rise

Answer: C

Topic: Chapter 4.2 Supply and Demand in the Bond Market

Question Status: Previous Edition

4) When the price of a bond is below the equilibrium price, there is excess ________ in the bond market and the price will ________.

A) demand; rise

B) demand; fall

C) supply; fall

D) supply; rise

Answer: A

Topic: Chapter 4.2 Supply and Demand in the Bond Market

Question Status: Previous Edition

5) When the price of a bond is ________ the equilibrium price, there is an excess supply of bonds and the price will ________.

A) above; rise

B) above; fall

C) below; fall

D) below; rise

Answer: B

Topic: Chapter 4.2 Supply and Demand in the Bond Market

Question Status: Previous Edition

6) When the price of a bond is ________ the equilibrium price, there is an excess demand for bonds and the price will ________.

A) above; rise

B) above; fall

C) below; fall

D) below; rise

Answer: D

Topic: Chapter 4.2 Supply and Demand in the Bond Market

Question Status: Previous Edition

7) When the interest rate on a bond is above the equilibrium interest rate, there is excess ________ in the bond market and the interest rate will ________.

A) demand; rise

B) demand; fall

C) supply; fall

D) supply; rise

Answer: B

Topic: Chapter 4.3 Changes in Equilibrium Interest Rates

Question Status: Previous Edition

8) When the interest rate on a bond is below the equilibrium interest rate, there is excess ________ in the bond market and the interest rate will ________.

A) demand; rise

B) demand; fall

C) supply; fall

D) supply; rise

Answer: D

Topic: Chapter 4.3 Changes in Equilibrium Interest Rates

Question Status: Previous Edition

9) When the interest rate on a bond is ________ the equilibrium interest rate, there is excess ________ in the bond market and the interest rate will ________.

A) above; demand; fall

B) above; demand; rise

C) below; supply; fall

D) above; supply; rise

Answer: A

Topic: Chapter 4.3 Changes in Equilibrium Interest Rates

Question Status: Previous Edition

10) When the interest rate on a bond is ________ the equilibrium interest rate, there is excess ________ in the bond market and the interest rate will ________.

A) below; demand; rise

B) below; demand; fall

C) below; supply; rise

D) above; supply; fall

Answer: C

Topic: Chapter 4.3 Changes in Equilibrium Interest Rates

Question Status: Previous Edition

11) When the demand for bonds ________ or the supply of bonds ________, interest rates rise.

A) increases; increases

B) increases; decreases

C) decreases; decreases

D) decreases; increases

Answer: D

Topic: Chapter 4.2 Supply and Demand in the Bond Market

Question Status: Previous Edition

12) When the demand for bonds ________ or the supply of bonds ________, interest rates fall.

A) increases; increases

B) increases; decreases

C) decreases; decreases

D) decreases; increases

Answer: B

Topic: Chapter 4.2 Supply and Demand in the Bond Market

Question Status: Previous Edition

13) When the demand for bonds ________ or the supply of bonds ________, bond prices rise.

A) increases; decreases

B) decreases; increases

C) decreases; decreases

D) increases; increases

Answer: A

Topic: Chapter 4.2 Supply and Demand in the Bond Market

Question Status: Previous Edition

14) When the demand for bonds ________ or the supply of bonds ________, bond prices fall.

A) increases; increases

B) increases; decreases

C) decreases; decreases

D) decreases; increases

Answer: D

Topic: Chapter 4.2 Supply and Demand in the Bond Market

Question Status: Previous Edition

15) Factors that determine the demand for an asset include changes in the

A) wealth of investors.

B) liquidity of bonds relative to alternative assets.

C) expected returns on bonds relative to alternative assets.

D) risk of bonds relative to alternative assets.

E) all of the above.

Answer: E

Topic: Chapter 4.1 Determining Asset Demand

Question Status: Previous Edition

16) The demand for an asset rises if ________ falls.

A) risk relative to other assets

B) expected return relative to other assets

C) liquidity relative to other assets

D) wealth

Answer: A

Topic: Chapter 4.1 Determining Asset Demand

Question Status: Previous Edition

17) The higher the standard deviation of returns on an asset, the ________ the asset’s ________.

A) greater; risk

B) smaller; risk

C) greater; expected return

D) smaller; expected return

Answer: A

Topic: Chapter 4.1 Determining Asset Demand

Question Status: Previous Edition

18) Diversification benefits an investor by

A) increasing wealth.

B) increasing expected return.

C) reducing risk.

D) increasing liquidity.

Answer: C

Topic: Chapter 4.A1 Models of Asset Pricing

Question Status: Previous Edition

19) In a recession when income and wealth are falling, the demand for bonds ________ and the demand curve shifts to the ________.

A) falls; right

B) falls; left

C) rises; right

D) rises; left

Answer: B

Topic: Chapter 4.1 Determining Asset Demand

Question Status: Previous Edition

20) During business cycle expansions when income and wealth are rising, the demand for bonds ________ and the demand curve shifts to the ________.

A) falls; right

B) falls; left

C) rises; right

D) rises; left

Answer: C

Topic: Chapter 4.1 Determining Asset Demand

Question Status: Previous Edition

21) Higher expected interest rates in the future ________ the demand for long-term bonds and shift the demand curve to the ________.

A) increase; left

B) increase; right

C) decrease; left

D) decrease; right

Answer: C

Topic: Chapter 4.1 Determining Asset Demand

Question Status: Previous Edition

22) Lower expected interest rates in the future ________ the demand for long-term bonds and shift the demand curve to the ________

A) increase; left.

B) increase; right.

C) decrease; left.

D) decrease; right.

Answer: B

Topic: Chapter 4.1 Determining Asset Demand

Question Status: Previous Edition

23) When people begin to expect a large stock market decline, the demand curve for bonds shifts to the ________ and the interest rate ________.

A) right; falls

B) right; rises

C) left; falls

D) left; rises

Answer: A

Topic: Chapter 4.3 Changes in Equilibrium Interest Rates

Question Status: Previous Edition

24) When people begin to expect a large run up in stock prices, the demand curve for bonds shifts to the ________ and the interest rate ________.

A) right; rises

B) right; falls

C) left; falls

D) left; rises

Answer: D

Topic: Chapter 4.3 Changes in Equilibrium Interest Rates

Question Status: Previous Edition

25) An increase in the expected rate of inflation will ________ the expected return on bonds relative to that on ________ assets, and shift the ________ curve to the left.

A) reduce; financial; demand

B) reduce; real; demand

C) raise; financial; supply

D) raise; real; supply

Answer: B

Topic: Chapter 4.3 Changes in Equilibrium Interest Rates

Question Status: Previous Edition

26) A decrease in the expected rate of inflation will ________ the expected return on bonds relative to that on ________ assets.

A) reduce; financial

B) reduce; real

C) raise; financial

D) raise; real

Answer: D

Topic: Chapter 4.3 Changes in Equilibrium Interest Rates

Question Status: Previous Edition

27) When the expected inflation rate increases, the demand for bonds ________, the supply of bonds ________, and the interest rate ________.

A) increases; increases; rises

B) decreases; decreases; falls

C) increases; decreases; falls

D) decreases; increases; rises

Answer: D

Topic: Chapter 4.3 Changes in Equilibrium Interest Rates

Question Status: Previous Edition

28) When the expected inflation rate decreases, the demand for bonds ________, the supply of bonds ________, and the interest rate ________.

A) increases; increases; rises

B) decreases; decreases; falls

C) increases; decreases; falls

D) decreases; increases; rises

Answer: C

Topic: Chapter 4.3 Changes in Equilibrium Interest Rates

Question Status: Previous Edition

29) When bond prices become more volatile, the demand for bonds ________ and the interest rate ________.

A) increases; rises

B) increases; falls

C) decreases; falls

D) decreases; rises

Answer: D

Topic: Chapter 4.3 Changes in Equilibrium Interest Rates

Question Status: Previous Edition

30) When bond prices become less volatile, the demand for bonds ________ and the interest rate ________.

A) increases; rises

B) increases; falls

C) decreases; falls

D) decreases; rises

Answer: B

Topic: Chapter 4.3 Changes in Equilibrium Interest Rates

Question Status: Previous Edition

31) When prices in the stock market become more uncertain, the demand curve for bonds shifts to the ________ and the interest rate ________.

A) right; rises

B) right; falls

C) left; falls

D) left; rises

Answer: B

Topic: Chapter 4.3 Changes in Equilibrium Interest Rates

Question Status: Previous Edition

32) When stock prices become less volatile, the demand curve for bonds shifts to the ________ and the interest rate ________.

A) right; rises

B) right; falls

C) left; falls

D) left; rises

Answer: D

Topic: Chapter 4.3 Changes in Equilibrium Interest Rates

Question Status: Previous Edition

33) When bonds become more widely traded, and as a consequence the market becomes more liquid, the demand curve for bonds shifts to the ________ and the interest rate ________.

A) right; rises

B) right; falls

C) left; falls

D) left; rises

Answer: B

Topic: Chapter 4.3 Changes in Equilibrium Interest Rates

Question Status: Previous Edition

34) When bonds become less widely traded, and as a consequence the market becomes less liquid, the demand curve for bonds shifts to the ________ and the interest rate ________.

A) right; rises

B) right; falls

C) left; falls

D) left; rises

Answer: D

Topic: Chapter 4.3 Changes in Equilibrium Interest Rates

Question Status: Previous Edition

35) Factors that cause the demand curve for bonds to shift to the left include

A) an increase in the inflation rate.

B) an increase in the liquidity of stocks.

C) a decrease in the volatility of stock prices.

D) all of the above.

E) none of the above.

Answer: D

Topic: Chapter 4.3 Changes in Equilibrium Interest Rates

Question Status: Previous Edition

36) Factors that cause the demand curve for bonds to shift to the left include

A) a decrease in the inflation rate.

B) an increase in the volatility of stock prices.

C) an increase in the liquidity of stocks.

D) all of the above.

E) only A and B of the above.

Answer: C

Topic: Chapter 4.3 Changes in Equilibrium Interest Rates

Question Status: Previous Edition

37) During an economic expansion, the supply of bonds ________ and the supply curve shifts to the ________.

A) increases; left

B) increases; right

C) decreases; left

D) decreases; right

Answer: B

Topic: Chapter 4.2 Supply and Demand in the Bond Market

Question Status: Previous Edition

38) During a recession, the supply of bonds ________ and the supply curve shifts to the ________.

A) increases; left

B) increases; right

C) decreases; left

D) decreases; right

Answer: C

Topic: Chapter 4.2 Supply and Demand in the Bond Market

Question Status: Previous Edition

39) An increase in expected inflation causes the supply of bonds to ________ and the supply curve to shift to the ________.

A) increase; left

B) increase; right

C) decrease; left

D) decrease; right

Answer: B

Topic: Chapter 4.2 Supply and Demand in the Bond Market

Question Status: Previous Edition

40) When the federal governments budget deficit increases, the ________ curve for bonds shifts to the ________.

A) demand; right

B) demand; left

C) supply; left

D) supply; right

Answer: D

Topic: Chapter 4.2 Supply and Demand in the Bond Market

Question Status: Previous Edition

41) When the federal government’s budget deficit decreases, the ________ curve for bonds shifts to the ________.

A) demand; right

B) demand; left

C) supply; left

D) supply; right

Answer: C

Topic: Chapter 4.2 Supply and Demand in the Bond Market

Question Status: Previous Edition

42) When the inflation rate is expected to increase, the expected return on bonds relative to real assets falls for any given interest rate; as a result, the ________ bonds falls and the ________ curve shifts to the left.

A) demand for; demand

B) demand for; supply

C) supply of; demand

D) supply of; supply

Answer: A

Topic: Chapter 4.2 Supply and Demand in the Bond Market

Question Status: Previous Edition

43) When the inflation rate is expected to increase, the real cost of borrowing declines at any given interest rate; as a result, the ________ bonds increases and the ________ curve shifts to the right.

A) demand for; demand

B) demand for; supply

C) supply of; demand

D) supply of; supply

Answer: D

Topic: Chapter 4.2 Supply and Demand in the Bond Market

Question Status: Previous Edition

Figure 4.4

44) In Figure 4.4, the most likely cause of the increase in the equilibrium interest rate from i1 to i2 is

A) an increase in the price of bonds.

B) a business cycle boom.

C) an increase in the expected inflation rate.

D) a decrease in the expected inflation rate.

Answer: C

Topic: Chapter 4.3 Changes in Equilibrium Interest Rates

Question Status: Previous Edition

45) In Figure 4.4, the most likely cause of the increase in the equilibrium interest rate from i1 to i2 is a(n) ________ in the ________.

A) increase; expected inflation rate

B) decrease; expected inflation rate

C) increase; government budget deficit

D) decrease; government budget deficit

Answer: A

Topic: Chapter 4.3 Changes in Equilibrium Interest Rates

Question Status: Previous Edition

46) In Figure 4.4, the most likely cause of a decrease in the equilibrium interest rate from i2 to i1 is

A) an increase in the expected inflation rate.

B) a decrease in the expected inflation rate.

C) a business cycle expansion.

D) a combination of both A and C of the above.

Answer: B

Topic: Chapter 4.3 Changes in Equilibrium Interest Rates

Question Status: Previous Edition

47) Factors that can cause the supply curve for bonds to shift to the right include

A) an expansion in overall economic activity.

B) a decrease in expected inflation.

C) a decrease in government deficits.

D) all of the above.

E) only A and B of the above.

Answer: A

Topic: Chapter 4.2 Supply and Demand in the Bond Market

Question Status: Previous Edition

48) Factors that can cause the supply curve for bonds to shift to the left include

A) an expansion in overall economic activity.

B) a decrease in expected inflation.

C) an increase in government deficits.

D) only A and C of the above.

Answer: B

Topic: Chapter 4.2 Supply and Demand in the Bond Market

Question Status: Previous Edition

49) The economist Irving Fisher, after whom the Fisher effect is named, explained why interest rates ________ as the expected rate of inflation ________.

A) rise; increases

B) rise; stabilizes

C) rise; decreases

D) fall; increases

E) fall; stabilizes

Answer: A

Topic: Chapter 4.3 Changes in Equilibrium Interest Rates

Question Status: Previous Edition

50) An increase in the expected rate of inflation causes the demand for bonds to ________ and the supply for bonds to ________.

A) fall; fall

B) fall; rise

C) rise; fall

D) rise; rise

Answer: B

Topic: Chapter 4.2 Supply and Demand in the Bond Market

Question Status: Previous Edition

51) A decrease in the expected rate of inflation causes the demand for bonds to ________ and the supply of bonds to ________.

A) fall; fall

B) fall; rise

C) rise; fall

D) rise; rise

Answer: C

Topic: Chapter 4.2 Supply and Demand in the Bond Market

Question Status: Previous Edition

52) When the economy slips into a recession, normally the demand for bonds ________, the supply of bonds ________, and the interest rate ________.

A) increases; increases; rises

B) decreases; decreases; falls

C) increases; decreases; falls

D) decreases; increases; rises

Answer: B

Topic: Chapter 4.3 Changes in Equilibrium Interest Rates

Question Status: Previous Edition

53) When the economy enters into a boom, normally the demand for bonds ________,

the supply of bonds ________, and the interest rate ________.

A) increases; increases; rises

B) decreases; decreases; falls

C) increases; decreases; rises

D) decreases; increases; rises

Answer: A

Topic: Chapter 4.3 Changes in Equilibrium Interest Rates

Question Status: Previous Edition

Figure 4.2

54) In Figure 4.2, one possible explanation for the increase in the interest rate from i1 to i2 is a(n) ________ in ________.

A) increase; the expected inflation rate

B) decrease; the expected inflation rate

C) increase; economic growth

D) decrease; economic growth

Answer: C

Topic: Chapter 4.3 Changes in Equilibrium Interest Rates

Question Status: Previous Edition

55) In Figure 4.2, one possible explanation for the increase in the interest rate from i1 to i2 is

A) an increase in economic growth.

B) an increase in government budget deficits.

C) a decrease in government budget deficits.

D) a decrease in economic growth.

E) a decrease in the riskiness of bonds relative to other investments.

Answer: A

Topic: Chapter 4.3 Changes in Equilibrium Interest Rates

Question Status: Previous Edition

56) In Figure 4.2, one possible explanation for a decrease in the interest rate from i2 to i1 is

A) an increase in government budget deficits.

B) an increase in expected inflation.

C) a decrease in economic growth.

D) a decrease in the riskiness of bonds relative to other investments.

Answer: C

Topic: Chapter 4.3 Changes in Equilibrium Interest Rates

Question Status: Previous Edition

57) In Keynes’s liquidity preference framework, individuals are assumed to hold their wealth in two forms:

A) real assets and financial assets.

B) stocks and bonds.

C) money and bonds.

D) money and gold.

Answer: C

Topic: Chapter 4.A4 Supply and Demand in the Market for Money: The Liquidity Preference Framework

Question Status: Previous Edition

58) In his liquidity preference framework, Keynes assumed that money has a zero rate of return; thus, when interest rates ________ the expected return on money falls relative to the expected return on bonds, causing the demand for money to ________.

A) rise; fall

B) rise; rise

C) fall; fall

D) fall; rise

Answer: A

Topic: Chapter 4.A4 Supply and Demand in the Market for Money: The Liquidity Preference Framework

Question Status: Previous Edition

59) The loanable funds framework is easier to use when analyzing the effects of changes in ________, while the liquidity preference framework provides a simpler analysis of the effects from changes in income, the price level, and the supply of ________.

A) expected inflation; bonds

B) expected inflation; money

C) government budget deficits; bonds

D) the supply of money; bonds

Answer: B

Topic: Chapter 4.A3 Loanable Funds Framework

Question Status: Previous Edition

60) When comparing the loanable funds and liquidity preference frameworks of interest rate determination, which of the following is true?

A) The liquidity preference framework is easier to use when analyzing the effects of changes in expected inflation.

B) The loanable funds framework provides a simpler analysis of the effects of changes in income, the price level, and the supply of money.

C) In most instances, the two approaches to interest rate determination yield the same predictions.

D) All of the above are true.

E) Only A and B of the above are true.

Answer: C

Topic: Chapter 4.A3 Loanable Funds Framework

Question Status: Previous Edition

61) A higher level of income causes the demand for money to ________ and the interest rate to ________.

A) decrease; decrease

B) decrease; increase

C) increase; decrease

D) increase; increase

Answer: D

Topic: Chapter 4.3 Changes in Equilibrium Interest Rates

Question Status: Previous Edition

62) A lower level of income causes the demand for money to ________ and the interest rate to ________.

A) decrease; decrease

B) decrease; increase

C) increase; decrease

D) increase; increase

Answer: A

Topic: Chapter 4.2 Supply and Demand in the Bond Market

Question Status: Previous Edition

63) A rise in the price level causes the demand for money to ________ and the demand curve to shift to the ________.

A) decrease; right

B) decrease; left

C) increase; right

D) increase; left

Answer: C

Topic: Chapter 4.2 Supply and Demand in the Bond Market

Question Status: Previous Edition

64) A decline in the price level causes the demand for money to ________ and the demand curve to shift to the ________.

A) decrease; right

B) decrease; left

C) increase; right

D) increase; left

Answer: B

Topic: Chapter 4.2 Supply and Demand in the Bond Market

Question Status: Previous Edition

65) A decline in the expected inflation rate causes the demand for money to ________ and the demand curve to shift to the ________.

A) decrease; right

B) decrease; left

C) increase; right

D) increase; left

Answer: B

Topic: Chapter 4.2 Supply and Demand in the Bond Market

Question Status: Previous Edition

66) Holding everything else constant, an increase in the money supply causes

A) interest rates to decline initially.

B) interest rates to increase initially.

C) bond prices to decline initially.

D) both A and C of the above.

E) both B and C of the above.

Answer: A

Topic: Chapter 4.3 Changes in Equilibrium Interest Rates

Question Status: Previous Edition

67) Holding everything else constant, a decrease in the money supply causes

A) interest rates to decline initially.

B) interest rates to increase initially.

C) bond prices to increase initially.

D) both A and C of the above.

E) both B and C of the above.

Answer: B

Topic: Chapter 4.3 Changes in Equilibrium Interest Rates

Question Status: Previous Edition

Figure 4.3

68) In Figure 4.3, the factor responsible for the decline in the interest rate is

A) a decline in the price level.

B) a decline in income.

C) an increase in the money supply.

D) a decline in the expected inflation rate.

Answer: C

Topic: Chapter 4.3 Changes in Equilibrium Interest Rates

Question Status: Previous Edition

69) In Figure 4.3, the decrease in the interest rate from i1 to i2 can be explained by

A) a decrease in money growth.

B) an increase in money growth.

C) a decline in the expected price level.

D) only A and B of the above.

Answer: B

Topic: Chapter 4.3 Changes in Equilibrium Interest Rates

Question Status: Previous Edition

70) In Figure 4.3, an increase in the interest rate from i2 to i1 can be explained by

A) a decrease in money growth.

B) an increase in money growth.

C) a decline in the price level.

D) an increase in the expected price level.

Answer: A

Topic: Chapter 4.3 Changes in Equilibrium Interest Rates

Question Status: Previous Edition

71) If the liquidity effect is smaller than the other effects, and the adjustment of expected inflation is slow, then the

A) interest rate will fall.

B) interest rate will rise.

C) interest rate will initially fall but eventually climb above the initial level in response to an increase in money growth.

D) interest rate will initially rise but eventually fall below the initial level in response to an increase in money growth.

Answer: C

Topic: Chapter 4.A4 Supply and Demand in the Market for Money: The Liquidity Preference Framework

Question Status: Previous Edition

72) When the growth rate of the money supply increases, interest rates end up being permanently lower if

A) the liquidity effect is larger than the other effects.

B) there is fast adjustment of expected inflation.

C) there is slow adjustment of expected inflation.

D) the expected inflation effect is larger than the liquidity effect.

Answer: A

Topic: Chapter 4.A4 Supply and Demand in the Market for Money: The Liquidity Preference Framework

Question Status: Previous Edition

73) When the growth rate of the money supply decreases, interest rates end up being permanently lower if

A) the liquidity effect is larger than the other effects.

B) there is fast adjustment of expected inflation.

C) there is slow adjustment of expected inflation.

D) the expected inflation effect is larger than the liquidity effect.

Answer: D

Topic: Chapter 4.A4 Supply and Demand in the Market for Money: The Liquidity Preference Framework

Question Status: Previous Edition

74) When the growth rate of the money supply is decreased, interest rates will rise immediately if the liquidity effect is ________ than the other effects and if there is ________ adjustment of expected inflation.

A) larger; rapid

B) larger; slow

C) smaller; slow

D) smaller; rapid

Answer: B

Topic: Chapter 4.A4 Supply and Demand in the Market for Money: The Liquidity Preference Framework

Question Status: Previous Edition

75) When the growth rate of the money supply is increased, interest rates will rise immediately if the liquidity effect is ________ than the other effects and if there is ________ adjustment of expected inflation.

A) larger; rapid

B) larger; slow

C) smaller; slow

D) smaller; rapid

Answer: D

Topic: Chapter 4.A4 Supply and Demand in the Market for Money: The Liquidity Preference Framework

Question Status: Previous Edition

76) If the Fed wants to permanently lower interest rates, then it should lower the rate of money growth if

A) there is fast adjustment of expected inflation.

B) there is slow adjustment of expected inflation.

C) the liquidity effect is smaller than the expected inflation effect.

D) the liquidity effect is larger than the other effects.

Answer: C

Topic: Chapter 4.A4 Supply and Demand in the Market for Money: The Liquidity Preference Framework

Question Status: Previous Edition

77) If the Fed wants to permanently lower interest rates, then it should raise the rate of money growth if

A) there is fast adjustment of expected inflation.

B) there is slow adjustment of expected inflation.

C) the liquidity effect is smaller than the expected inflation effect.

D) the liquidity effect is larger than the other effects.

Answer: D

Topic: Chapter 4.A4 Supply and Demand in the Market for Money: The Liquidity Preference Framework

Question Status: Previous Edition

78) Milton Friedman contends that it is entirely possible that when the money supply rises, interest rates may ________ if the ________ effect is more than offset by changes in income, the price level, and expected inflation.

A) fall; liquidity

B) fall; risk

C) rise; liquidity

D) rise; risk

Answer: C

Topic: Chapter 4.A4 Supply and Demand in the Market for Money: The Liquidity Preference Framework

Question Status: Previous Edition

Figure 4.5

79) Figure 4.5 illustrates the effect of an increased rate of money supply growth. From the figure, one can conclude that the liquidity effect is ________ than the expected inflation effect and interest rates adjust ________ to changes in expected inflation.

A) smaller; quickly

B) larger; quickly

C) larger; slowly

D) smaller; slowly

Answer: C

Topic: Chapter 4.A4 Supply and Demand in the Market for Money: The Liquidity Preference Framework

Question Status: Previous Edition

80) Figure 4.5 illustrates the effect of an increased rate of money supply growth. From the figure, one can conclude that the

A) Fisher effect is dominated by the liquidity effect and interest rates adjust slowly to changes in expected inflation.

B) liquidity effect is dominated by the Fisher effect and interest rates adjust slowly to changes in expected inflation.

C) liquidity effect is dominated by the Fisher effect and interest rates adjust quickly to changes in expected inflation.

D) Fisher effect is smaller than the expected inflation effect and interest rates adjust quickly to changes in expected inflation.

Answer: A

Topic: Chapter 4.A4 Supply and Demand in the Market for Money: The Liquidity Preference Framework

Question Status: Previous Edition

81) _______ is the total resources owned by an individual, including all assets.

A) Expected return

B) Wealth

C) Liquidity

D) Risk

Answer: B

Topic: Chapter 4.1 Determining Asset Demand

Question Status: Previous Edition

82) A ________ prefers stock in a less risky asset than in a riskier asset.

A) risk preferrer

B) risk-averse person

C) risk lover

D) risk-favorable person

Answer: B

Topic: Chapter 4.1 Determining Asset Demand

Question Status: Previous Edition

83) When the quantity of bonds demanded equals the quantity of bonds supplied, there is

A) excess supply.

B) excess demand.

C) a market equilibrium.

D) an asset market approach.

Answer: C

Topic: Chapter 4.2 Supply and Demand in the Bond Market

Question Status: Previous Edition

84) Determining asset prices using stocks of assets rather than flow is called

A) asset transformation.

B) expected return.

C) asset market approach.

D) market equilibrium.

Answer: C

Topic: Chapter 4.A1 Models of Asset Pricing

Question Status: Previous Edition

85) What is the model whose equations are estimated using statistical procedures used in forecasting interest rates called?

A) Econometric model

B) Liquidity preference framework

C) Market equilibrium

D) Fisher effect

Answer: A

Topic: Chapter 4.A1 Models of Asset Pricing

Question Status: Previous Edition

86) As expected inflation increases for the coming year, we expected the price of gold to ________ due to a rightward shift the in ________ curve.

A) increase; demand

B) increase; supply

C) decrease; demand

D) decrease; supply

Answer: A

Topic: Chapter 4.A2 Applying the Asset Approach to a Commodity Market: The Case of Gold

Question Status: New Question

87) As expected inflation falls for the coming year, we expected the price of gold to ________ due to a leftward shift the in ________ curve.

A) increase; demand

B) increase; supply

C) decrease; demand

D) decrease; supply

Answer: C

Topic: Chapter 4.A2 Applying the Asset Approach to a Commodity Market: The Case of Gold

Question Status: New Question

4.2  True/False

1) When interest rates decrease, the demand curve for bonds shifts to the left.

Answer: FALSE

Topic: Chapter 4.2 Supply and Demand in the Bond Market

Question Status: Previous Edition

2) When an economy grows out of a recession, normally the demand for bonds increases and the supply of bonds increases.

Answer: TRUE

Topic: Chapter 4.2 Supply and Demand in the Bond Market

Question Status: Previous Edition

3) When the federal government’s budget deficit decreases, the demand curve for bonds shifts to the right.

Answer: FALSE

Topic: Chapter 4.2 Supply and Demand in the Bond Market

Question Status: Previous Edition

4) Investors make their choices of which assets to hold by comparing the expected return, liquidity, and risk of alternative assets.

Answer: TRUE

Topic: Chapter 4.1 Determining Asset Demand

Question Status: Previous Edition

5) A person who is risk averse prefers to hold assets that are more, not less, risky.

Answer: FALSE

Topic: Chapter 4.1 Determining Asset Demand

Question Status: Previous Edition

6) Interest rates are procyclical in that they tend to rise during business cycle expansions and fall during recessions.

Answer: TRUE

Topic: Chapter 4.2 Supply and Demand in the Bond Market

Question Status: Previous Edition

7) When income and wealth are rising, the demand for bonds rises and the demand curve shifts to the right.

Answer: TRUE

Topic: Chapter 4.2 Supply and Demand in the Bond Market

Question Status: Previous Edition

8) An increase in the inflation rate will cause the demand curve for bonds to shift to the right.

Answer: FALSE

Topic: Chapter 4.2 Supply and Demand in the Bond Market

Question Status: Previous Edition

9) The Fisher Effect predicts that an increase in expected inflation will lower the interest rate on bonds.

Answer: FALSE

Topic: Chapter 4.3 Changes in Equilibrium Interest Rates

Question Status: Previous Edition

10) An increase in the federal government budget deficit will raise the interest rate on bonds.

Answer: TRUE

Topic: Chapter 4.3 Changes in Equilibrium Interest Rates

Question Status: Previous Edition

11) Holding everything else constant, an increase in wealth lowers the quantity demanded of an asset.

Answer: FALSE

Topic: Chapter 4.2 Supply and Demand in the Bond Market

Question Status: Previous Edition

12) An increase in an asset’s expected return relative to that of an alternative asset, holding everything else unchanged, raises the quantity demanded of the asset.

Answer: TRUE

Topic: Chapter 4.2 Supply and Demand in the Bond Market

Question Status: Previous Edition

13) The more liquid an asset is relative to alternative assets, holding everything else unchanged, the more desirable it is, and the greater the quantity demanded.

Answer: TRUE

Topic: Chapter 4.2 Supply and Demand in the Bond Market

Question Status: Previous Edition

14) A movement along the demand (or supply) curve occurs when the quantity demanded (or supplied) changes at each given price (or interest rate)of the bond in response to a change in some other factor besides the bond’s price or interest rate.

Answer: FALSE

Topic: Chapter 4.2 Supply and Demand in the Bond Market

Question Status: Previous Edition

4.3  Essay

1) Identify and explain the four factors that influence asset demand. Which of these factors affect total asset demand and which influence investors to demand one asset over another?

Topic: Chapter 4.1 Determining Asset Demand

Question Status: Previous Edition

2) How is the equilibrium interest rate determined in the bond market? Explain why the interest rate will move toward equilibrium if it is temporarily above or below the equilibrium rate.

Topic: Chapter 4.3 Changes in Equilibrium Interest Rates

Question Status: Previous Edition

3) Use the bond demand and supply framework to explain the Fisher effect and why it occurs.

Topic: Chapter 4.3 Changes in Equilibrium Interest Rates

Question Status: Previous Edition

4) If investors perceive greater interest rate risk, what will happen to the equilibrium interest rate in the bond market? Explain using the bond demand and supply framework.

Topic: Chapter 4.3 Changes in Equilibrium Interest Rates

Question Status: Previous Edition

5) How will a decrease in the federal government’s budget deficit affect the equilibrium interest rate in the bond market? Explain using the bond demand and supply framework.

Topic: Chapter 4.3 Changes in Equilibrium Interest Rates

Question Status: Previous Edition

6) What is the expected return on a bond if the return is 9% two-thirds of the time and 3% one-third of the time? What is the standard deviation of the returns on this bond? Would you prefer this bond or one with an identical expected return and a standard deviation of 4.5? Why?

Topic: Chapter 4.1 Determining Asset Demand

Question Status: Previous Edition

7) Identify and describe three factors that cause the supply curve for bonds to shift.

Topic: Chapter 4.2 Supply and Demand in the Bond Market

Question Status: Previous Edition

8) Explain why the marginal contribution of an asset to the risk of a portfolio does not depend on the risk of the asset in isolation.

Topic: Chapter 4.A1 Models of Asset Pricing

Question Status: New Question

9) What is the difference between systematic and nonsystematic risk?

Topic: Chapter 4.A1 Models of Asset Pricing

Question Status: New Question

10) Explain the difference between the Capital Asset Pricing Model and the Arbitrage Pricing Theory.

Topic: Chapter 4.A1 Models of Asset Pricing

Question Status: New Question

11) Explain how the price of gold should be positively related to expected inflation.

Topic: Chapter 4.A2 Applying the Asset Approach to a Commodity Market: The Case of Gold

Question Status: New Question

12) Explain how the loanable funds framework and the supply and demand for bonds are related.

Topic: Chapter 4.A3 Loanable Funds Framework

Question Status: New Question

13) Describe the factors that shift the demand and supply of money in the loanable funds framework.

Topic: Chapter 4.A3 Loanable Funds Framework

Question Status: New Question

14) Explain the differences between the loanable funds framework and the liquidity preference framework.

Topic: Chapter 4.A4 Supply and Demand in the Market for Money: The Liquidity Preference Framework

Question Status: New Question

 
"Looking for a Similar Assignment? Get Expert Help at an Amazing Discount!"

Which Of The Following Statements About Cost Behavior Is True?

/in /by

1.  Which of the following statements about cost behavior is true?

 

A costs item that is classified as “variable” relative to one activity base may be classified as “fixed” relative to another activity base.

The concept of “relevant range” applies to fixed costs but not to variable costs.

As output increases, fixed cost per unit increases.

As output increases, mixed cost per unit increases.

 

2.  Which of the following costs changes in direct proportion to a change in the activity level?

 

Fixed cost.

Variable cost.

Step-variable cost.

Semi-variable cost.

 

3.  The Eola Hills Company has estimated the following cost formulas for overhead:

Cost Formula:  Lubricants $2,500 plus $0.50 per machine-hour Utilities $3,000 plus $0.60 per machine-hour Depreciation $1,000 Maintenance $1,200 plus $0.10 per machine-hour Machine setup $ 0.30 per machine-hour

Based on these cost formulas, the total overhead cost expected at an activity level of 500 machine hours is:

 

$7700.

$8450.

$7900.

$8350.

 

4.  A product sells for $15 per unit and has variable expenses of $9 per unit. Fixed expenses total $70,000 per month. How many units of the product must be sold each month to yield a monthly profit of $20,000?

 

10,000 units

3,750 units

6,000 units

15,000 units

 

5.  Which of the following statements about cost-volume-profit analysis is false?

 

A company selling multiple products should use the contribution margin ratio method to perform CVP analysis.

The break-even point is the sales level at which the total contribution margin is equal to total fixed costs.

An assumption of CVP analysis is that productivity improves over time.

An assumption of CVP analysis is that variable costs are linear.

 

6.  Which of the following would take place if a company were forced to increase its variable cost per unit?

 

Contribution Margin:              Break-even Point:

Increase                        Increase

Increase                                    Increase:

Decrease                                   Increase

Decrease                       Decrease

 

7.  Richard Hamilton has a fast-food franchise and must pay a franchise fee equal to $35,000 plus 3% of gross sales. In terms of cost behavior, the fee is a:

 

fixed cost.

variable cost.

mixed cost.

step-fixed cost.

 

8.  Which of the following statements about operating leverage is false?

 

A change in sales volume will affect a company’s operating leverage.

The degree of operating leverage is highest in companies that have relatively high fixed costs and relatively low variable costs in proportion to total coats.

If a company has an operating leverage of “4,” then a 10% increase in sales will result in a 40% increase in net income.

The net income of a company with a relatively low operating leverage will be more sensitive to changes in sales volume than for a company with a relatively high operating leverage.

 

9.  The following information is available for the Skyway Company for 20X5: Sales $200,000 Variable expenses 140,000 Fixed expenses 40,000 What was Skyway’s contribution-margin ratio for 20X5?

 

20%

80%

70%

30%

 

10.  Atlanta, Inc., which uses the high-low method to analyze cost behavior, has determined that machine hours best explain the company’s utilities cost. The company’s relevant range of activity varies from a low of 600 machine hours to a high of 1,100 machine hours, with the following data being available for the first six months of the year:

 

 

Month      Utilities      Machine Hours

January `$ 8,700         800

February `8,360            720

March `8,950             810

April `9,360              920

May `9,625              950

June` 9,150              900

 

The variable utilities cost per machine hour is:

 

$5.00.

$5.50.

$0.18.

$4.50.

 

11.  Atlanta, Inc., which uses the high-low method to analyze cost behavior, has determined that machine hours best explain the company’s utilities cost. The company’s relevant range of activity varies from a low of 600 machine hours to a high of 1,100 machine hours, with the following data being available for the first six months of the year:

 

Month         Utilities              Machine Hours

 

January      $ 8,700             800

February           8,360          720

March              8,950          810

April                 9,360         920

May                 9,625         950

June                 9,150      900

 

The fixed utilities cost per month is:

 

$5,100.

$3,764.

$4,400.

$4,760.

 

12.  The following information is available for Forrest Company: Sales price: $90 per unit Variable cost: $35 per unit Fixed cost: $37,500 If the variable cost per unit is increased by $7 and the total fixed cost is increased by $4,500, what will be the new break-even point in units?

 

1,000

875

1,429

467

 

13.  Fliptop’s indirect materials cost for two recent months was as follows:

 

Production in Units Indirect Materials Cost

March 1,200 $2,100

October 1,400 $2,300

 

The cost behavior of indirect materials costs at Fliptop is best classified as:

 

Mixed

Variable

Fixed

 

14.  The following data are available for Bendo Co.: Sales: $700,000 Variable cost: 390,000 Fixed cost: 250,000 Bendo’s break-even point in dollars is:

 

$696,429

$448,718

$700,000

$564,516

 

15.  Wilson sells a single product for $70 that has a variable cost of $45. Fixed costs at the break-even point amount to $15 per unit. If the company sells one unit in excess of its break-even volume, the bottom-line profit will be:

 

$15.

$45.

$55.

$25

 

16. An example of a committed fixed cost is:

 

property taxes on a factory building.

executive travel expenses.

a training program for salespersons.

research and development for new products.

 
"Looking for a Similar Assignment? Get Expert Help at an Amazing Discount!"

WAL-MART ANALYSIS

/in /by

WAL-MART ANALYSIS – DUE DATE MAY 29 @5PM EST

Directions: Answer all the questions. Please submit your work in Word or PDF formats only. Submit an Excel file to support calculations, but please “cut and paste” your solutions into the Word or PDF file. Be sure to show how you did your calculations.

Please run spell check, check your grammar and sentence structure and proofread your answers.

YOUR SUBMISSION WILL BE SUBMITTED TO “TURNITIN” and “GOOGLE” TO CHECK FOR PLAIGIARISM.

PLEASE REVIEW THE TEMPLATE I HAVE ATTACHED TO SEE HOW THE ANALYSIS IS DONE. IT IS JUST AN EXAMPLE YOU DON’T HAVE TO DO EXACTLY THE SAME BUT IT HELPS YOU TO STRUCTURE YOUR ASSIGNMENT IF YOU ARE NOT SURE.

ACT 5140 – Accounting for Decision Makers

Walmart Analysis Assignment

Directions: Answer all the questions. Please submit your work in Word or PDF formats only. You can submit an Excel file to support calculations, but please “cut and paste” your solutions into the Word or PDF file. Be sure to show how you did your calculations. Also, please be sure to include your name at the top of the first page of your file.

Part 1

Perform a vertical and horizontal analysis of Wal-Mart Stores, Inc.’s income statements and balance sheets as of January 31, 2015. In performing this analysis, consider any notable trends or changes that you observe that may provide useful information concerning its financial condition. Also use as many years’ worth of statements as you feel necessary. You should write up your results in paragraph form.

Part 2

Assess Wal-Mart, Stores Inc. concerning liquidity, solvency, profitability, and stock performance as of January 31, 2015. For each area, you should calculate the ratios we discussed in class and provide an analysis of the ratios calculated. I include historical stock price information and outstanding common share information below.

Fiscal Year Ended 1/31/2015 1/31/2014 1/31/2013 1/31/2012
Adjusted Closing Price $83.94 $71.97 $65.79 $56.32
Common Shares Outstanding (millions) 3,228 3,233 3,314 3,418
 
"Looking for a Similar Assignment? Get Expert Help at an Amazing Discount!"

Guide

/in /by

Question 1)

Required information

[The following information applies to the questions displayed below.]

 

Wayland Custom Woodworking is a firm that manufactures custom cabinets and woodwork for business and residential customers. Students will have the opportunity to establish payroll records and to complete a month of payroll information for Wayland. Wayland Custom Woodworking is located at 1716 Nichol Street, Logan, Utah, 84321, phone number 435-555-9877. The owner is Mark Wayland. Wayland’s EIN is 91-7444533, and the Utah Employer Account Number is 999-9290-1. Wayland has determined it will pay their employees on a semimonthly basis. Federal income tax should be computed using the percentage method.

 

For Part 1 of this project, you will complete payroll for the last month (December) of the fourth quarter (Q4) of 2016, which consists of the final two pay periods of the year.  Once payroll has been completed for the fourth quarter, you will then file the annual tax forms for Wayland as well as prepare each employee’s Form W-2 in Part 2.

 

The SUTA (UI) rate for Wayland Custom Woodworking is 2.6% on the first $32,200. The state withholding rate is 5.0% for all income levels and marital statuses, which will be used in computing Utah withholding tax for each employee using the tax tables provided below.

 

Rounding can create a challenge. For this project, the hourly rate for the individuals should be rounded to five decimal places. So take their salary and divide by 2,080 (52 weeks at 40 hours per week) for all full time employees, both exempt and nonexempt. For nonexempt employees, such as Stevon Varden, Varden’s salary is $42,000 and is a nonexempt employee, so the calculation will be $42,000/2,080, which would give you $20.19231 per hour, and use this to compute the employee’s gross pay based on the number of hours worked.  When a nonexempt employee has worked overtime hours for a given pay period, take their regular hourly rate and multiply it by 1.5, round the result to 5 decimal places, and multiply the new rate by their number of overtime hours.

 

For exempt employees, such as Anthony Chinson, an hourly rate rounded to five decimal places should be determined using the same method shown above, but gross pay should be determined by taking the exempt employee’s yearly salary and dividing it by 24, which is the number of payroll periods with a semimonthly frequency.  For example, Chinson’s salary is $24,000 and is a full time employee.  Chinson’s hourly rate is $11.53846(determined by taking $24,000/2,080), but as he is an exempt employee, the calculation for his gross pay will be $24,000/24, which would give you $1,000.  For pay periods that include paid holidays, ensure to distribute an exempt employee’s regular pay accordingly to holiday pay based on the number of hours that consist of the holidays for that period.

 

Employees are paid for the following holidays occurring during the final quarter:

· Thanksgiving day and the day after, Thursday and Friday November 24-25

· Christmas, which is a Sunday. When holidays occur on a weekend, the preceding Friday, December 23, is considered a holiday. Employees receive holiday pay for Monday, December 26.

 

For the completion of this project, refer to the tax-related information in the table below.  For federal withholding calculations, use the percentage method tables in Appendix C, which is provided below. For Utah state withholding calculations, use the Utah Schedule 3 tax tables linked below (ensure to use the appropriate Utah table based on each employee’s marital status). Both 401(k) and insurance are pretax for federal income tax and Utah income tax.

 

 

   
Federal Withholding Allowance (less 401(k), Section 125) $168.80 per allowance claimed
Semimonthly Federal Percentage Method Tax Table Appendix C Page 254 Table #3
Federal Unemployment Rate (employer only) (less Section 125) 0.6% on the first $7,000 of wages
State Withholding Rate (less 401(k), Section 125) See Utah Schedule 3, Table 1 or use the Excel Version of Schedule 3
State Unemployment Rate (employer only) (less Section 125) 2.6% on the first $32,200 of wages
 

 

 

The balance sheet for WCW as of November 30, 2016, is as follows:

Wayland Custom Woodworking Balance Sheet 11/30/2016
Assets   Liabilities & Equity
Cash $ 1,086,269.51   Accounts Payable $ 150,230.89
Supplies   10,283.15   Salaries and Wages Payable   10,319.19
Office Equipment   130,202.16   Federal Unemployment Tax Payable   1,920.92
Inventory   221,163.81   Social Security Tax Payable   3,219.22
Vehicle   25,000.00   Medicare Tax Payable   752.88
Accumulated Depreciation, Vehicle   (1,420.00)   Federal Unemployment Tax Payable   92.32
Building   164,000.00   State Unemployment Tax Payable   674.99
Accumulated Depreciation, Building   (3,221.00)   Employee State Income Tax Payable   1,088.86
Land   35,750.00   401(k) Contributions Payable   1,018.66
Total Assets   1,668,027.63   Employee Medical Premiums Payable   750.00
        Notes Payable   211,000.00
        Utilities Payable   2,825.43
        Total Liabilities   383,893.36
        Owners’ Equity   1,250,000.00
        Retained Earnings   34,134.27
        Total Equity   1,284,134.27
        Total Liabilities and Equity   1,668,027.63
 

 

October 1:

Wayland Custom Woodworking (WCW) pays its employees according to their job classification. The following employees comprise Wayland’s staff:

 

Employee Number Name and Address Payroll information
00-Chins Anthony Chinson Married, 1 Withholding allowance
  530 Sylvann Avenue Exempt
  Logan, UT 84321 $24,000/year + commission
  435-555-1212 Start Date: 10/1/2016
  Job title: Account Executive SSN: 511-22-3333
     
00-Wayla Mark Wayland Married, 5 withholding allowances
  1570 Lovett Street Exempt
  Logan, UT 84321 $75,000/year
  435-555-1110 Start Date: 10/1/2016
  Job title: President/Owner SSN: 505-33-1775
     
01-Peppi Sylvia Peppinico Married, 7 withholding allowances
  291 Antioch Road Exempt
  Logan, UT 84321 $43,500/year
  435-555-2244 Start Date: 10/1/2016
  Job title: Craftsman SSN: 047-55-9951
     
01-Varde Stevon Varden Married, 2 withholding allowances
  333 Justin Drive Nonexempt
  Logan, UT 84321 $42,000/year
  435-555-9981 Start Date: 10/1/2016
  Job title: Craftsman SSN: 022-66-1131
     
02-Hisso Leonard Hissop Single, 4 withholding allowances
  531 5th Street Nonexempt
  Logan, UT 84321 $49,500/year
  435-555-5858 Start Date: 10/1/2016
  Job title: Purchasing/Shipping SSN: 311-22-6698
     
00-Succe Student F Success Single, 1 withholding allowance
  1650 South Street Nonexempt
  Logan, UT 84321 $36,000/year
  435-556-1211 Start Date: 10/1/2016
  Job title: Accounting Clerk SSN: 555-55-5555
     

 

Voluntary deductions for each employee are as follows:

 

Name Deduction
Chinson Insurance: $50/paycheck
  401(k): 3% of gross pay
Wayland Insurance: $75/paycheck
  401(k): 6% of gross pay
Peppinico Insurance: $75/paycheck
  401(k): $50 per paycheck
Varden Insurance: $50/paycheck
  401(k): 4% of gross pay
Hissop Insurance: $75/paycheck
  401(k): 3% of gross pay
Student Insurance: $50/paycheck
  401(k): 3% of gross pay
 

 

 

The departments are as follows:

Department 00: Sales and Administration

Department 01: Factory workers

Department 02: Delivery and Customer service

 

You have been hired as of October 1 as the new accounting clerk. Your employee number is 00-SUCCE. Your name is Student F Success. Your address is 1650 South Street, Logan, UT 84321. Your phone number is 435-556-1211, you were born July 16, 1985, your Utah driver’s license number is 887743 expiring in 7/16/2018, and your Social Security number is 555-55-5555. You are considered a nonexempt employee, have one withholding allowance, and paid a rate of $36,000 per year.

 

For additional instructions on how to navigate and work through through Part 1 of this project, please download the student project guide here.

rev: 01_11_2017_QC_CS-74391

Required:

 

1. Complete the W-4 and, using the given information, complete the I-9 form to start your employee file. Complete it as if you are single with one withholding, you contribute 3% to a 401(k), and health insurance is $50 per pay period. The following file provides the lists of acceptable documents for Form I-9.

 

(NOTE): Further instructions on format can be found on certain cells within the forms. Employer I9 PG 2 Section should also be completed.

 

 

 

 

Question 2) Required information

[The following information applies to the questions displayed below.]

 

Wayland Custom Woodworking is a firm that manufactures custom cabinets and woodwork for business and residential customers. Students will have the opportunity to establish payroll records and to complete a month of payroll information for Wayland. Wayland Custom Woodworking is located at 1716 Nichol Street, Logan, Utah, 84321, phone number 435-555-9877. The owner is Mark Wayland. Wayland’s EIN is 91-7444533, and the Utah Employer Account Number is 999-9290-1. Wayland has determined it will pay their employees on a semimonthly basis. Federal income tax should be computed using the percentage method.

 

For Part 1 of this project, you will complete payroll for the last month (December) of the fourth quarter (Q4) of 2016, which consists of the final two pay periods of the year.  Once payroll has been completed for the fourth quarter, you will then file the annual tax forms for Wayland as well as prepare each employee’s Form W-2 in Part 2.

 

The SUTA (UI) rate for Wayland Custom Woodworking is 2.6% on the first $32,200. The state withholding rate is 5.0% for all income levels and marital statuses, which will be used in computing Utah withholding tax for each employee using the tax tables provided below.

 

Rounding can create a challenge. For this project, the hourly rate for the individuals should be rounded to five decimal places. So take their salary and divide by 2,080 (52 weeks at 40 hours per week) for all full time employees, both exempt and nonexempt. For nonexempt employees, such as Stevon Varden, Varden’s salary is $42,000 and is a nonexempt employee, so the calculation will be $42,000/2,080, which would give you $20.19231 per hour, and use this to compute the employee’s gross pay based on the number of hours worked.  When a nonexempt employee has worked overtime hours for a given pay period, take their regular hourly rate and multiply it by 1.5, round the result to 5 decimal places, and multiply the new rate by their number of overtime hours.

 

For exempt employees, such as Anthony Chinson, an hourly rate rounded to five decimal places should be determined using the same method shown above, but gross pay should be determined by taking the exempt employee’s yearly salary and dividing it by 24, which is the number of payroll periods with a semimonthly frequency.  For example, Chinson’s salary is $24,000 and is a full time employee.  Chinson’s hourly rate is $11.53846 (determined by taking $24,000/2,080), but as he is an exempt employee, the calculation for his gross pay will be $24,000/24, which would give you $1,000.  For pay periods that include paid holidays, ensure to distribute an exempt employee’s regular pay accordingly to holiday pay based on the number of hours that consist of the holidays for that period.

 

Employees are paid for the following holidays occurring during the final quarter:

· Thanksgiving day and the day after, Thursday and Friday November 24-25

· Christmas, which is a Sunday. When holidays occur on a weekend, the preceding Friday, December 23, is considered a holiday. Employees receive holiday pay for Monday, December 26.

 

For the completion of this project, refer to the tax-related information in the table below.  For federal withholding calculations, use the percentage method tables in Appendix C, which is provided below. For Utah state withholding calculations, use the Utah Schedule 3 tax tables linked below (ensure to use the appropriate Utah table based on each employee’s marital status). Both 401(k) and insurance are pretax for federal income tax and Utah income tax.

 

   
Federal Withholding Allowance (less 401(k), Section 125) $168.80 per allowance claimed
Semimonthly Federal Percentage Method Tax Table Appendix C Page 254 Table #3
Federal Unemployment Rate (employer only) (less Section 125) 0.6% on the first $7,000 of wages
State Withholding Rate (less 401(k), Section 125) See Utah Schedule 3, Table 1 or use the Excel Version of Schedule 3
State Unemployment Rate (employer only) (less Section 125) 2.6% on the first $32,200 of wages
 

 

The balance sheet for WCW as of November 30, 2016, is as follows:

Wayland Custom Woodworking Balance Sheet 11/30/2016
Assets   Liabilities & Equity
Cash $ 1,086,269.51   Accounts Payable $ 150,230.89
Supplies   10,283.15   Salaries and Wages Payable   10,319.19
Office Equipment   130,202.16   Federal Unemployment Tax Payable   1,920.92
Inventory   221,163.81   Social Security Tax Payable   3,219.22
Vehicle   25,000.00   Medicare Tax Payable   752.88
Accumulated Depreciation, Vehicle   (1,420.00)   Federal Unemployment Tax Payable   92.32
Building   164,000.00   State Unemployment Tax Payable   674.99
Accumulated Depreciation, Building   (3,221.00)   Employee State Income Tax Payable   1,088.86
Land   35,750.00   401(k) Contributions Payable   1,018.66
Total Assets   1,668,027.63   Employee Medical Premiums Payable   750.00
        Notes Payable   211,000.00
        Utilities Payable   2,825.43
        Total Liabilities   383,893.36
        Owners’ Equity   1,250,000.00
        Retained Earnings   34,134.27
        Total Equity   1,284,134.27
        Total Liabilities and Equity   1,668,027.63
 

 

October 1:

Wayland Custom Woodworking (WCW) pays its employees according to their job classification. The following employees comprise Wayland’s staff:

 

Employee Number Name and Address Payroll information
00-Chins Anthony Chinson Married, 1 Withholding allowance
  530 Sylvann Avenue Exempt
  Logan, UT 84321 $24,000/year + commission
  435-555-1212 Start Date: 10/1/2016
  Job title: Account Executive SSN: 511-22-3333
     
00-Wayla Mark Wayland Married, 5 withholding allowances
  1570 Lovett Street Exempt
  Logan, UT 84321 $75,000/year
  435-555-1110 Start Date: 10/1/2016
  Job title: President/Owner SSN: 505-33-1775
     
01-Peppi Sylvia Peppinico Married, 7 withholding allowances
  291 Antioch Road Exempt
  Logan, UT 84321 $43,500/year
  435-555-2244 Start Date: 10/1/2016
  Job title: Craftsman SSN: 047-55-9951
     
01-Varde Stevon Varden Married, 2 withholding allowances
  333 Justin Drive Nonexempt
  Logan, UT 84321 $42,000/year
  435-555-9981 Start Date: 10/1/2016
  Job title: Craftsman SSN: 022-66-1131
     
02-Hisso Leonard Hissop Single, 4 withholding allowances
  531 5th Street Nonexempt
  Logan, UT 84321 $49,500/year
  435-555-5858 Start Date: 10/1/2016
  Job title: Purchasing/Shipping SSN: 311-22-6698
     
00-Succe Student F Success Single, 1 withholding allowance
  1650 South Street Nonexempt
  Logan, UT 84321 $36,000/year
  435-556-1211 Start Date: 10/1/2016
  Job title: Accounting Clerk SSN: 555-55-5555
     

 

Voluntary deductions for each employee are as follows:

 

Name Deduction
Chinson Insurance: $50/paycheck
  401(k): 3% of gross pay
Wayland Insurance: $75/paycheck
  401(k): 6% of gross pay
Peppinico Insurance: $75/paycheck
  401(k): $50 per paycheck
Varden Insurance: $50/paycheck
  401(k): 4% of gross pay
Hissop Insurance: $75/paycheck
  401(k): 3% of gross pay
Student Insurance: $50/paycheck
  401(k): 3% of gross pay
 

 

 

The departments are as follows:

Department 00: Sales and Administration

Department 01: Factory workers

Department 02: Delivery and Customer service

 

You have been hired as of October 1 as the new accounting clerk. Your employee number is 00-SUCCE. Your name is Student F Success. Your address is 1650 South Street, Logan, UT 84321. Your phone number is 435-556-1211, you were born July 16, 1985, your Utah driver’s license number is 887743 expiring in 7/16/2018, and your Social Security number is 555-55-5555. You are considered a nonexempt employee, have one withholding allowance, and paid a rate of $36,000 per year.

 

For additional instructions on how to navigate and work through through Part 1 of this project, please download the student project guide here.

rev: 01_11_2017_QC_CS-74391

Required:

 

2. Complete the payroll process for Wayland Custom Woodworking’s last two pay periods of the fourth quarter.  Please note that you must carry the ending balance from each account in the December 15 General Ledger to the following period’s General Ledger to the input boxes titled “Ending account balance from the prior period” before posting the payroll journal entries from the current period to the Ledger.

 

For additional instructions on how to carry information from one pay period General Ledger to another, along with a guided walkthrough example of this process, refer to the project user guide in the project information section above.

 

 

December 15

December 15 is the end of the first pay period for the month of December. Employee pay will be disbursed on December 19, 2016. Remember that the employees are paid on a semimonthly basis.

 

Compute the net pay and update the Employees’ Earning Record with the December 15 pay and the new YTD information. Any hours worked in excess of 80 hours during this pay period are considered overtime for nonexempt employees.

 

· Complete the Employee Gross Pay tab.

· Complete the Payroll Register for December 15 Pay. Employee pay will be disbursed on December 19, 2016.

· Refer to the Employee Earning Record Forms for each employee for the current YTD amounts after you have completed the December 15 Payroll Register and update each EERF with the amounts from the current period.  YTD amounts from the previous four pay periods of the fourth quarter are shown for each employee.

· Complete the General Journal entries for the December 15 payroll.

· Post the journal entries to the General Ledger. Amounts for the ledger accounts from the previous four pay periods of the fourth quarter are shown.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31

The final pay period of the year will not be paid to employees until January 3, 2017. The company will accrue the wages for the final pay period only. Since the pay period is complete, there will not be a reversing entry for the accrual.  As a result, paychecks will not be issued for this pay period since they will be paid in the following year and reflected on the Employee Earning Record forms for each employee when paid.

 

The company pays for the day before and the day of Christmas, and if the holiday is on a weekend, the company pays for the Friday before. Christmas fell on a Sunday, so employees will be paid for both the Friday and Monday as holiday pay.  Employees worked extra hours on Saturday during the week of 12/23-12/29.  Reminder, holidays and vacations are not included as hours worked for calculation of overtime.

 

· Complete the Employee Gross Pay tab.

· Complete the Payroll Register for December 31.

· Complete the General Journal entries for the December 31 payroll.

· Update the General Ledger with the ending ledger balances from the December 15 pay period ledger accounts first, and then post the journal entries from the current period to the General Ledger.

 

 

 

 

 

Question 3)

 

Wayland Custom Woodworking is a firm that manufactures custom cabinets and woodwork for business and residential customers. Students will have the opportunity to establish payroll records and to complete a month of payroll information for Wayland. Wayland Custom Woodworking is located at 1716 Nichol Street, Logan, Utah, 84321, phone number 435-555-9877. The owner is Mark Wayland. Wayland’s EIN is 91-7444533, and the Utah Employer Account Number is 999-9290-1. Wayland has determined it will pay their employees on a semimonthly basis. Federal income tax should be computed using the percentage method. The SUTA (UI) rate for Wayland Custom Woodworking is 2.6% on the first $32,200. The state withholding rate is 5.0% for all income levels and marital statuses.

 

For Part 2 of this project, you will use the fourth quarter payroll information that you calculated in Part 1 to complete the following tax forms for Wayland Custom Woodworking:

· U.S. Form 941

· U.S. Form 940

· Utah Form TC-941

· Utah Form 33H

· Form W-2s for all 6 employees

· Form W-3 for WCW

 

Specific instructions on how to complete each form can be found within the individual forms themselves. The employee information for Wayland has been presented again below, for convenience.

 

Employee Number Name and Address Payroll information
00-Chins Anthony Chinson Married, 1 Withholding allowance
  530 Sylvann Avenue Exempt
  Logan, UT 84321 $24,000/year + commission
  435-555-1212 Start Date: 10/1/2016
  Job title: Account Executive SSN: 511-22-3333
     
00-Wayla Mark Wayland Married, 5 withholding allowances
  1570 Lovett Street Exempt
  Logan, UT 84321 $75,000/year
  435-555-1110 Start Date: 10/1/2016
  Job title: President/Owner SSN: 505-33-1775
     
01-Peppi Sylvia Peppinico Married, 7 withholding allowances
  291 Antioch Road Exempt
  Logan, UT 84321 $43,500/year
  435-555-2244 Start Date: 10/1/2016
  Job title: Craftsman SSN: 047-55-9951
     
01-Varde Stevon Varden Married, 2 withholding allowances
  333 Justin Drive Nonexempt
  Logan, UT 84321 $42,000/year
  435-555-9981 Start Date: 10/1/2016
  Job title: Craftsman SSN: 022-66-1131
     
02-Hisso Leonard Hissop Single, 4 withholding allowances
  531 5th Street Nonexempt
  Logan, UT 84321 $49,500/year
  435-555-5858 Start Date: 10/1/2016
  Job title: Purchasing/Shipping SSN: 311-22-6698
     
00-Succe Student F Success Single, 1 withholding allowance
  1650 South Street Nonexempt
  Logan, UT 84321 $36,000/year
  435-556-1211 Start Date: 10/1/2016
  Job title: Accounting Clerk SSN: 555-55-5555
     

 

If you have submitted Part 1 already, it is recommended that you access your submission while attempting Part 2, as you will need the information from Part 1 in order to complete all applicable tax forms.

 

For additional instructions on how to navigate and work through through Part 2 of this project, please download the student project guide here.

rev: 01_11_2017_QC_CS-74391

Required:

 

1. Complete Form 941 for the remittance of quarterly federal taxes.

 

 

 

 

 

 

 

Question 4)

 

Required information

[The following information applies to the questions displayed below.]

 

Wayland Custom Woodworking is a firm that manufactures custom cabinets and woodwork for business and residential customers. Students will have the opportunity to establish payroll records and to complete a month of payroll information for Wayland. Wayland Custom Woodworking is located at 1716 Nichol Street, Logan, Utah, 84321, phone number 435-555-9877. The owner is Mark Wayland. Wayland’s EIN is 91-7444533, and the Utah Employer Account Number is 999-9290-1. Wayland has determined it will pay their employees on a semimonthly basis. Federal income tax should be computed using the percentage method. The SUTA (UI) rate for Wayland Custom Woodworking is 2.6% on the first $32,200. The state withholding rate is 5.0% for all income levels and marital statuses.

 

For Part 2 of this project, you will use the fourth quarter payroll information that you calculated in Part 1 to complete the following tax forms for Wayland Custom Woodworking:

· U.S. Form 941

· U.S. Form 940

· Utah Form TC-941

· Utah Form 33H

· Form W-2s for all 6 employees

· Form W-3 for WCW

 

Specific instructions on how to complete each form can be found within the individual forms themselves. The employee information for Wayland has been presented again below, for convenience.

 

Employee Number Name and Address Payroll information
00-Chins Anthony Chinson Married, 1 Withholding allowance
  530 Sylvann Avenue Exempt
  Logan, UT 84321 $24,000/year + commission
  435-555-1212 Start Date: 10/1/2016
  Job title: Account Executive SSN: 511-22-3333
     
00-Wayla Mark Wayland Married, 5 withholding allowances
  1570 Lovett Street Exempt
  Logan, UT 84321 $75,000/year
  435-555-1110 Start Date: 10/1/2016
  Job title: President/Owner SSN: 505-33-1775
     
01-Peppi Sylvia Peppinico Married, 7 withholding allowances
  291 Antioch Road Exempt
  Logan, UT 84321 $43,500/year
  435-555-2244 Start Date: 10/1/2016
  Job title: Craftsman SSN: 047-55-9951
     
01-Varde Stevon Varden Married, 2 withholding allowances
  333 Justin Drive Nonexempt
  Logan, UT 84321 $42,000/year
  435-555-9981 Start Date: 10/1/2016
  Job title: Craftsman SSN: 022-66-1131
     
02-Hisso Leonard Hissop Single, 4 withholding allowances
  531 5th Street Nonexempt
  Logan, UT 84321 $49,500/year
  435-555-5858 Start Date: 10/1/2016
  Job title: Purchasing/Shipping SSN: 311-22-6698
     
00-Succe Student F Success Single, 1 withholding allowance
  1650 South Street Nonexempt
  Logan, UT 84321 $36,000/year
  435-556-1211 Start Date: 10/1/2016
  Job title: Accounting Clerk SSN: 555-55-5555
     

 

If you have submitted Part 1 already, it is recommended that you access your submission while attempting Part 2, as you will need the information from Part 1 in order to complete all applicable tax forms.

 

For additional instructions on how to navigate and work through through Part 2 of this project, please download the student project guide here.

rev: 01_11_2017_QC_CS-74391

Project guideP

Required:

 

2. Complete Form 940 for Wayland Custom Woodworking.

 

 

 

 

 

Question 5)

 

Required information

[The following information applies to the questions displayed below.]

 

Wayland Custom Woodworking is a firm that manufactures custom cabinets and woodwork for business and residential customers. Students will have the opportunity to establish payroll records and to complete a month of payroll information for Wayland. Wayland Custom Woodworking is located at 1716 Nichol Street, Logan, Utah, 84321, phone number 435-555-9877. The owner is Mark Wayland. Wayland’s EIN is 91-7444533, and the Utah Employer Account Number is 999-9290-1. Wayland has determined it will pay their employees on a semimonthly basis. Federal income tax should be computed using the percentage method. The SUTA (UI) rate for Wayland Custom Woodworking is 2.6% on the first $32,200. The state withholding rate is 5.0% for all income levels and marital statuses.

 

For Part 2 of this project, you will use the fourth quarter payroll information that you calculated in Part 1 to complete the following tax forms for Wayland Custom Woodworking:

· U.S. Form 941

· U.S. Form 940

· Utah Form TC-941

· Utah Form 33H

· Form W-2s for all 6 employees

· Form W-3 for WCW

 

Specific instructions on how to complete each form can be found within the individual forms themselves. The employee information for Wayland has been presented again below, for convenience.

 

Employee Number Name and Address Payroll information
00-Chins Anthony Chinson Married, 1 Withholding allowance
  530 Sylvann Avenue Exempt
  Logan, UT 84321 $24,000/year + commission
  435-555-1212 Start Date: 10/1/2016
  Job title: Account Executive SSN: 511-22-3333
     
00-Wayla Mark Wayland Married, 5 withholding allowances
  1570 Lovett Street Exempt
  Logan, UT 84321 $75,000/year
  435-555-1110 Start Date: 10/1/2016
  Job title: President/Owner SSN: 505-33-1775
     
01-Peppi Sylvia Peppinico Married, 7 withholding allowances
  291 Antioch Road Exempt
  Logan, UT 84321 $43,500/year
  435-555-2244 Start Date: 10/1/2016
  Job title: Craftsman SSN: 047-55-9951
     
01-Varde Stevon Varden Married, 2 withholding allowances
  333 Justin Drive Nonexempt
  Logan, UT 84321 $42,000/year
  435-555-9981 Start Date: 10/1/2016
  Job title: Craftsman SSN: 022-66-1131
     
02-Hisso Leonard Hissop Single, 4 withholding allowances
  531 5th Street Nonexempt
  Logan, UT 84321 $49,500/year
  435-555-5858 Start Date: 10/1/2016
  Job title: Purchasing/Shipping SSN: 311-22-6698
     
00-Succe Student F Success Single, 1 withholding allowance
  1650 South Street Nonexempt
  Logan, UT 84321 $36,000/year
  435-556-1211 Start Date: 10/1/2016
  Job title: Accounting Clerk SSN: 555-55-5555
     

 

If you have submitted Part 1 already, it is recommended that you access your submission while attempting Part 2, as you will need the information from Part 1 in order to complete all applicable tax forms.

 

For additional instructions on how to navigate and work through through Part 2 of this project, please download the student project guide here.

rev: 01_11_2017_QC_CS-74391

Required:

 

3. Complete Utah Forms TC-941 and 33H for the remittance of quarterly state taxes.

 

 

 

 

 

 

 

 

Question 6)

 

Required information

[The following information applies to the questions displayed below.]

 

Wayland Custom Woodworking is a firm that manufactures custom cabinets and woodwork for business and residential customers. Students will have the opportunity to establish payroll records and to complete a month of payroll information for Wayland. Wayland Custom Woodworking is located at 1716 Nichol Street, Logan, Utah, 84321, phone number 435-555-9877. The owner is Mark Wayland. Wayland’s EIN is 91-7444533, and the Utah Employer Account Number is 999-9290-1. Wayland has determined it will pay their employees on a semimonthly basis. Federal income tax should be computed using the percentage method. The SUTA (UI) rate for Wayland Custom Woodworking is 2.6% on the first $32,200. The state withholding rate is 5.0% for all income levels and marital statuses.

 

For Part 2 of this project, you will use the fourth quarter payroll information that you calculated in Part 1 to complete the following tax forms for Wayland Custom Woodworking:

· U.S. Form 941

· U.S. Form 940

· Utah Form TC-941

· Utah Form 33H

· Form W-2s for all 6 employees

· Form W-3 for WCW

 

Specific instructions on how to complete each form can be found within the individual forms themselves. The employee information for Wayland has been presented again below, for convenience.

 

Employee Number Name and Address Payroll information
00-Chins Anthony Chinson Married, 1 Withholding allowance
  530 Sylvann Avenue Exempt
  Logan, UT 84321 $24,000/year + commission
  435-555-1212 Start Date: 10/1/2016
  Job title: Account Executive SSN: 511-22-3333
     
00-Wayla Mark Wayland Married, 5 withholding allowances
  1570 Lovett Street Exempt
  Logan, UT 84321 $75,000/year
  435-555-1110 Start Date: 10/1/2016
  Job title: President/Owner SSN: 505-33-1775
     
01-Peppi Sylvia Peppinico Married, 7 withholding allowances
  291 Antioch Road Exempt
  Logan, UT 84321 $43,500/year
  435-555-2244 Start Date: 10/1/2016
  Job title: Craftsman SSN: 047-55-9951
     
01-Varde Stevon Varden Married, 2 withholding allowances
  333 Justin Drive Nonexempt
  Logan, UT 84321 $42,000/year
  435-555-9981 Start Date: 10/1/2016
  Job title: Craftsman SSN: 022-66-1131
     
02-Hisso Leonard Hissop Single, 4 withholding allowances
  531 5th Street Nonexempt
  Logan, UT 84321 $49,500/year
  435-555-5858 Start Date: 10/1/2016
  Job title: Purchasing/Shipping SSN: 311-22-6698
     
00-Succe Student F Success Single, 1 withholding allowance
  1650 South Street Nonexempt
  Logan, UT 84321 $36,000/year
  435-556-1211 Start Date: 10/1/2016
  Job title: Accounting Clerk SSN: 555-55-5555
     

 

If you have submitted Part 1 already, it is recommended that you access your submission while attempting Part 2, as you will need the information from Part 1 in order to complete all applicable tax forms.

 

For additional instructions on how to navigate and work through through Part 2 of this project, please download the student project guide here.

rev: 01_11_2017_QC_CS-74391

Required:

 

4. Complete the employee W-2s and Wayland Custom Woodworking W-3 for 2016.

 

 

 

 

 

 

 

 
"Looking for a Similar Assignment? Get Expert Help at an Amazing Discount!"