Answer: $1,021,382
Explanation:
The Consumer Price index (CPI) is an economic measure that enables us calculate inflation. It checks for a price changes in a group or basket of goods and then averages these price changes to find out how much they may have changed overtime.
A higher CPI means prices have increased.
CPI can then be used to calculate the potential values of goods in different years using another year as a base. This means that prices of goods in one year can be written in terms of prices in another year.
This can be done by Dividing the CPI in the current year by the CPI in the base year (year being expressed in terms of) and then multiplying the result by the price of the good in question.
In this case the good is the salary of $75,000.
The 2007 equivalent of a 1931 salary will therefore be,
= 75,000 * ( 207/15.2)
= $1,021,381.57
= $1,021,382
Answer: c. It could allow real wages to downwardly adjust more easily.
Explanation:
When there is modest inflation, companies in the car manufacturing industry can simply decide not to increase nominal wages. This would lead to a fall in real wages as inflation would ensure that the nominal wages are less than they were worth before.
This decrease in real wages will allow the companies in the industry to reduce labor costs in real terms and become more competitive with the foreign manufacturers.
Amount should the company record as an estimate of Bad Debt Expense is $6,200
Explanation:
Net credit sales of Kelton Inc. for the current year = $310,000
The unadjusted credit balance in Allowance for Doubtful Accounts = $525.
Kelton Inc. bad debt losses of = 2% of credit sales in prior periods.
Estimate of Bad Debt Expense = Credit Sales * Bad debit %
- Estimate of Bad Debt Expense = ($310,000 * 2) / 100
- Estimate of Bad Debt Expense = $6,200
Amount should the company record as an estimate of Bad Debt Expense = $6200