Explanation:
a. Present value formula:
PV= FV /(1+i)^n
FV: future value
i: interest rate
n: number of periods
-year 1: $130 to year 0 or to present value (PV):
PV=$130/(1+10%)^1
PV=$118.18
-year 2: $130 to year 0 or to present value (PV):
PV=$130/(1+10%)^2
PV=$107.43
-year 3: $130 to year 0 or to present value (PV):
PV=$130/(1+10%)^3
PV=$97.67
The sum of the three cash inflows: $118.18+$107.43+$97.67=$323.28
b. The future valur formula is:
VF=VP(1+i)^n
The future value of $323.28
VF= $323.28(1+10%)^3
VF= $430.28
c. Compound interest formula:
Final Capital (FC)= Initial Capital (IC)*[(1+interest(i))]^(number of periods(n))
-Year 2(because at the end of year 1 you received the first $130):
FC= $130*(1+10%)^1
FC=$143
At the end of Year 2: $143+$130=$273
-Year 3
FC= $273*(1+10%)^1
FC= $300.30
At the end of Year 3: $300.30+$130= $430.30
The final bank balance is the same as the answer in (b) because the compound interest formula that banks use is the same as the future value formula of cash flows.
$5000 is the contribution margin. The contribution margin is the portion of a product's sales revenue that is not consumed by variable costs and is used to pay the firm's fixed expenses. The concept of contribution margin is a key component of break-even analysis.
Labor-intensive businesses with few fixed expenses tend to have low contribution margins, whereas capital-intensive, industrial businesses have more fixed costs and, thus, higher contribution margins.
It offers a means of demonstrating the potential for profit of a specific product being offered by a business and displays the percentage of sales that goes toward paying the business' fixed costs. Profit is the amount that remains after fixed expenses have been paid.
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Answer:
at the end
Explanation:
Adjusting entries are made at the end of an accounting period after a trial balance is prepared to adjust the revenues and expenses for the period in which they occurred.
Answer:
The entries are as follows
To record estimated returns on Sales
Debit: Sales Refund Payable Account $131,400
Credit: Accounts Receivables $131,400
To record estimated Cost of Sales returns
Debit: Inventory Returns Estimated Account $77,700
Credit: Inventory on Sales on Returns $77,700
Explanation:
To derive the figure for Sales Refund payable for the year
6% of $2,190,000
= 
= $131,400
To derive the figure for Inventory cost on Sales Refund payable for the year
6% of $1,295,000
= 
= $77,700
<span>A life or health insurance policy is owned by an employee, but the premiums are paid by the employer: o The premiums are treated as taxable income to the employee. o The employer may deduct the premiums against business income as long as the premiums are a reasonable business expense.</span>
