Awanita Enterprises sells computer flash drives for $ 3.87 per unit. Unit variable cost is $ 0.05. The breakeven point in units
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Answer:
Beginning Installment Interest Ending
1 144,605.00 20,000 0 124,605
2 124,605.00 20,000 3,738.15 108,343
3 108,343.15 20,000 3,250.29 91,593
4 91,593.44 20,000 2,747.80 74,341
5 74,341.25 20,000 2,230.24 56,571
6 56,571.48 20,000 1,697.14 38,269
7 38,268.63 20,000 1,148.06 19,417
8 19,416.69 20,000 582.50 0
Journal entries:
Cash 20,000 debit
lease receivables 124,605 debit
Lease Equipment 144,605 credit
--Jan 1st
cash 20,000 debit
interest revenue 3,738.15 credit
--March 31st
cash 20,000 debit
interest revenue 3,250.29 credit
lease receivables 16749.71 credit
--June 30th
cash 20,000 debit
interest revenue 2,747.80 credit
lease receivables 17252.20 credit
--Sep 30th
cash 20,000 debit
interest revenue 2,230.24 credit
lease receivables 17,769.76 credit
--Dec 31st
Explanation:
<em><u>Present value of the lease payment:</u></em>
C 20,000
time 8 (eight quarters)
rate 0.03 (12% annual --> divided among four quarters = 3%)
PV $144,605.6591
We build the table starting from the present value. Then, we subtract hte installment and in the second period we start doing interest calculations
(not in the firt one as it is being paid in the present thus, no interest accrued)