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oee [108]
3 years ago
11

On January 1 of this year, Shannon Company completed the following transactions (assume a 10% annual interest rate): (FV of $1,

PV of $1, FVA of $1, and PVA of $1) (Use the appropriate factor(s) from the tables provided.)
a. Bought a delivery truck and agreed to pay $60,000 at the end of three years.
b. Rented an office building and was given the option of paying $10,000 at the end of each of the next three years or paying $28,000 immediately.
c. Established a savings account by depositing a single amount that will increase to $90,000 at the end of seven years.
d. Decided to deposit a single sum in the bank that will provide 10 equal annual year-end payments of $40,000 to a retired employee (payments starting December 31 of this year).

1. What is the cost of the truck that should be recorded at the time of purchase? (Round your answer to nearest whole dollar.)
2. Which option for the office building results in the lowest present value?
Pay in single installment or Pay in three installments?
3. What single amount must be deposited in this account on January 1 of this year? (Round your answer to nearest whole dollar.)
4. What single sum must be deposited in the bank on January 1 of this year? (Round your answer to nearest whole dollar.)
Business
1 answer:
fredd [130]3 years ago
7 0

Answer:

1. Amount to be paid at the end of three years (A) = $60,000

Rate of interest (r) = 10% = 0.10

Number of years (n) = 3 years.

Cost of truck that should be recorded at the time of purchase = A÷(1+r)n = 60,000÷(1+0.10)3 = 60,000÷1.13 = 60,000÷1.331 = $45,078

2. Annual payment (P) = 10,000

Number of years (n) = 3 years

Rate of interest (r) = 10% = 0.10

Present value of annual payment = P×[1-(1+r)-n]÷r = 10,000×[1-(1+0.10)-3]÷0.10 = 10,000×[1-1.1-3]÷0.10 = 10,000×[1-0.7513]÷0.10 = 10,000×0.2487÷0.10 = $24,870.

Single installment payment is $28,000 and the present value of $10,000 paid annually for 3 years is $24,870, which means annual payment for three years will be the better option because the present value is less than the single installment.

Pay in three installment will be the better option.

3. Amount at the end of 7 years (A) = $90,000

Number of years (n) = 7 years

Rates of interest (r) = 10% = 0.10

Single amount to be deposited in this account on January 1 of this year = A÷(1+r)n = 90,000÷(1+0.10)7 = 90,000÷1.17 = 90,000÷1.9487 = $46,184

4. Annual payment (P) = $40,000

Number of years (n) = 10 years

Rate of interest (r) = 10% = 0.10

Single sum to be deposited in the bank on January 1 of this year = P×[1-(1+r)-n]÷r = 40,000×[1-(1+0.10)-10]÷0.10 = 40,000×[1-1.1-10]÷0.10 = 40,000×[1-0.3855]÷0.10 = 40,000×0.6145÷0.10 = $245782.6842

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Ramirez Company installs a computerized manufacturing machine in its factory at the beginning of the year at a cost of $81,400.
ivann1987 [24]

Answer:

$7,326

Explanation:

Double Decline Balance = 2 x SLDP x SLDBV

where,

SLDP = Straight Line Depreciation Percentage

          = 100 ÷ useful life

          = 100 ÷ 20

          = 5 %

and

SLDBV = Straight Line Percentage Book Value

Year 1

Double Decline Balance = 2 x 5% x $81,400

                                           = $8,140

Year 2

Double Decline Balance = 2 x 5% x ($81,400 - $8,140)

                                           = $7,326

Therefore

The machine's second-year depreciation using the double-declining balance method is $7,326.

4 0
3 years ago
A beta distribution center worker was injured when she tried to remove items on the shelf and not a heavy box onto her for a wee
LenaWriter [7]

Answer:

C. Teach procedures for stacking items in straight, even loads.

Explanation:

7 0
3 years ago
During the adjusting process two transactions were missed. The first is for unearned rent revenue of which $450 was earned durin
masya89 [10]

Answer:

3. net income is understated by $175

Explanation:

There were two transactions omitted. The first transaction is unearned rent revenue of which $450 was earned. This earned rent revenue increases income by $450. While the second transaction was accrued interest payable of which $275 is owed. This interest payable increases liabilities by $275.

Therefore, from the above, income or revenue is understated by $450, while expenses is understated by $275.

Therefore, net income is understated by income less expenses, thus 450 - 275 = $175. This also implies that liabilities are overstated by $175.

4 0
3 years ago
Match each value with its type.
lozanna [386]

<u>Answer: </u>

The following are the values with their correct matches

Pays medical bills - Liability coverage.

Pays damages to your car - Collision coverage.

Pays damages to the other car - Pays 0% damages to the other car.

<u>Explanation: </u>

  • Medical expenses are termed as a liability coverage because they certainly cannot be ignored as one cannot choose to risk his health.
  • The payment done for the repairing of a car damaged due to collision is termed as collision coverage.
  • One would choose to not spend on the repairing of the other car when one car is in good condition.
7 0
3 years ago
Read 2 more answers
A local university has a student population that is 55% male. 60% of students are undergraduates. 38% are both male and undergra
Mandarinka [93]

The probability that a randomly selected student is female and an undergraduate = 37%

The probability of being female or an undergraduate= 1.05

<h3>The male students</h3>

The male population = 55%

Therefore female population would be 1 - 0.55 = 45%

<u>Undergraduates</u> = 60%

The male undergraduate = 38%

Therefore female undergraduates = 60%-38%

= 22%

a. The probability that a randomly selected student is an undergraduate and female

= \frac{0.22}{0.60}

= 37%

B. The probability that the student is female or undergraduate

P(A or B)

= Probability of female = 45/100

Probability of undergraduate = 60/100

= 0.45 + 0.60

= 1.05

Read more on probability here:

brainly.com/question/25870256

4 0
2 years ago
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