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?
In: Accounting
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.
In: Accounting
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
In: Accounting
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.
| Cost and residual value | Estimated service life | ||
| Acquisition cost | $20,000 | Years | 5 |
| Residual value | $800 | Service hours | 16,000 |
| Productive output (units) | 38,400 |
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.
| 2020 | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Answer | Answer | Answer | Answer | Answer | Answer |
b. Double-declining-balance method: Compute the depreciation amount for each year.
| 2020 | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Answer | Answer | Answer | Answer | Answer | Answer |
In: Accounting
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.
In: Accounting
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.
In: Accounting
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)
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:
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)
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)
A 11% annual rate on a simple interest loan, with no compensating balance required and interest due at the end of the year.
A 9% annual rate on a simple interest loan, with a 20% compensating balance required and interest due at the end of the year.
An 8.75% annual rate on a discounted loan, with a 15% compensating balance.
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.
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)
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)
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)
Construct the uncollected balances schedule for the second quarter as of June 30. You must show calculations to receive full credit. (3pts)
In: Accounting
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
|
60 |
10 |
50 |
30 |
70 |
3 |
50 |
30 |
10 |
30 |
|
40 |
10 |
20 |
40 |
10 |
40 |
50 |
60 |
30 |
500 |
In: Statistics and Probability
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
|
60 |
10 |
50 |
30 |
70 |
3 |
50 |
30 |
10 |
30 |
|
40 |
10 |
20 |
40 |
10 |
40 |
50 |
60 |
30 |
500 |
Compute the mean and median.
In: Statistics and Probability
Step 1. 4% of Capital Balance Approach.
Use the managing retirement distributions worksheet to
calculate Faye’s annual retirement income possibilities and inheritance, using a beginning-of-the-year
withdrawal from ages 65-94 by withdrawing 4% of her capital the first year and with the remainder of
her account earning 4% annual after-tax return. Retirement income should increase by 3% annually
across retirement to keep pace with inflation. Start with a 4% withdrawal, but if it is not enough, then
reduce downward until the projections are adequate for her lifespan (i.e. start initial withdrawal at
4.0%, 3.9%, 3.8%, etc) Faye starts with 2,000,000 in her retirement account.
In: Finance