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3 years ago

On January 1 of this year, Shannon Company completed the following transactions (assume a 8% annual interest rate):

Business

1 answer:

inessss [21]3 years ago

4 0

Answer:

a. The cost of the truck that should be recorded at the time of purchase is:

= $48,741.

b. The option of paying $11,400 annually for 3 years results in a PV of $29,379, which is lower than $30,000 paid immediately.

c. The single amount that must be deposited in this account on January 1 of this year is:

= $54,148.

d. The single sum that must be deposited in the bank on January 1 of this year to provide 8 equal annual year-end payments of $41,400 to a retired employee is:

= $237,910.85

Explanation:

a) Data and Calculations:

a. Bought a delivery truck and agreed to pay $61,400 at the end of three years.

From an online financial calculator:

(# of periods) 3

I/Y (Interest per year) 8

PMT (Periodic Payment) 0

FV (Future Value) $61400

Results

PV = $48,741.30

Total Interest $12,658.70

b. Rented an office building and was given the option of paying $11,400 at the end of each of the next three years or paying $30,000 immediately.

From an online financial calculator:

N (# of periods) 3

I/Y (Interest per year) 8

PMT (Periodic Payment) $11,400

FV (Future Value) 0

Results

PV = $29,378.91

Sum of all periodic payments $34,200.00

Total Interest $4,821.09

c. Established a savings account by depositing a single amount that will increase to $92,800 at the end of seven years.

From an online financial calculator:

N (# of periods) 7

I/Y (Interest per year) 8

PMT (Periodic Payment) 0

FV (Future Value) $92,800

Results

PV = $54,147.91

Total Interest $38,652.09

d. Decided to deposit a single sum in the bank that will provide 8 equal annual year-end payments of $41,400 to a retired employee (payments starting December 31 of this year.

From an online financial calculator:

N (# of periods) 8

I/Y (Interest per year) 8

PMT (Periodic Payment) $41,400

FV (Future Value) 0

Results

PV = $237,910.85

Sum of all periodic payments $331,200.00

Total Interest $93,289.15

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Hitzu Co. sold a copier costing $4,800 with a two-year parts warranty to a customer on August 16, 2018, for $6,000 cash. Hitzu u

fredd [130]

Answer:

1) $240 warranty expense

2) $240 warranty liaiblity

3) zero as decreases the warranty laibility

4) 240 beginning - 209 used = 31 ending

cash 6,000 debit

sales revenues 6,000 credit

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3 years ago

Tulip Co. owns 100% of Daisy Co.'s outstanding common stock. Tulip's cost of goods sold for the year totals $600,000 and Daisy's

dsp73

Answer:

Amount to be reported as cost of goods sold in the consolidated financial statement = $900,000

Explanation:

When a company holds 100% shares or more than 50% shares of another company that is common stock, they establish a holding subsidiary relationship in which equity method is to be followed.

As per equity method all the cost of goods sold by that of subsidiary is to be added to financial statements of holding while making consolidated financial statements.

In this if there are any sales or purchase between holding and subsidiary then such profit is not be added up till that inventory is further sold to third party.

In case the inventory is sold to third party then entire profit that is inclusive of holding to subsidiary is to be included as part of consolidated financial statements.

Therefore in the above case since Daisy has sold the inventory purchased from Tulip, entire cost of goods sold shall form part of consolidated financial statements.

Here amount to be reported as cost of goods sold in the consolidated financial statement = $600,000 + $400,000 = $1,000,000

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