Question

In: Accounting

Answer the following questions. (a) On May 1, 2020, Goldberg Company sold some machinery to Newlin...

Answer the following questions.

(a) On May 1, 2020, Goldberg Company sold some machinery to Newlin Company on an installment contract basis. The contract required fi ve equal annual payments, with the first payment due on May 1, 2020. What present value concept is appropriate for this situation?

(b) On June 1, 2020, Seymour Inc. purchased a new machine that it does not have to pay for until June 1, 2022. The total payment on June 1, 2022, will include both principal and interest. Assuming interest at a 12% rate, the cost of the machine would be the total payment multiplied by what time value of money concept?

(c) Costner Inc. wishes to know how much money it will have available in 5 years if five equal amounts of $35,000 are invested, with the first amount invested immediately. What interest table is appropriate for this situation?

(d) Megan Hoff man invests in a “jumbo” $200,000, 3-year certificate of deposit at First Wisconsin Bank. What table would be used to determine the amount accumulated at the end of 3 years?

Solutions

Expert Solution

Answer-

(a) On May 1, 2020, Goldberg Company sold some machinery to Newlin Company on an installment contract basis. The contract required five equal annual payments, with the first payment due on May 1, 2020. What present value concept is appropriate for this situation?

Present Value of an annuity due

Explanation; As the first installment of the contract has been paid on the date of the contract signed it is considered as a present value of annuity due. When the payment is paid at the beginning then it is annuity due and if the payment is made at the end of the year then it is known as ordinary annuity

(b) On June 1, 2020, Seymour Inc. purchased a new machine that it does not have to pay for until June 1, 2022. The total payment on June 1, 2022, will include both principal and interest. Assuming interest at a 12% rate, the cost of the machine would be the total payment multiplied by what time value of money concept?

Present Value of ordinary annuity or Present Value of $ 1

Explanation; As the entire payment is made at the end which includes both the principal and interest ,the total payment should be multiplied by Present Value of $1

(c) Costner Inc. wishes to know how much money it will have available in 5 years if five equal amounts of $35,000 are invested, with the first amount invested immediately. What interest table is appropriate for this situation?

Future Value of an annuity due

Explanation; As the equal payments are invested and the first amount is invested immediately it is a case of future value of annuity due.

(d) Megan Hoffman invests in a “jumbo” $200,000, 3-year certificate of deposit at First Wisconsin Bank. What table would be used to determine the amount accumulated at the end of 3 years?

Future Value of $ 1 or Future Value of ordinary annuity

Explanation ; As Megan Hoffman want to know how much mount he will get at the end of the 3rd year it is a case of Future Value of $1.


Related Solutions

1.         Caterpillar, Inc., a US corporation, has sold some heavy machinery to an Italian company for...
1.         Caterpillar, Inc., a US corporation, has sold some heavy machinery to an Italian company for 10,000,000 euros, with the payment to be received in six months. Because this is a sizable contract for the firm and because the contract is in euros rather than dollars, as the Lead Risk Analyst in Caterpillar’s heavy machinery division, you need to make a recommendation to the Treasurer regarding how Caterpillar should hedge the risk arising from this transaction exposure. You have gathered...
Metlock Company purchased machinery on January 1, 2020, for $88,000. The machinery is estimated to have...
Metlock Company purchased machinery on January 1, 2020, for $88,000. The machinery is estimated to have a salvage value of $8,800 after a useful life of 8 years. New attempt is in progress. Some of the new entries may impact the last attempt grading.Your answer is incorrect. Compute 2020 depreciation expense using the double-declining-balance method. Depreciation expense $enter Depreciation expense in dollars eTextbook and Media       New attempt is in progress. Some of the new entries may impact the...
heffield Company purchased machinery on January 1, 2020, for $93,600. The machinery is estimated to have...
heffield Company purchased machinery on January 1, 2020, for $93,600. The machinery is estimated to have a salvage value of $9,360 after a useful life of 8 years. New attempt is in progress. Some of the new entries may impact the last attempt grading.Your answer is incorrect. Compute 2020 depreciation expense using the sum-of-the-years'-digits method. Depreciation expense $enter Depreciation expense in dollars eTextbook and Media       New attempt is in progress. Some of the new entries may impact the...
Bonita Company purchased machinery on January 1, 2020, for $87,200. The machinery is estimated to have...
Bonita Company purchased machinery on January 1, 2020, for $87,200. The machinery is estimated to have a salvage value of $8,720 after a useful life of 8 years. Compute 2020 depreciation expense using the double-declining-balance method. Compute 2020 depreciation expense using the double-declining-method method assuming the machinery was purchased on September 1, 2020.
Answer the following questions 1- List some difficulties that may arise when analyzing multiple goals. 2....
Answer the following questions 1- List some difficulties that may arise when analyzing multiple goals. 2. List the reasons for performing sensitivity analysis. 3. Explain why a manager might perform what-if analysis. 4. Explain why a manager might use goal seeking. ****Please Please No hand writing ,And answer all the questions not part of them.THANKYOU in advance
Questions 1) Locate the Healthy People 2020 Framework and answer the following questions. a) What is...
Questions 1) Locate the Healthy People 2020 Framework and answer the following questions. a) What is the vision of HP2020? b) What are the overarching goals? 2) Locate the about page. What original accomplishment is HP2020 based on? 3) Locate the data about page. What are the three data objectives? 4) Locate the Leading Health Indicators (LHIs). There are only 12. Select one of the LHIs. a) What LHI did you select? b) What are the Leading Health Indicators for...
Use the following information to answer questions 1-15. Consider a firm that daily rents machinery for...
Use the following information to answer questions 1-15. Consider a firm that daily rents machinery for the cost of $1000 and employs workers at the cost of $100 for a full day of work. The following table describes the production function of the firm. Fill the table such that you can make some production decisions for this firm. Units of Labor Units of Production Fixed Costs Variable Costs Total Costs Average Variable Costs Average Total Costs Marginal Cost 1 11.00...
Use the following information to answer questions 1-7 Consider a firm that daily rents machinery for...
Use the following information to answer questions 1-7 Consider a firm that daily rents machinery for the cost of $1000 and employs workers at the cost of $100 for a full day of work. The following table describes the production function of the firm. Fill the table such that you can make some production decisions for this firm. Units of Labor Units of Production Fixed Costs Variable Costs Total Costs Average Variable Costs Average Total Costs Marginal Cost 1 11.00...
Use the following information to answer questions 1-15. Consider a firm that daily rents machinery for...
Use the following information to answer questions 1-15. Consider a firm that daily rents machinery for the cost of $1000 and employs workers at the cost of $100 for a full day of work. The following table describes the production function of the firm. Fill the table such that you can make some production decisions for this firm. Units of Labor Units of Production Fixed Costs Variable Costs Total Costs Average Variable Costs Average Total Costs Marginal Cost 1 11.00...
Jon Blue Spruce Furnace Corp. purchased machinery for $462,000 on May 1, 2020. It is estimated...
Jon Blue Spruce Furnace Corp. purchased machinery for $462,000 on May 1, 2020. It is estimated that it will have a useful life of 10 years, residual value of $12,000, production of 300,000 units, and working hours of 37,500. During 2021, Blue Spruce Corp. uses the machinery for 2,850 hours, and the machinery produces 23,000 units. From the information given, calculate the following. 1. Calculate the depreciation charge for 2021 under straight-line method. Depreciation charge $Enter your answer in accordance...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT