Answer:
Value of the lease = Annual lease payments * PVAD (11%, 13)
Value of the lease = $102,771 * 7.492236
Value of the lease = $770,000
Date Account Titles and Explanation Debit$ Credit$
Jan. 1 Leased Asset - Airplane 770000
Lease Liability 770000
Jan. 1 Lease Liability 102771
Cash 102771
Dec. 31 Interest Expense 73395
($770,000 - $102,771) x 11%
Interest Payable 73395
Dec 31. Depreciation Expenses 40,000
(600,000/15 years)
Accumulated Depreciation 40,000
Answer:
$3979.79
2 $4023.63
Explanation:
Here is the full question used in answering this question :
Find the interest earned on $15,000 invested for 6 years at 4% interest compounded as follows. a. Annually b. Semiannually (twice a year) c. Quarterly d. Monthly e. Continuously
the formula for determining interest earned is :
future value - present value
The formula for calculating future value:
FV = P (1 + r/m)^mn
FV = Future value
P = Present value
R = interest rate
N = number of years
m = number of compounding
1. 15,000 ( 1 + 0.04)^6 = 18979.79
18979.79 - 15,000 = $3979.79
2 1. 15,000 ( 1 + 0.04/2)^12 = 19023.63 = $4023.63
Answer:
The monthly return on this investment vehicle is 1.37%
Explanation:
A perpetuity contract is one which lasts forever, It does not any time limit. Live Forever Life Insurance Co will pay $1,600 for indefinite time on today's investment of #117,000.
Monthly return will be calculated using following formula:
Present value of Perpetuity = Perpetuity Received / Interest rate
$117,000 = $1,600 / r
r = $1,600 / $117,000
r = 1.37%
Monthly return on the perpetuity is 1.37% for this perpetuity.
Answer:
Cash account in the amount of $10,100
Explanation:
The journal entry to be recorded for the receipt of payment is as:
Cash A/c.............................................Dr $10,100
Note receivable A/c...................Cr $10,000
Interest Revenue A/c..................Cr $100
Being recoded the receipt of payment
As payment is received so asset is increasing and any increase in asset is debited. Therefore, cash account is debited. And the note receivable got decrease will be credited and the interest revenue is also credited.
Computation of interest revenue is as:
Interest revenue = Amount × % of note × Days / Number of days in a year
= $10,000 × 6% × 60 / 360
= $100
Note: Assume 360 days in a year
Answer:
Annual depreciation= $7,996
Explanation:
Giving the following information:
Purchase price= $42,000
Useful life= 5 years
Salvage value= $2,020
<u>To calculate the annual depreciation under the straight-line method, we need to use the following formula:</u>
Annual depreciation= (original cost - salvage value)/estimated life (years)
Annual depreciation= (42,000 - 2,020) / 5
Annual depreciation= $7,996
