Answer:
1. Ordinary maintenance and repairs.
a) Adding refrigerant to an air conditioning system.
b) Fixing damage due to a car accident.
e) Exterior and interior painting.
2. Assets improvements
c) Installing a new air conditioning system in an old building.
d) Paving a new parking lot.
h) New landscaping.
3. Extra ordinary repairs.
f) Overhauling an engine in a large truck.
g) Resurfacing a pool in an apartment building.
Explanation:
Assets improvements: this are improvements carried out on an assets for comfort and ease of use of such assets. Example is the installation of air conditioning unit in an old building.
Ordinary maintenance and repairs: this are maintenance and repairs carried out on machines, equipment and tools to bring them to the required working conditions or standard.
Extraordinary repairs: unlike ordinary maintenance and repairs this requires overhauling or changing of heavy components parts of a machine or equipment.
g The aggregate supply curve shifts A. rightward if the money wage rate falls. B. leftward if the aggregate demand curve shifts leftward. C. rightward if potential GDP decreases. D. leftward if potential GDP increases. E. rightward if the money wage rate rises.
Answer:
The correct option to the question above is option A "rightward if the money wage rate falls."
Explanation:
The aggregate supply curve is a graphical illustration of how the total quantity of goods and services is available for a given price and time.
When the aggregate supply curve shifts to the right, it increases. While, when the aggregate supply curve shifts to the left, it decreases.
An increase in the aggregate supply curve shows a fall in price, which makes a high price level resulting in a greater supply of real GDP.
Money wages is the amount of money paid in wages. Money wages is indirectly proportional to real wages. The aggregate supply curve decreases if the money wage rate increases and the aggregate supply curve increases when the money wage rate falls.
Aggregate supply is affected by GDP. When A GDP decreases, it also decreases aggregate supply.
On January 1, 2014, Pert Company purchased 85% of the outstanding common stock of Sales Company for $350,000. On that date. Sales Company's stockholders' equity consisted of common stock, $100,000; other contributed capital, $40,000; and retained earnings, $140,000. Pert Company paid more than the book value of net assets acquired because the recorded cost of Sales Company's land was significantly less than its fair value.
During 2014 Sales Company earned $148,000 and declared and paid a $50,000 dividend. Pert Company used the partial equity method to record its investment in Sales Company.
Required:
1. Prepare the investment-related entries on Pert Company's books for 2014.
2. Prepare the working paper eliminating entries for a working paper on December 31, 2014.
Answer and Explanation:
The journal entries are shown below:
a. For investment related entries
Investment in sales Dr $350,000
To cash $350,000
(being the investment is recorded)
Investment in sales Dr ($148,000 × 85%) $125,800
To Subsidiary income $125,800
(Being the investment in sales is recorded)
Cash Dr $42,500
To Dividend income $42,500
(Being the dividend income is recorded)
b. For work paper eliminating entries
Equity income ($148,000 × 85%) $125,800
To Dividend $42,500
To investment in sales $83,300
(Being the equity income is recorded)
Common stock Dr $100,000
Other contributed capital Dr $40,000
Retained earnings Dr $140,000
Difference between implied and book value Dr $131,765 (Bal figure)
To Investment in S Company $350,000
To Non controlling interest $61,765 ($350,000 ÷ 0.85 × 0.15)
(Being the consolidated items are recorded)
Land Dr $131,765
To Difference between implied and book value Dr $131,765
(Being the land is recorded)
Working note:
Particulars Parent share Non-conrolling interest Total value
Purchase price
& implied value $350,000 $61,765 $411,765
Less:
Book value -$238,000 -$42,000 -$280,000
Difference
amount $112,000 $19,765 $131,765
Less:
Land value -$112,000 -$19,765 -$131,765
Balance $0 $0 $0
Pendleton Company, a merchandising company, is developing its master budget for 2015. The income statement for 2014 is as follows:________.
Pendleton Company
Income Statement
For Year Ending December 31, 2014
Gross sales $2,000,000
Less: Estimated uncollectible accounts (40,000)
Net sales 1,960,000
Cost of goods sold (1,100,000)
Gross profit 860,000
Operating expenses (including $25,000
depreciation) (500,000)
Net income $360,000
The following are management's goals and forecasts for 2015:________.
1. Selling prices will increase by 6 percent, and sales volume will increase by 4 percent.
2. The cost of merchandise will increase by 3 percent.
3. All operating expenses are fixed and are paid in the month incurred. Price increases for operating expenses will be 10 percent. The company uses straight-line depreciation.
4. The estimated uncollectibles are 2 percent of budgeted sales.
Answer and Explanation:
The Preparation of budgeted functional income statement for 2015 is shown below:-
Pendleton Company
Budgeted functional income statement
For the year ended 2015
Particulars Amount
Sales revenue $2,204,800
($2,000,000 × 106% × 104%)
Less:
Estimated uncollectible accounts at 2% $44,096
Net sales revenue $2,160,704
Less: Cost of goods sold $1,178,320
($1,100,000 × 103% × 104%)
Gross Profit $982,384
Less: Operating expense $575,000
($500,000 + 10%) + $25,000
Net income $407,384
We simply deduct all expenses from the sales revenue so that the net income could come
The following selected transactions relate to cash collections for a firm that maintains a $100 change fund at all times. Present entries to record the transactions for each of the two days of cash receipts from sales.
(a) Actual cash in cash register, $5,412.36; cash receipts per cash register tally, $5,413.07.
(b) Actual cash in cash register, $3,712.95; cash receipts per cash register tally, $3,712.16.
What will be an ideal response?
Answer:
a, Journal Entries to record transactions
Account Titles Debit Credit
Cash $5,412.36
Cash Short and Over $0.71
($5,413.07 - $5,412.36)
Sales $5,413.07
The actual cash in cash register is debited to cash account and cash receipts per cash register tally is credited to sales account and the balancing figure is debited or credited to Cash short and over account.
b. Journal Entries to record transactions
Account Titles Debit Credit
Cash $3,712.95
Cash Short and Over $0.79
(3,712.95 - 3,712.16)
Sales $3,712.16
The Destin Company has one temporary difference of $160 caused by accelerated tax depreciation on 12/31/14. The difference will reverse evenly over the next four years. Tax Rates are 20% in 2014, 30% in 2015, and 40% in 2016 and beyond. Pretax book income in 2014 is $1,000. What is 2014 Income Tax Expense?
Answer: = $168
Explanation:
Destin Company had a $1,000 income in 2014 but also a temporary difference of $160.
This means that they were taxed on the income less the temporary difference.
= 1,000 - 160
= $840
Tax Expense = 840 * 20%
= $168
Bogart Company is considering two alternatives. Alternative A will have revenues of $147,400 and costs of $103,400. Alternative B will have revenues of $188,200 and costs of $121,600. Compare Alternative A to Alternative B showing incremental revenues, costs, and net income.
Answer:
B is better than A
Explanation:
Here, we want to compare “A” to “B”. It means if B’s amount is higher than A’s amount, it should be positive; If B’s amount is lower than A’s amount, it should be negative.
Net income for each alternative = Revenues – Costs
Since the net income is positive, B is better than A.
Please check attachment for for actual tabular calculations
Sudoku Company issues 7,000 shares of $7 par value common stock in exchange for land and a building. The land is valued at $45,000 and the building at $85,000. Prepare the journal entry to record issuance of the stock in exchange for the land and building.
Answer:
The journal entry to record this exchange is :
Land $45,000 (debit)
Buildings $85,000 (debit)
Common Stocks $49,000 (credit)
Share Premium $81,000 (credit)
Explanation:
The price of Common Stock is equivalent to the price required to settle the Market Cost of Land and Buildings.
Also note that the Common Stocks have a par vale of $7, this means that any amount paid in excess of the par value is accounted in the Share Premium Reserve.
The journal entry to record this exchange is :
Land $45,000 (debit)
Buildings $85,000 (debit)
Common Stocks $49,000 (credit)
Share Premium $81,000 (credit)
Land $45,000
Building $85,000
To Common stock $49,000 (7,000 shares × $7)
To Premium on issue of common stock 81,000
(Being recording of the issuance of the stock in exchange for the land and building)
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1. Do you think that punishments deter crime? Why or why not? Do you think there is a better way to reduce crime than punishment?
Explanation:
In my honest opinion i don not think punishment deter crime, but it does to a great extent reduce the rate of crime, if actually punishment deter crime, then there will not be offenders anymore.
Another possible way to reduce crime than punishment is to place a fine for offender to pay and also place offenders on community service, in this way offenders get to move freely in the society while they get to pay a huge sum for the offence they have committed
Answer:
I really believe that punishments reduce crime, if someone has done something wrong they have to be punished because, if not, how are they going to know that what they have done is wrong? So, in this way, some criminals stop committing crimes because they see that what they have done is not good and has consequences.
Punishment is known to be a bad stimulus to reduce crime; instead, education has been much more effective, because in this way criminals learn what they can do to improve their lives.
Explanation:
To reduce product development time, Caterpillar connected its engineering and manufacturing divisions with its active suppliers, distributors, overseas factories, and customers, through ________.
Answer: an extranet
Explanation:
An extranet is a private network that is controlled that gives access to vendors, suppliers, partners, vendors or a group of customers that are authorized.
Therefore, to reduce product development time, Caterpillar connected its engineering and manufacturing divisions with its active suppliers, distributors, overseas factories, and customers, through an extranet.
At July 31, Farmer Company has this bank information: cash balance per bank $8,344; outstanding checks $804; deposits in transit $1,383; and a bank service charge $58.
Determine the adjusted cash balance per bank at July 31.
The adjusted cash balance per bank at July 31:___________.
Answer:
The adjusted balance per bank is $8923
Explanation:
Adjusted cash balance per bank
Cash balance per bank (unadjusted) 8344
(+) Deposits in transit 1383
(-) Outstanding checks (804)
Cash balance per bank (adjusted) 8923
The adjusted cash balance per bank is calculated by adjusting the transactions that do not appear on the current bank statement.
The deposits in transit is the amount of cash deposited in the bank, that will increase the bank balance, which is still in process and has not been added to the bank account as of now. Thus, we will add this amount to calculate the adjusted bank balance.
The outstanding checks amount is the amount of checks that have been issued by the business but which are yet to be presented by the recipients of checks and will result in a reduction in the bank balance. Thus, we deduct them to calculate the adjusted balance.
The bank charge is deducted by the bank itself thus we assume that it has already been deducted. So, no adjustment is made for this.
A company earned $7,605 in net income for October. Its net sales for October were $19,500. Its profit margin is:
Answer: 39%
Explanation:
From the question, we are informed that company earned $7,605 in net income for October and that its net sales for October were $19,500.
To calculate its profit margin, we have to divide the net income by the net sales. This will be:
= 7605/19500
= 0.39
= 39%
True or False: Firms operating in more price-competitive industries, or exhibiting lower levels of market power, generally exhibit lower levels of business risk, all other things being equal. This statement is: True False
Answer:
The statement is false
Explanation:
Determining the profitability depends on market power. At a higher market power, the level of profitability will be high.
Conversely, a company operating in a system where its market power is low which results into inability to compete with other companies will cause a low probability.
Bryant Co. has $2.7 million of debt, $1 million of preferred stock, and $2.1 million of common equity. What would be its weight on preferred stock
Answer:
0.172
Explanation:
The computation of the weight on the preferred stock is shown below:
Weight on preferred stock is
= Preferred stock ÷(Debt + preferred stock + common equity)
= $1 million ÷ ($2.7 million + $1 million + $2.1 million)
= $1 million ÷ $5.8 million
= 0.172
By applying the above formula we can easily determine the weight on preferred stock
Use the following information for Jett Co. to answer the following question: 2015 2014 Sales 1,200 1,000 COGS 850 700 Operating Expenses 200 200 Income Taxes 30 35 Jett Co.'s average tax rates for 2015 and 2014 are: A. 15.5% and 10.0% B. 20.0% and 35.0% C. 25.8% and 35.4%. D. 31.4% and 36.8%.
Answer:
B. 20.0% and 35.0%
Explanation:
Jett Co.'s Average tax rates for 2015 = Income taxes paid / Taxable income
When, Taxable Income = Sales - Cost of goods sold - Operating expenses
= $1,200 - $850 - $200
= $150
Hence, Jett Co.'s Average tax rates for 2015 = $30 / $150
= 20%
Jett Co.'s Average tax rates for 2014 = Income taxes paid / Taxable income
When Taxable Income = Sales - Cost of goods sold - Operating expenses
= $1,000 - $700 - $200
= $100
Hence, Jett Co.'s Average tax rates for 2014 = $35 / $100
= 35%
A break-even analysis includes operating expenses and total monthly debt payments,
plus
school costs
gross profit margin.
Onet profit margin
zero term margin.
Answer: Gross profit margin.
Explanation:
Break-Even Analysis enables a business to know how much cash it has under given situations by helping it know how much sales it needs in order to have a certain amount of cash.
It is calculated by the formula;
(Operating Expenses + Annual Debt Service)/Gross Profit Margin = Break-Even Sales
Operating Expenses in this equation is net of Depreciation as depreciation is a non-cash expense.
Lincoln Park Co. has a bond outstanding with a coupon rate of 5.66 percent and semiannual payments. The yield to maturity is 6.3 percent and the bond matures in 16 years. What is the market price if the bond has a par value of $2,000?
Answer:
Market price of Bond = $1872.135629 rounded off to $1872.14
Explanation:
To calculate the price of the bond, we need to first calculate the coupon payment per period. We assume that the interest rate provided is stated in annual terms. As the bond is a semi annual bond, the coupon payment, number of periods and semi annual YTM will be,
Coupon Payment (C) = 2000 * 0.0566 * 1/2 = $56.6
Total periods (n)= 16 * 2 = 32
r = 6.3% * 1/2 = 3.15% or 0.0315
The formula to calculate the price of the bonds today is attached.
Bond Price = 56.6 * [( 1 - (1+0.0315)^-32) / 0.0315] + 2000 / (1+0.0315)^32
Bond Price = $1872.135629 rounded off to $1872.14
Logan and Johnathan exchange land, and the exchange qualifies as like kind under § 1031. Because Logan's land (adjusted basis of $193,000) is worth $231,600 and Johnathan's land has a fair market value of $183,350, Johnathan also gives Logan cash of $48,250. a. Logan's recognized gain is $ . b. Assume that Johnathan's land is worth $208,440 and he gives Logan $23,160 cash. Logan's recognized gain is $ .
Answer:
a. Logan's recognized gain is $38,600
b. Logan's recognized gain is $23,160
Explanation:
a. If the worth of the land for Jonathan is $183,350, then the gain recognized by Logan would be;
the lower of the realized gain between the amount realized of $231,600 - adjusted basis of $193,000 = $38,600
or the fair market worth of the received boot i.e $48,250.
Therefore, Logan's recognized gain is $38,600
b. Suppose Jonathan's land is worth, $208,440, then we can calculate Logan's recognized gain to be ;
the lower of the realized gain I.e amount realized of $231,600 - adjusted basis $193,00 = $38,600
or the fair market value of the received boot I.e $23,160 .
Therefore, Logan's recognized gain is $23,160
The balanced scorecard approach relies not only on financial performance measures, but includes customers, internal business processes, and organizational learning and growth.
a. True
b. False
You experiment by offering free warranties for your product in market A but not in market B. Sales in A rise from 240 to 360 units per week while sales in B rise from 410 to 430. The Difference-in-difference estimate of the effect of the free warranty is:
Answer:
Difference in difference estimate = 50 - 5% = 45 %
Explanation:
a) Data and Calculations:
Market A Market B
Sales 240 410
Sales rise 360 430
Rise difference 120 20
Percentage of rise 50% 5%
120/240 x 100 = 50%
20/41 x 100 = 4.878% or 5%
Therefore, the Difference in difference estimate = 50 - 5% = 45 %
One can then say that the free warranties in market A brought about a difference in difference of 45% in Market A when compared to the no warranties in Market B. This can be seen from the presented data. Sales in A rose from 240 units to 360 units, an increase of 120 units or 50%. Sales in market B only rose from 410 to 430, an increase of 20 units or 5%. This difference in difference estimator shows the effect of the free warranty on market A and market B. This means that the firm could do better by introducing the free warranties for its product in market B, all things being equal.
What would you pay for a bond that pays an annual coupon of $70, paid semiannually, par value, matures in 6 years, and has a yield to maturity of 8%
Answer:
Price per bond is $953.77
Explanation:
The price to be paid for the bond can be computed using pv excel function as below:
=-pv(rate,nper,pmt,fv)
rate is the yield to maturity of 8%
nper is number of coupons that the bond would pay i.e 6 annual coupons in 6 years
pmt is the annual coupon of $70
fv is the face value of $1000 by default
=-pv(8%,6,70,1000)=$953.77
Galvatron Metals has a bond outstanding with a coupon rate of 6.1 percent and semiannual payments. The bond currently sells for $947 and matures in 23 years. The par value is $1,000 and the company's tax rate is 40 percent. What is the company's aftertax cost of debt
The following is information for Palmer Co.:
2017 2016 2015
Cost of goods sold $643,825 $426,650 $391,300
Ending inventory 97,400 87,750 92,500
Required:
(a) Use the above information to compute inventory turnover for 2016, and its days' sales in inventory at December 31, 2016.
Numerator / Denominator = Ratio
Inventory turnover $426,650 / $90,125 = 4.7 times
Days' sales in inventory ?
(b) Use the above information to compute inventory turnover for 2017, and its days' sales in inventory at December 31, 2017.
Numerator / Denominator = Ratio
Inventory turnover $643,825 / $92,575 = 7.0times
Days' sales in inventory ?
Answer:
a.
i. 4.7 times
ii. 77.1 days
b
i. 7 times
ii. 52.1 days
Explanation:
Inventory turnover = cost of goods sold / average inventory
average inventory for 2016 = ( 87,750 + 92,500 ) / 2 = $90,125
Inventory turnover $426,650 / $90,125 = 4.7 times
Days' sales in inventory = 365 / inventory turnover = 77.1 days
for 2017
inventory turnover = cost of goods sold / average inventory
average inventory for 2017 = ( 97,400 + 87,750 ) / 2 = $92,575
Inventory turnover $643,825 / $92,575 = 7.0 times
Days' sales in inventory = 365 / inventory turnover = 52.1 days
Suppose that borrowing is restricted so that the zero-beta version of the CAPM holds. The expected return on the market portfolio is 17%, and on the zero-beta portfolio it is 8%. What is the expected return on a portfolio with a beta of .6?
Answer:
10.4%
Explanation:
The computation of expected return on a portfolio is shown below:-
Expected return = Risk Free return + 5%Beta ( Market Return - Risk Free return)
= 5% + 0.60 × (17% - 8%)
= 5% + 5.4%
= 10.4%
Therefore for computing the expected return on a portfolio with a beta of .6 we simply applied the above formula.
The market return less risk free return is known as market risk premium
When a country produces on its production possibilities curve, then this country's unemployment is expected to be at one of its lowest rates, however, prices in this country are not expected to be relatively low.
a. True
b. False
Answer:
TRUE
Explanation:
the production possibility curve shoes the number of goods that can be produced in an economy when its resources are fully employed.
if a country produces on its production possibilities curve, it means that its resources are fully employed and so unemployment would be at its lowest.
Scenario 9-1 For a small country called Boxland, the equation of the domestic demand curve for cardboard is Q D = 200 − 2P , where Q D represents the domestic quantity of cardboard demanded, in tons, and P represents the price of a ton of cardboard. For Boxland, the equation of the domestic supply curve for cardboard is Q S = -60 + 3P , where Q S represents the domestic quantity of cardboard supplied, in tons, and P again represents the price of a ton of cardboard. Refer to Scenario 9-1. Suppose the world price of cardboard is $45. Then, relative to the no-trade situation, international trade in cardboard a. benefits Boxlandian consumers by $672 and harms Boxlandian producers by $598.50. b. benefits Boxlandian consumers by $721 and harms Boxlandian producers by $598.50. c. harms Boxlandian consumers by $336 and harms Boxlandian producers by $525.00. d. benefits Boxlandian consumers by $721 and harms Boxlandian producers by $525.00.
Answer: a. benefits Boxlandian consumers by $672 and harms Boxlandian producers by $598.50.
Explanation:
Equilibrium price will be at level where quantity demanded equals quantity supplied.
200 − 2P = -60 + 3P
200+60 = 5P
5P = 260
P = $52
Equilibrium Quantity Demanded = 200 − 2P = 200 - 2 * 52 = 96 units
In a no-trade situation the demand in Boxland is 96 units at a price of $52. If they were to buy at the world price of $45, they would benefit;
= (96 * 52) - (96 * 45)
= 4,992 - 4,320
= $672
Producers however would produce the following at a price of $45;
Q S = -60 + 3P
= -60 + 3(45)
= 75 units
They would be supplying less units and be hurt.
Joe wants to start an SEP-IRA that will have $460,000 in it when he retires in 15 years. How much should he invest semiannually in his IRA to do this if the interest is 15% compounded semiannually?
Answer:
$4,448.77
Explanation:
time until retirement = 15 years x 2 semiannual contributions = 30 payments
interest rate =15% / 2 = 7.5%
future value = $460,000
we can use the future value of an annuity formula:
future value = payment x annuity factor
FV annuity factor 7.5%, 30 periods = 103.3994
payment = future value / annuity factor
payment = $460,000 / 103.3994 = $4,448.77
The amount that should be invested is $4,448.77.
Calculation of the amount:Since
time until retirement = 15 years x 2
= 30 payments
And,
interest rate =15% / 2 = 7.5%
Also,
future value = $460,000
Now we can use the future value of an annuity formula:
Here,
future value = payment x annuity factor
where,
FV annuity factor 7.5%, 30 periods = 103.3994
So,
payment = future value / annuity factor
= $460,000 / 103.3994
= $4,448.77
hence, The amount that should be invested is $4,448.77.
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Kant Corporation retires its $100,000 face value bonds at 102 on January 1, following the payment of interest. The carrying value of the bonds at the redemption date is $96,250. The entry to record the redemption will include a
Answer:
Refer to the explanation below
Explanation:
Please see the journal entry below;
Dr Bonds payable $100,000
Dr Loss on retirement of bonds
$5,750
( $102,000 + $3,750 - $100,000)
To Cash $102,00( $100,000 × 1.02)
To Discount on bonds payable
$3,750( $100,000 - $96,250)
(Being redemption that is recorded)
Because bonds payable and loss on retirement of bonds decreases the liability and increased the loss, hence were debited. Cash and discount on bonds payable were credited because it decreases the assets and increased liabilities respectively.
Oriole Leasing Company leases a new machine to Sharrer Corporation. The machine has a cost of $65,000 and fair value of $87,000. Under the 3-year, non-cancelable contract, Sharrer will receive title to the machine at the end of the lease. The machine has a 3-year useful life and no residual value. The lease was signed on January 1, 2017. Oriole expects to earn an 8% return on its investment, and this implicit rate is known by Sharrer. The annual rentals are payable on each December 31, beginning December 31, 2017.
Prepare an amortization schedule that would be suitable for both the lessor and the lessee and that covers all the years involved. (For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to 0 decimal places e.g. 5,275.)
Date
Rent Receipt/ Payment
Interest Revenue/ Expense
Reduction of Principal
Receivable/ Liability
1/1/17 $
$
$
$
12/31/17
12/31/18
12/31/19
Prepare the journal entry at commencement of the lease for Oriole. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Date
Account Titles and Explanation
Debit
Credit
1/1/17
Prepare the journal entry at commencement of the lease for Sharrer. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Date
Account Titles and Explanation
Debit
Credit
1/1/17
Prepare the journal entry at commencement of the lease for Sharrer, assuming (1) Sharrer does not know Oriole’s implicit rate (Sharrer’s incremental borrowing rate is 9%), and (2) Sharrer incurs initial directs costs of $9,500. (Credit account titles are automatically indented when amount is entered. Do not indent manually. For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to 0 decimal places e.g. 5,275.)
Date
Account Titles and Explanation
Debit
Credit
1/1/17
Answer and Explanation:
1. The Preparation of amortization table is shown below:-
Date Rent payment Interest Reduction of Liability
revenue Principal
01.01.2017 $0 $0 $0 $87,000
31.12.2017 $33.759 $6,960 $26,799 $60201
(87,000 × 8%)
31.12.2018 $33.759 $4,816 $28,943 $31,258
(60,201 × 8%)
31.12.2022 $33,759 $2,501 $31,258 $0
(32,258 × 8%)
Working note
The computation of the yearly lease amount is shown below:-
Period Table value PV at 8%
1 0.92593
2 0.85734
3 0.79383
Total 2.57710
Lease rent $33.759
($87,000 ÷ 2.5771)
2. The Journal entry is shown below:-
Lease receivable Dr, $87,000
Cost of goods sold Dr, $65,000
To Sales $87,000
To Inventory $65,000
(Being lease commenced is recorded)
3. The Journal entry is shown below:-
ROU assets Dr, (right of use) $87,000
To lease liability $87,000
(Being ROU assets recognized is recorded)
4. ROU assets Dr, (right of use) $96,500
To lease liability $87,000
To Cash $9,500
(Being ROU assets recognized of direct costs is recorded)
The purchase price of a natural gas-fired commercial boiler (capacity X) was $181,000 eight years ago. Another boiler of the same basic design, except with capacity 1.42X, is currently being considered for purchase. If it is purchased, some optional features presently costing $28,000 would be added for your application. If the cost index was 162 for this type of equipment when the capacity X boiler was purchased and is 221 now, and the applicable cost capacity factor is 0.8, what is your estimate of the purchase price for the new boiler
Answer:
$308,500.85
Explanation:
$181,000 eight years ago in real dollars was $181,000 / 162 = $111,728.40
new boiler with a 1.42X capacity x capacity factor = 1.42 x 0.8 = 1.136 (the price of the new boiler is 1.136 times the old boiler)
current price of the new boiler in real dollars = 1.136 x $111,728.40 = $126,923.46
real dollars converted to current nominal dollars = $126,923.46 x 2.21 = $280,500.85
price of the new boiler + additional optional features = $280,500.85 + $28,000 = $308,500.85
A 30 year $1,000 par 4 3/4% Treasury Bond is quoted at 95-11 - 95-15. The note pays interest on Jan 1st and Jul 1st. A customer buys 1 bond at the ask price. What is the current yield, disregarding commissions
Answer:
4.98%
Explanation:
Calculation for the current yield
First step
Since the the bond was purchased at 95 +15/32nds this means that we have to find the bond percentage.
Calculated as
Bond Percentage = 95 + 15/32nds
Bond percentage =95.46875%
Second step is to multiply the bond percentage by $1,000
95.46875% *$1,000
= $954.6875
The last step is to find the current yield
Current yield=$47.50 /$954.6875
Current yield = 4.98%
Therefore the current yield will be 4.98%