Will shoprite manager makes informed decision
1 answer:
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Solution:
a. It is a capital lease to Jensen, because the leasing period is more than 75% of the economic existence of the rented asset. The leasing duration is 78% (7-9) of the economic life of the commodity. That is a capital lease to Glaus, since the collectibility of the lease fees is fairly stable, there are no significant surprises regarding the expenses remaining to be borne by the lessor, so there is a lea. If the market valuation ($700,000) of the property equals the expense of the lessor ($525,000), the contract is a sale-type deal.
b. Calculation of annual rental payment:
= $121,130
**Present value of $1 at 10% for 7 periods.
**Present value of an annuity due at 10% for 7 periods
c. Computation of present value of minimum lease payments:
PV of annual payments: $121,130 X 5.23054 =
PV of guaranteed residual value:
$50,000 X 0.48166 = 24,083
**Present value of an annuity due at 11% for 7 periods.
**Present value of $1 at 11% for 7 periods
d. 1/1/14 Leased Equipment................................681,741
Lease Liability...............................681,741
Lease Liability.......................................121,130
Cash...............................................121,130
12/31/14 Depreciation Expense.......................... 83,106
Accumulated Depreciation—Capital Leases
($681,741 – $100,000) ÷ 7 ..........83,106
Interest Expense................................... 61,667
Interest Payable ($681,741 – $121,130) X .11......61,667
1/1/15 Lease Liability....................................... 59,463
Interest Payable.................................... 61,667
Cash...............................................121,130
12/31/15 Depreciation Expense.......................... 83,106
Accumulated Depreciation - Capital Leases..........................83,106
Interest Expense................................... 55,126
e) 1/1/14 Lease Receivable..................................700,000
Cost of Goods Sold..............................525,000
Sales Revenue...............................700,000
Inventory........................................525,000
Cash.......................................................121,130
Lease Receivable..........................121,130
12/31/14 Interest Receivable............................... 57,887
Interest Revenue [($700,000 – $121,130) X .10]....57,887
1/1/15 Cash.......................................................121,130
Lease Receivable..........................63,243
Interest Receivable.......................57,8871
2/31/15 Interest Receivable............................... 51,563
Interest Revenue
($700,000 – $121,130 - $63,243) X .10...............................51,5635
Answer:
$84.86
Explanation:
I'm guessing they want you to find the standard deviation.
It would be easy to do this in a statistical calculator, but I suspect they want you to do it by hand.
Here are the steps for a manual calculation.
1. Count the elements in the data set
N = 8
2 Calculate the sum of the data set
3. Calculate the mean
4. Calculate the standard deviation
(a) Subtract the mean from each data point
(b) Square the differences
(c) Add the squares of the differences
(d) Divide the sum by the number of terms
(e)Take the square root of the result
We can set up a table to organize the calculations.