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vekshin1
3 years ago
8

Michaels plumbing purchased a used van for $3,250. the company made a down payment of $450 and agrees to 24 payments of $150 per

month. find the finance charge.
Business
1 answer:
PolarNik [594]3 years ago
7 0
<span> <span>Finance charge can be defined as the amount charged by a creditor to a debtor as borrowing fees or by a seller to a buyer for allowing the buyer to extend the payment period for a certain good/service. In this case, the original price of the car was $3,250. But since Michael's Plumbing was not able to pay the full amount at once, they made a down payment of $450 and later 24 equal installments of $150. In total, the amount paid will be (450+(150*24))= $4,050. The finance charge is what they will pay over and above the initial cash price. This is arrived at by getting the difference as follows $4,050-$3,250= $800</span></span>
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Explanation:

<u>1.  Private ownership of factors of production</u>

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3 years ago
Mike's Motors Corp. manufactures motors for dirt bikes. The company requires a minimum $30,000 cash balance at each month-end. I
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Answer:

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Cash Budget

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Cash balance                    13,000            30,000            45,998

Cash to borrow                 17,000                      0               0

Minimum cash balance $30,000          $30,000          $30,000

Explanation:

a) Data and Calculations:

Minimum cash balance = $30,000

Interest rate on borrowings = 3% per month

Beginning cash balance = $41,000

Cash Budget

                                           July             August        September

Beginning balance        $41,000          $30,000          $30,000

Cash receipts                 92,000            118,000           157,000

Total cash available    $133,000         $148,000        $187,000

Cash payments            120,000           106,900           134,400

Interest/Loan repayment                         11,100              6,602

Cash balance                  13,000            30,000            45,998

Cash to borrow               17,000                      0               0

Minimum cash balance 30,000            30,000            30,000

Loan repayment:

In August:

Interest is paid =   $510 ($17,000 * 3%)

Loan is repaid = 10,590

Total paid =        $11,100

Balance of loan unpaid = $6,410 ($17,000 - 10,590)

In September:

Interest on loan = $192 ($6,410 * 3%)

Loan repaid =     6,602 ($6,410 + 192)

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Answer:

See explanation

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Credit                  Accounts payable            $31,000

(Purchase supplies on account means liability will increase)

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Credit                   Cash                                 $2,900

(Paid cash dividends to the shareholders)

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