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kirill115 [55]
2 years ago
12

What is the present value of a perpetuity that pays you annual, end-of-year payments of $950.00? Use a nominal rate (monthly com

pounding) of 7.75%. (Hint: use EAR).
Business
1 answer:
BARSIC [14]2 years ago
6 0

Answer:

Present value of perpetuity is $12,242.27

Explanation:

Nominal rate is compounded monthly so the effected rate will be different due to monthly compounding effect.

Effective annual rate is calculated as follows

EAR = [ ( 1 + r )^n ] - 1

EAR = [ ( 1 + 0.0775/12 )^12 ] - 1

EAR = [ ( 1.0775 )^12 ] - 1

EAR = 7.76%

Present value of perpetuity = Cash flow / discount rate

Present value of perpetuity = $950 / 7.76%

Present value of perpetuity = $950 / 0.0776

Present value of perpetuity = 12,242.27

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Johnson Company calculates its allowance for uncollectible accounts as 10% of its ending balance in gross accounts receivable. T
Margaret [11]

Answer:

<em>Incomplete question is "2. What journal entry should Johnson record to recognize bad debt expense for 2021? 3. Assume Johnson made no other adjustment of the allowance for uncollectible accounts during 2021. Determine the amount of accounts receivable written off during 2021 4. If Johnson instead used the direct write-off method, what would bad debt expense be for 2021?"</em>

1. Gross accounts Receivable = Allowance Account balance at beginning / 10%

= $30,000 / 10%

= $300,000

2.     Year   Account Title                              Debit     Credit

       2021  Bad debt expense                   $105,000

                  ($500,000*10% + $55,000)  

                         To Allowance for Doubtful Accounts   $105,000

3.  Accounts receivable written off = Beginning balance of Allowance Account - Ending Balance of Allowance account

= $30,000 - (- $50,000)

= $30,000 + $50,000

= $80,000

4. Bad debt expense for 2021 (direct write off method) = Amount written off = $80,000

4 0
2 years ago
The employer amount of FICA taxes that Red Mountain is required to pay is equal to the amount that it withholds from its employe
kolezko [41]

Answer:

$189,000

Explanation:

The computation of total expense with regards to this payroll is shown below:-

Total expense = Salaries and wages earned by employees + Employer's portion of FICA taxes

= $180,000 + $9,000

= $189,000

Therefore for computing the total expenses with regards to this payroll we simply applied the above formula and we ignore all other values as they are not relevant.

5 0
3 years ago
Last year Lawn Corporation reported sales of $115,000 on its income statement. During the year, accounts receivable decreased by
julia-pushkina [17]

Answer:

$125,000

Explanation:

Particulars                                                     Amount

Sales revenue                                            $115,000

Add: Accounts receivable decrease        <u>$10,000</u>

Cash Receipt from customers                 <u>$125,000</u>

The sales revenue adjusted to a cash basis for the year is $125,000.

4 0
2 years ago
If your credit reports show different scores, what should you do?
agasfer [191]
Contact your teacher
3 0
3 years ago
Read 2 more answers
Power Pumps produces a variety of commercial sump pumps. One of their models—Mighty Mo—is produced in a small plant in Missouri.
mojhsa [17]

Answer:

1000

Explanation:

The economic order quantity is given by the formula = Square root of [ (2 * D * S ) / (H) ]

D = Annual Demand = 2000*6=12000 numbers (six rotor for each pump)

S = Unit Order Cost = $ 250 / order

H = Inventory Holding Cost = 10% of Unit Cost = 10% of 60 = $ 6

The economic order quantity is given by the formula = Square root of [ (2 * D * S ) / (H) ]

Economic Order Quantiity = Squareroot of { (2 * 12000 * 250) / (6) }

Economic Order Quantiity = Squareroot of { 1,000,000 }

Economic Order Quantiity = 1000 numbers.

4 0
3 years ago
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