What do you mean? I\' ve provided you all information, including the table. See
ID: 1133113 • Letter: W
Question
What do you mean? I' ve provided you all information, including the table. See below.
1. Record the following transactions in the Balance of Payments table on the next page.
(a) A U.S. computer manufacturer purchases a $50 hard disk from a Malaysian company. The U.S. manufacturer pays the Malaysian company by writing a check on its bank account in Malaysia.
(b) A German owner of Apple stock receives $1,000 in dividend payments. Apple deposits these payments into a New York (U.S.) bank account owned by the German resident.
(c) A Canadian firm purchases $6,000 worth of Florida (U.S.) orange juice, paying the orange juice company by transferring funds into its bank account in Canada.
(d) A U.S. insurance company buys corporate bonds worth $50,000 issued by a Mexican firm, paying the Mexican firm by transferring funds into a bank account in the U.S.
(e) A U.S. firm provides $2,000 worth of shipping services to a South African client, who pays the shipping firm by writing a check from a Bank of America account in the U.S.
(f) A U.S. resident sends a piece of furniture worth $400 as a gift to a family member in Turkey.
Value (S) 50 -1000 -6000 50000 2000 400 U.S. BoP Description -IM -IMFS -IM -IM -IM -UToUT CURRENT ACCOUNT CA CAPITAL ACCOUNT KA +50 +1000 +6000 +50000 +2000 +400 +EX +EX FINANCIAL ACCOUNT FA Calculate the Trade Balance Calculate the balance on the Current Account Calculate the balance on the Capital Account Calculate the balance on the Financial Account Calculate the overall Balance of Payments 9050Explanation / Answer
(a) A U.S. computer manufacturer purchases a $50 hard disk from a Malaysian company. The U.S. manufacturer pays the Malaysian company by writing a check on its bank account in Malaysia.
This is debited to US Current account as money goes out. Hence $-50
(b) A German owner of Apple stock receives $1,000 in dividend payments. Apple deposits these payments into a New York (U.S.) bank account owned by the German resident.
This is debited to current account(transfers) as this money can go out any time. Hence $-1000
(c) A Canadian firm purchases $6,000 worth of Florida (U.S.) orange juice, paying the orange juice company by transferring funds into its bank account in Canada.
Similar to above, hence $+6000.(as it is export from USA)
Therefore trade balance = -50+6000=$5950(Surplus of $5950 on current account.
(d) A U.S. insurance company buys corporate bonds worth $50,000 issued by a Mexican firm, paying the Mexican firm by transferring funds into a bank account in the U.S.
This is debited to finacial account as this is loan to Mexican firm. Therefore $-50,000
(e) A U.S. firm provides $2,000 worth of shipping services to a South African client, who pays the shipping firm by writing a check from a Bank of America account in the U.S.
This is credited to services account under current account. hence $+2000
Balance on current account = -50-1000-400+2000+6000= surplus of $6550
(f) A U.S. resident sends a piece of furniture worth $400 as a gift to a family member in Turkey.
This is debited under transfers in Current account, therefore, $-400
Total balance on payment(Current, capital and financial accoount included) = -50000+6550=deficit of 43450.(in dollars)
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