What is the value on January 1, 2026, of $40,000 deposited on January 1, 2019, which accumulates interest at 12% compounded annually?

What is the value on January 1, 2025, of $10,000 deposited on July 1, 2019, which accumulates interest at 16% compounded quarterly?

On August 1, 2019, United Corporation issued $9.50 million of 6% bonds at 104. The bonds mature in 20 years. Each $1,000 bond was issued with 20 detachable stock warrants, each of which entitled the bondholder to purchase, for $45, one share of United $5 par common stock. World Company purchased 20% of the bond issue. On August 1, 2019, the market value per share for United stock was $51 and the market value of each warrant was $7. In March 2025, when United common stock had a market price of $65 per share and the unamortized premium balance was $250,000, World exercised the warrants it held.

Required:

1. Prepare the journal entries on August 1, 2019, to record (A) the issuance of the bonds by United and (B) the investment by World.

2. Prepare the journal entries for both companies in March 2025 to record the exercise of the warrants.

On January 1, 2021, the Excel Delivery Company purchased a delivery van for $46,000. At the end of its five-year service life, it is estimated that the van will be worth $4,000. During the five-year period, the company expects to drive the van 165,000 miles.

Required:
Calculate annual depreciation for the five-year life of the van using each of the following methods.

rev: 05_15_2019_QC_CS-168776, 11_22_2019_QC_CS-191707

Exercise 11-1 (Algo) Part 1

1. Straight line.

2. Double-declining balance. (Round your answers to the nearest whole dollar amount.)

Years Depreciatiation

2021

2022

2023

2024

2025

3. Units of production using miles driven as a measure of output, and the following actual mileage: (Do not round intermediate calculations.)
miles Depreciation

2021 35,000

2022 37,000

2023 28,000

2024 33,000

2025 34,000

Computing Partial Period Depreciation under Multiple Depreciation Methods

To demonstrate the computations involved in several methods of depreciating a fixed asset, the following information is provided.

Required

Compute the annual depreciation using each of the following methods assuming that the asset was purchased on August 1, 2020.

a. Sum-of-the-years’-digits method: Compute the depreciation amount for each year.

b. Double-declining-balance method: Compute the depreciation amount for each year.

On August 1, 2019, United Corporation issued $9.20 million of 8% bonds at 105. The bonds mature in 20 years. Each $1,000 bond was issued with 20 detachable stock warrants, each of which entitled the bondholder to purchase, for $42, one share of United $5 par common stock. World Company purchased 10% of the bond issue. On August 1, 2019, the market value per share for United stock was $48 and the market value of each warrant was $6. In March 2025, when United common stock had a market price of $62 per share and the unamortized premium balance was $220,000, World exercised the warrants it held.

Required:
1. Prepare the journal entries on August 1, 2019, to record (A) the issuance of the bonds by United and (B) the investment by World.
2. Prepare the journal entries for both companies in March 2025 to record the exercise of the warrants.

On August 1, 2019, United Corporation issued $9.50 million of 6% bonds at 104. The bonds mature in 20 years. Each $1,000 bond was issued with 20 detachable stock warrants, each of which entitled the bondholder to purchase, for $45, one share of United $5 par common stock. World Company purchased 20% of the bond issue. On August 1, 2019, the market value per share for United stock was $51 and the market value of each warrant was $7. In March 2025, when United common stock had a market price of $65 per share and the unamortized premium balance was $250,000, World exercised the warrants it held.

Required:

1. Prepare the journal entries on August 1, 2019, to record (A) the issuance of the bonds by United and (B) the investment by World.

2. Prepare the journal entries for both companies in March 2025 to record the exercise of the warrants.

1. Assume there are two competitor firms, ABC and XYZ. ABC had no credit losses last year, but 1% of XYZ’s accounts receivable proved to be uncollectible and resulted in losses. Can you determine which firm’s credit manager is performing better? Why or why not? (2pts)

2. Indicate by a (+), (-), or (0) whether each of the following events would most likely cause A/R, sales, and profits to increase, decrease, or be affected in an indeterminate manner. Also provide an explanation for each event and the affects. (7pts)

AR              Sales Profit

a. The firm tightens its credit

standards.                                                                                                             

b. The terms of trade are

changed from 2/10, net 30,

to 3/10, net 30.                                              

c. The terms are changed from

2/10 net 30, to 3/10, net 40.                                             

d. The credit manager gets tough

with past-due accounts.      

Explanations:

3. On March 1, Minnerly Motors obtains business loan from a local bank. The loan is a $50,000 interest-only loan with a nominal rate of 9%. Interest is calculated on a simple interest basis with a 365-day year. What is Minnerly’s interest charge for the first month (assuming 31 days in the month)? You must show all calculations to receive credit. (2pts)

4. Cost of Bank Loans. Del Hawley, owner of Hawley’s Hardware, is negotiating with First City Bank for a 1-year loan of $40,000. First City has offered Hawley the alternatives listed below. Calculate the effective annual interest rate for each alternative. You must show calculations to receive full credit. (6pts)

5. • A 11% annual rate on a simple interest loan, with no compensating balance required and interest due at the end of the year.

5. • A 9% annual rate on a simple interest loan, with a 20% compensating balance required and interest due at the end of the year.

5. • An 8.75% annual rate on a discounted loan, with a 15% compensating balance.

5. Monitoring of Receivables. The Russ Fogler company, a small manufacturer of cordless telephones, began operations on January 1. Its credit sales for the first 6 months of operations were as follows:

Month Credit Sales

January $120,000

February 100,000

March 50,000

April 160,000

May 140,000

June 105,000

Throughout this entire period, the firm’s credit customers maintained a constant payments pattern; 20% paid in the month of sale, 30% paid in the first month following the sale, and 50% paid in the second month following the sale.

1. What was Fogler’s receivables balance at the end of March and at the end of June? You must show calculations to receive full credit. (2pts)

2. Assume 90 days per calendar quarter. What were the ADS and DSO for the first and second quarter? You must show calculations to receive full credit. (3pts)

3. Construct an aging schedule as of June 30. Use account ages of 0-30, 31-60, and 61-90 days. You must show calculations to receive full credit. (3pts)

4. Construct the uncollected balances schedule for the second quarter as of June 30. You must show calculations to receive full credit. (3pts)

Garden Sales, Inc., sells garden supplies. Management is planning its cash needs for the second quarter. The company usually has to borrow money during this quarter to support peak sales of lawn care equipment, which occur during May. The following information has been assembled to assist in preparing a cash budget for the quarter:

1. Budgeted monthly absorption costing income statements for April–July are:

*Includes $25,000 of depreciation each month.

2. Sales are 20% for cash and 80% on account.

3. Sales on account are collected over a three-month period with 10% collected in the month of sale; 70% collected in the first month following the month of sale; and the remaining 20% collected in the second month following the month of sale. February’s sales totaled $245,000, and March’s sales totaled $260,000.

4. Inventory purchases are paid for within 15 days. Therefore, 50% of a month’s inventory purchases are paid for in the month of purchase. The remaining 50% is paid in the following month. Accounts payable at March 31 for inventory purchases during March total $118,300.

5. Each month’s ending inventory must equal 20% of the cost of the merchandise to be sold in the following month. The merchandise inventory at March 31 is $91,000.

6. Dividends of $32,000 will be declared and paid in April.

7. Land costing $40,000 will be purchased for cash in May.

8. The cash balance at March 31 is $54,000; the company must maintain a cash balance of at least $40,000 at the end of each month.

9. The company has an agreement with a local bank that allows the company to borrow in increments of $1,000 at the beginning of each month, up to a total loan balance of $200,000. The interest rate on these loans is 1% per month and for simplicity we will assume that interest is not compounded. The company would, as far as it is able, repay the loan plus accumulated interest at the end of the quarter.

The average number of times Americans dine out in a week fell from 4.0 in 2008 to 3.8 in 2012. The number of times a sample of 20 families dined out last year provides the following data.

Table 4

1. Compute the mean and median.
2. Compute the first and third quartiles.
3. Compute the range and interquartile range.
4. Compute the variance and standard deviation.
5. The skewness measure for these data is 0.34. Comment on the shape of this distribution. is it the shape you would expect? Why or why not?
6. Do the data contain outliers?

The average number of times Americans dine out in a week fell from 4.0 in 2008 to 3.8 in 2012. The number of times a sample of 20 families dined out last year provides the following data.

Table 4

Compute the mean and median.

1. Compute the first and third quartiles.
2. Compute the range and interquartile range.
3. Compute the variance and standard deviation.
4. The skewness measure for these data is 0.34. Comment on the shape of this distribution. is it the shape you would expect? Why or why not?
5. Do the data contain outliers?