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barxatty [35]
3 years ago
7

Which of the following are characteristics of a perpetuity? A. A perpetuity is a stream of regularly timed, equal cash flows tha

t continues forever.B. A perpetuity is a stream of unequal cash flows.C. The value of a perpetuity cannot be determined.D. The current value of a perpetuity is based more on the discounted value of its nearer (in time) cash flows and less by the discounted value of its more distance (in the future) cash flows.
Business
1 answer:
grandymaker [24]3 years ago
8 0

Answer:

<u>A. A perpetuity is a stream of regularly timed, equal cash flows that continue forever</u>

<u>D. The current value of a perpetuity is based more on the discounted value of its nearer (in time) cash flows and less by the discounted value of its more distance (in the future) cash flows.</u>

<u>Explanation:</u>

First, we need to note that perpetuity is a term used in finance to refer to any continuous periodic payments of equal face value. In other words, the payments last forever.

Part of the characteristics of perpetuity is that the payments are of equal cash value and <em>the current value of a perpetuity is based more on the discounted value of its nearer (in time) cash flows</em> rather than by the discounted value of its more distance (in the future) cash flow.

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Use the following information to prepare a multistep income statement and a classified balance sheet for Eller Equipment Co. for
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Answer:

                                 Eller Equipment Co.

                                  Income statement

Particular                                  Amount($)  Amount ($)

Sales revenue                                                940,000

Less: Cost of good sold                                 <u>(595,000)</u>

Gross margin                                                   345,000

<u>Operating expenses</u>

Salaries expenses                         122,000  

Operating expenses                     65,000  

Warranty expenses                        9,200

Un-collectible account expenses  45,000  

Depreciation expenses                 <u>3,000</u>

Total operating expenses                                <u>(244,200)</u>

Operating income                                              100,800

<u>Non-operating expenses</u>

Interest revenue                            6,200  

Interest expenses                        (36,000)

Gain on sale of equipment            19,000  

Total non-operating items                                   <u>(10,800)</u>

Net Income                                                          <u>$90,000</u>

<u />

                                   Balance Sheet

Assets                                          Amount$

<u>Current Assets</u>                                    

Cash                                                            41,000  

Accounts receivable                  108,000

Less: Allowance for doubtful    (19,000)  89,000

accounts

Merchandise inventory                             101,000  

Interest receivable                                     3600

Prepaid rent                                                38,000  

Supplies                                                      6,500  

Notes receivable                                        <u>32,500</u>

Total current assets                                                           311,600

Property Plant and Equipment    

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Less: Accumulated depreciation <u>(66,000)</u>   177,000  

Land                                                                 <u>95,000</u>

Total property plant and equipment                                 <u>272,000</u>

Total Assets                                                                        <u>583,600</u>

Liabilities and Stockholder Equity

<u>Current liabilities</u>

Account payable                     55,000  

Unearned revenue                  47,000  

Warranties payable                  6,500  

Interest payable                        6,000  

Salaries payable                       <u>68,000 </u>

Total current liabilities                                                  182,500

<u>Long-term liabilities</u>  

Notes payable                     160,000

Total long-term liabilities                                               160,000

<u>Stockholders equity</u>

Common stock                            110,000  

Retained earning                         131,100

Total stockholders equity                                              <u>241,100</u>

Total liabilities and stockholders equity                    <u>$583,600</u>

<u>Workings</u>

Retained earning = Beginning retained earning + Net income - Dividend  

= 61,100 + 90,000 - 20,000

= 131,100

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Answer:

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