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Rom4ik [11]
3 years ago
13

Differential Analysis for a Lease or Buy Decision

Business
1 answer:
il63 [147K]3 years ago
4 0

Answer:

Lease Equipment $150,000

BUY EQUIPMENT$134,700

Differential Effects-$15,300

The company should choose BUY EQUIPMENT which is Alternative 2

Explanation:

Preparation of the differential analysis dated March 15 to determine whether Laredo Corporation should lease (Alternative 1) or purchase (Alternative 2) the equipment

Differential Analysis

Lease (Alt. 1) or Buy (Alt. 2) Equipment

March 15

Lease Equipment (Alternative 1); Buy Equipment

(Alternative 2); Differential Effects (Alternative 2)

Costs:

Purchase price $0 $120,000 $120,000

Freight and installation $0 $1,500 $1,500

Repair and maintenance (6 years) $0 $13,200.$13,200

($2,200*6=$13,200)

Lease (6 years) $150,000 $0 -$150,000

($25,000*6)

Total costs $150,000 $134,700 -$15,300

Based on the above calculation the company should choose BUY EQUIPMENT which is Alternative 2

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The journal entry to record the receipt of inventory purchased for cash in a perpetual inventory system would be (D)

Jan. 1    Inventory                    1,500

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<h3>What are journal entries?</h3>
  • A journal entry is an act of keeping or producing records of any economic or non-economic transaction.
  • An accounting journal, which shows a company's debit and credit balances, records transactions.
  • The journal entry can be made up of multiple records, each of which is either a debit or a credit.
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Inventory purchase journal entry:

  • Say you purchase $1,000 worth of inventory on credit.
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Therefore, the journal entry to record the receipt of inventory purchased for cash in a perpetual inventory system would be (D)

Jan. 1    Inventory                    1,500

                     Cash                                              1,500

Know more about journal entries here:

brainly.com/question/14279491

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The question you are looking for is here:

The journal entry to record the receipt of inventory purchased for cash in a perpetual inventory system would be

(A) Jan. 1    cash                    1,500

                     Account receivables                    1,500

(B) Jan. 1    Purchases                    1,500

                     Account payable                          1,500


(C) Jan. 1    Inventory                    1,500

                     Office Supplies                             1,500

(D) Jan. 1    Inventory                    1,500

                     Cash                                              1,500

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Matt and elaine are brokers who plan to go into business together, and they're working on a business plan to present to prospective lenders.  

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