Question

In: Accounting

cash price september30 ,62400 including sale taxes, cash down payment 7800,capitalstock 600share with current market price...

cash price september30 ,62400 including sale taxes, cash down payment 7800,capitalstock 600share with current market price of birr42as share---25200,promissory notespayable in24 equal mounthly installments ,includeing interest----36000,total---69000. the following aditional cost were incurred before the machine was ready for use installation-------2600,diret costof trials runs----1000.the machine was expected to produce 100000 units during its economic life. it was placed inservice october 4 year 1 . instraction ; 1) determine the cost pof the machine for financial accounting purpose. assume that the discounton the promissory note is difference between the total payment tobe made and the cashprice of the machine. 2) assuming that the estimated net resedual value of the machine is birr6000 andthat the economic life estimated to be five years, compute depreciation foryears1(3mounth) andyear 2 under1) straight line method 2)sumof the year digits method 3)rateof40% applied to decilining carrying amount of the machine.4)out put method(the machine produced15000 units inyear1 and24000 units in year)

Solutions

Expert Solution

SOLUTION A :-

(1) COST OF THE MACHINE SHALL BE AS FOLLOWS:-

cost of the machine shall incude all the costs and expenses incurred upto the date when the machine became ready to use in condition.

down payment =7800

capital stock(600*42) =25200

promissory notes payable

( including interest) =36000

installation cost =2600

trial runs cost =1000

discount on promissory notes

(69000-62400) =(6600)

cost of the machine =66000

CALCULATION OF DEPRECIATION;-

1. STRAIGHT LINE METHOD= COST-SCRAP VALUE/ ECONOMIC LIFE OF AN ASSETS

DEPRECIATION FOR YEAR 1 ( 3 MONTHS)={66000-6000/5}*3/12=3000

DEPRECIATION FOR YEAR 2 = 66000-6000-3000/4=14250

2. DIMINISHING BALANCE METHOD:-

YEAR 1= 66000*40%*3/12=6600

year 2 = 66000-6600=59400*40%=23760

3.OUT PUT METHOD:-

YEAR1 =[cost - scrap value/ total units ]* no of units

[66000-6000/100000]*15000=9000

year 2= [66000-6000-9000/100000]*24000=12240

4. sum of years digits method :-

years 5= 1+2+3+4+5=15

year 1:-[66000-6000/15]*5=20000

year 2 = [66000-6000/15]*4=16000


Related Solutions

The original sale price of a car is $22,194.96. The required down payment is $1,410. The...
The original sale price of a car is $22,194.96. The required down payment is $1,410. The monthly payment a customer will pay on the note is $604.36 for a 3-year auto loan with a promotional financing rate at 2.99%? Given that information respond the Following Based on the information from Q48, if a customer decides to skip the 2.99% financing promotion loan but take the cash rebate offer, how much cash does the customer need to pay to buy the...
The original sale price of a car is $22,194.96. The required down payment is $1,410. What...
The original sale price of a car is $22,194.96. The required down payment is $1,410. What is the monthly payment if the customer can apply for a 3-year auto loan with a promotional financing rate at 2.99%? $577.36 $598.25 $604.36 $645.36
The original sale price of a car is $22,194.96. The required down payment is $1,410. What...
The original sale price of a car is $22,194.96. The required down payment is $1,410. What is the monthly payment if the customer can apply for a 3-year auto loan with a promotional financing rate at 2.99%? Based on answer $604.36 monthly payment, if a customer decides to skip the 2.99% financing promotion loan but take the cash rebate offer, how much cash does the customer need to pay to buy the new car? We assume that regular market interest...
1. Amortize a $125,000 (Sale Price) house with 20% down payment on a 15 year loan...
1. Amortize a $125,000 (Sale Price) house with 20% down payment on a 15 year loan at 3.0% annual interest rate (1) What is the monthly payment? (2) What month will the debt be less than $50,000? (Assume that you just took out the loan) (3) How much will you pay in interest over the life of the loan?
You are planning to buy a house. Assume that you have the cash to pay 20% down payment on any home that your $2,400/month maximum payment can afford including taxes and insurance (no PMI required)
You are planning to buy a house. Assume that you have the cash to pay 20% down payment on any home that your $2,400/month maximum payment can afford including taxes and insurance (no PMI required). A lender offers you a 30 year fixed mortgage for the remaining 80% with 4.5% APR with 1.5 points and $2,000 in fees. Property taxes are $3,600 and Casualty Insurance is $1,200.How expensive of a home can you purchase today?What would your total amount due...
You put 20% down on a home with a purchase price of $250,000. The down payment...
You put 20% down on a home with a purchase price of $250,000. The down payment is thus $50,000, leaving a balance owed of $200,000. A bank will loan you this remaining balance at 3.91% APR. You will make monthly end-of-the-period payments with a 30-year payment schedule. What is the monthly annuity payment under this schedule?
4. Down: The amount of an individual's paycheck which remains after the payment of income taxes....
4. Down: The amount of an individual's paycheck which remains after the payment of income taxes. (Three Words) 5. Down: Total wealth based on the difference between total assets owned and total debt. (Two Words) 6. Down: The type of assets or liabilities which are not short-term in nature. (Two Words) 7. Down: Obligations to creditors. 8. Down: A ratio which indicates the percentage of assets financed with debt funding.
Current market price:                                       
Current market price:                                          $95 Strike/exercise price:                                           $100 Risk-free rate (rf):                                                     5% Time (in years):                                                         .25 Standard deviation:                                              25% The standard deviation is the risk associate with an option.  The greater the standard deviation, the greater the risk of an option. Use the Black-Scholes Option Pricing Model and calculate the price of this option.
The price of a home is ​$240 000. The bank requires a​ 15% down payment. The...
The price of a home is ​$240 000. The bank requires a​ 15% down payment. The buyer is offered two mortgage​ options: 15-year fixed at 8.5​% or​ 30-year fixed at 8.5​%. Calculate the amount of interest paid for each option. How much does the buyer save in interest with the​ 15-year option? Use the following formula to determine the regular payment amount. Find the monthly payment for the​ 15-year option. ​$ nothing ​(Round to the nearest dollar as​ needed.) Find...
The price of a new car is $32,000. Assume that an individual makes a down payment...
The price of a new car is $32,000. Assume that an individual makes a down payment of 25% toward the purchase of the car and secures financing for the balance at the rate of 7%/year compounded monthly. (Round your answers to the nearest cent.) (a) What monthly payment will she be required to make if the car is financed over a period of 48 months? Over a period of 72 months? 48 months $ 72 months $ (b) What will...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT