Answer:
$ 5,507.47
Explanation:
There are two steps involved in solving this question ,first we need to determine the present of annuity of $31,000 receivable per year after retirement at retirement date,then use that to calculate the annual contribution:
=-pv(rate,nper,pmt,fv)
rate is the rate of interest during retirement which is 14%
nper is the period during which the $31000 would be received which is 20
pmt is the $31000 annuity per year
fv is the future worth of the annuity which is unknown
=-pv(14%,20,31000,0)=$ 205,317.05
The present value above is the future value of the retirement contributions
annual contribution=pmt(rate,nper,pv,-fv)=pmt(12%,15,0, 205317.05) =$ 5,507.47
Answer:
Inflation = 9.5%
Explanation:
Inflation can be defined as the persistent general rise in the price of goods and services in an economy at a specific period of time.
Given the following data;
Nominal interest rate = 7 percent.
Real interest rate = -2.5 percent
Real interest rate = Nominal interest rate - Inflation
Inflation = Nominal interest - Real interest rate
Inflation = 7 - (-2.5)
Inflation = 9.5%
Answer:
Net income under absorption costing is $240,000
Explanation:
Sales (825*$1075) $886,875
less variable costs
Variable production cost($375*825) (309,375)
selling and admin. expense ($95,000)
Contribution margin $482,500
less fixed costs:
fixed production cost ($107,500)
selling and admin. expense ($135,000)
Net income $240,000
Net income under absorption was $25,000 more than the net income under the absorption costing, the difference is analyzed below:
Fixed product costs (1075-825)*$100=$25,000
That is the fixed production costs added to closing inventory under absorption method which was expensed under variable costing method
Answer:
The effect of this error on 2003 ending working capital is that it overstated the ending 2003 working capital.
The error does not have effect on the 2004 ending retained earnings balance.
Explanation:
Let the amount of the commission expense be xxxx.
At the end of 2003, the journal entries should have been as follows:
Debit Commission expense for xxxx
Credie Commission payable for xxxx
Also, we have:
Working capital = Current assets – Current liabilities ………… (1)
From equation (1), current liabilities are understated because commission payable which was not recorded is an item under current liabilities. Since the current liabilities are understated, that indicates that the working capital in equation is overstated. Therefore, the effect of this error on 2003 ending working capital is that it overstated the ending 2003 working capital.
When the 2003 commission expense in the entries above was paid in 2004, it would have been recognized as an expense. This made the error to counterbalance. This implies that the 2004 ending retained earnings balance is still correct despite that there are errors in the earnings of the two years. Therefore, the error does not have effect on the 2004 ending retained earnings balance.
Answer:
Correct option is (B)
Explanation:
Given:
Beginning capital = $80,000
Net income = $35,000
Drawings = $18,000
Net income is added to opening capital and deduct drawings to arrive at capital balance at the end.
Capital at the end of the year = opening capital + net income - drawings
= 80,000 + 35,000 - 18,000
= $97,000
