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Rom4ik [11]
2 years ago
15

Flo is considering three mutually exclusive options for the additional space he plans to add to the K-State Superstore. The cost

of the expansion will be $148,000. He can use this additional space to add children’s clothing, and exclusive gifts department, or a home décor section. He estimates the present value of the cash inflows from these projects is $221,000 for children’s clothing, $178,000 for exclusive gifts, and $145,000 for decorator items. Which option(s), if any, should he accept?
a. None of these options
b. Children’s clothing only
c. Exclusive gifts only
d. Exclusive gifts and decorator items only
e. All three options
Business
1 answer:
Dima020 [189]2 years ago
3 0

Answer:

B) Children’s clothing only

Explanation:

cost of the expansion $148,000

three mutually exclusive projects:

  • NPV $221,000 for children’s clothing ≥ $148,000 (initial investment)
  • NPV $178,000 for exclusive gifts ≥ $148,000 initial investment
  • NPV $145,000 for decorator items ≤ $148,000 initial investment

The projects whose NPV is positive should be considered (this eliminates decorator items)

Since the projects are mutually exclusive, only one can be chosen. So the project with the highest NPV is the best project for the store ⇒ children's clothing

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Answer:

a) Journal entry

Date        Account and explanation      Debit       Credit

June 1                Cash                             $108,000  

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b) Adjusting entry

Date        Account and explanation      Debit       Credit

June 30      Interest expense                    $360

                    (108,000*4%*1/12)

                   Interest payable                                    $360

c) Journal entry  

Date        Account and explanation      Debit       Credit

Dec 10        Notes payable                   $108,000  

                  Interest payable (360*6)      $2,160  

                        Cash                                                  $110,160

d)  Total (interest expenses)

Interest payable = $360 * 6

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5 0
3 years ago
Raby, Inc. acquires all of the outstanding stock of Fletcher Corporation on January 1, 2017. At that date, Fletcher owns only th
Nina [5.8K]

Answer:

D. $285,000

Explanation:

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FV = $300,000

amortizable value = $100,000

depreciation for 3 years (2017, 2018 and 2019) = ($100,000 / 20) x 3 = 415,000

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amm1812

Answer:

No - FALSE

Explanation:

Scoop Masters Inc. has been charged by Fab Flavors Corp. with stealing Fab Flavors' patented process for making ice cream. After the papers are filed, Scoop Masters begins shredding all documents pertaining to its ice cream-making process. Since no motion has been made requesting production of documents, Scoop Masters has done nothing wrong is a false statement. Scoop Masters Inc. has done really wrong. They have stolen someone else's idea of making a product even without their consent and then without mentioning their name and rights and trademarks. Moreover, they shredded all the proof in order not to be caught by the court in law. They have some serious crime which is totally wrong and unacceptable in all cases at all grounds.

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Answer:

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= $148,000

3 0
3 years ago
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