1. If 2003 is the base year, what is the rate of inflation in 2003 for the fruit basket question in the Self -Check Questions in the textbook? Include at least one decimal place. Do not include the percent sign. (The answer key in the textbook is incorrect. What is the correct answer?)

2. Describe at least one cost of inflation. Explain who is harmed.

3. The second column of the table below summarizes weights in the market basket for food, housing, fuel, and higher education. The third column reports the current inflation rate for this category. Data is taken from the BLS Table 2 for January 2022.

Category	Weight in the Market Basket	Current Inflation Rate
Food (home and away)	13.0%	7.9%
Housing	33.0	4.7
Gasoline	3.7	6.6
Higher Education	1.5	2.0

(a) How does your spending differ from the spending shown in the table?

(b) Based on your response to question (a), does the aggregate inflation rate over or understate your personal experience?

Transcribed Image Text:

Acco Cash Prepaid Rent Equipment Accumulated Depreciation Uncarned Revenue Notes Ple Geven, Capital Green, Withdrawal Service Reven Advertising Expense Depreciation Expense Adjusted Trial Balance Debit Credit $4,000 2,400 8.000 Rent Expense Telephone Expense 1.500 300 120 800 100 347-339 347.229 3. Based on the adjusted trial balance, close the Income Summary account and Owner's Drawings. Calculate the new balance of owner's capital. DATE Mar 31 Prepare the closing entries to close revenue and expenses: Journal ACCOUNT TITLE & EXPLANATION Service Revenue Income Summary Close sense reven Mar 31 Income Summary Telephone Expose Close expense acco Advertising Expense Depreciation Expense Rent Expe $120 600 2,000 8,100 6.200 DATE ACCOUNT TITLE & EXPLANATION Mar 31 Income Summary Geven, Catal Prepare the closing entries to close income summary and withdrawal: Mar 31 Green Capital Green, Withdrawals Journal Close Owner Withdra DEBIT CREDIT DEBIT CREDIT Acco Cash Prepaid Rent Equipment Accumulated Depreciation Uncarned Revenue Notes Ple Geven, Capital Green, Withdrawal Service Reven Advertising Expense Depreciation Expense Adjusted Trial Balance Debit Credit $4,000 2,400 8.000 Rent Expense Telephone Expense 1.500 300 120 800 100 347-339 347.229 3. Based on the adjusted trial balance, close the Income Summary account and Owner's Drawings. Calculate the new balance of owner's capital. DATE Mar 31 Prepare the closing entries to close revenue and expenses: Journal ACCOUNT TITLE & EXPLANATION Service Revenue Income Summary Close sense reven Mar 31 Income Summary Telephone Expose Close expense acco Advertising Expense Depreciation Expense Rent Expe $120 600 2,000 8,100 6.200 DATE ACCOUNT TITLE & EXPLANATION Mar 31 Income Summary Geven, Catal Prepare the closing entries to close income summary and withdrawal: Mar 31 Green Capital Green, Withdrawals Journal Close Owner Withdra DEBIT CREDIT DEBIT CREDIT

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ANSWER 1 The rate of inflation in 2003 for the fruit basket question in the Self Check Questions in ... View the full answer