Answer:
a. The Geometric average return is 1.72%
b. The Arithmetic average return is 1.75%
c. The Dollar weighted average return is 2.61%
Explanation:
a) In order to calculate the time-weighted geometric average return we would have to calculate first the Holding period return as follows:
Holding period return = (200 - 190) / 190 = 5.263%
Hence, Geometric average return = (1 + .05263)^(1/3) - 1 = 1.72%
b) To calculate time-weighted arithmetic average return we have to make the following calculation:
Arithmetic average return = 5.263% / 3 = 1.75%
c) To calculate time-weighted arithmetic average return we would have to make the following calculation:
Dollar weighted average return=-190*3 + 200/(1+r) + 200/(1+r)^2 + 200 / (1+r)^3 = 0
= 2.61%
The answer should be “which the company’s operating income is zero”
Hope this helps!
The lender is bearing the risk on defaulting the loan
Here, there's an increase in cash and a decrease in receivables. Therefore, the journal entries will be as follows
Dr. Cash .... 85000
Cr. Receivables ..... 85000
Cash borrowed against receivables
Answer and Explanation:
Any additional cost incurred on account of improving the performance of long term asset is called capital improvement.
1. New component was purchased to improve the efficiency of the equipment.
Journal entry:
Particulars Debit Credit
Equipment $22,000
Cash $22,000
(Being component purchased for cash)
Equipment is debited as capital improvements are made.
2. In the third year, some repair expense incurred for maintaining the efficiency of equipment.
Journal entry:
Particulars Debit Credit
Repair expense $6,250
Cash $6,250
(Being repair expense incurred and paid in cash)
increase in expenses is debited and decrease in asset (cash) is credited.
3. Since repairs is improving the useful life of the equipment, it is considered capital improvement, so the same will be charged to the equipment.
Journal entry:
Particulars Debit Credit
Equipment $14,870
Cash $14,870
(Being repair expense charged to equipment)
