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Leona [35]
2 years ago
13

Libby Company purchased equipment by paying $6,700 cash on the purchase date and agreed to pay $6,700 every six months during th

e next four years. The first payment is due six months after the purchase date. Libby's incremental borrowing rate is 6%. The equipment reported on the balance sheet as of the purchase date is closest to _________?
Business
1 answer:
vladimir1956 [14]2 years ago
5 0

Answer:

The answer is $53,732.

Explanation:

The value of the equipment reported on Libby Company's balance sheet is equal to:

Cash payment at purchase + Present value of 8 equal semiannual payment, $6,700 each discounted at 3% ( because semiannual payment is made for 4 years so we have 2 x4 = 8 payments; and annual borrowing rate is 6% so we have discount rate = 6% /2 = 3%).

with:

Cash payment at purchase = $6,700;

Present value of 8 equal semiannual payment, $6,700 each discounted at 3% = (6,700/3%) x ( 1 - 1.03^(-8) ) = $47,032 ( that is, apply the formula to find present value of annuity).

we have:

The value of the equipment reported on Libby Company's balance sheet = 6,700 + 47,032 = $53,732.

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3 years ago
Acme, Inc.'s books show an ending cash balance of $10,500 before preparing the bank reconciliation. Given the bank reconciliatio
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Answer:

a. $ 10,410

Explanation:

Balance per books                                                                  $ 10,500

Less: NSF Checks                                                                   $ (    110)

Add: Interest earned                                                              <u>$       20</u>  

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The interest earned has to be added to the book balance as this information would have not been available with the book.

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6 0
3 years ago
In the Assembly Department of Hannon Company, budgeted and actual manufacturing overhead costs for the month of April 2020 were
AlekseyPX

Answer:

Hannon Company

Assembly Department

Responsibility Report

For the month of April 2020:

                               Budget       Actual      Variance

Indirect materials   $16,000    $14,300     $1,700  F

Indirect labor           20,000     20,600         600  U

Utilities                     10,000      10,850          850  U

Supervision               5,000       5,000         0       No effect

Total                      $51,000   $50,750      $250  F

Explanation:

a) Data and Calculations:

                               Budget       Actual      Variance

Indirect materials   $16,000    $14,300     $1,700  F

Indirect labor           20,000     20,600         600  U

Utilities                     10,000      10,850          850  U

Supervision               5,000       5,000         0       No effect

Total                      $51,000   $50,750      $250  F

b) The Assembly Department's responsibility report is a the budget analysis that compares its actual and budgeted amounts of controllable costs for the month of April, 2020.  The purpose of this report is to assign responsibility, improve performance, and hold a department or center responsible for its activities.

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