Paul's Pizzeria as signed a new five year lease for 1,000 SF of restaurant space in a shopping center in Granada Hills. The base rent on the lease is $3.00/SF, NNN with 3% annual rent increases to account for inflation. However, the lease has a percentage lease clause, that states the lessee will pay an additional 3% of gross annual sales over $1,200,000. Gross sales for the tenant are estimated to be as follows:

Year 1 - $ 1,200,000

Year 2 - $ 1,100,000

Year 3 - $ 1,400,000

Year 4 - $ 1,090,000

Year 5 - $ 1,500,000

What are the estimated annual lease payments for:

Year 1 ?

Year 2 ?

Year 3 ?

Year 4?

Year 5 ?

The monthly market basket for consumers consists of​ pizza, t-shirts, and rent.   The table below shows market basket quantities and prices for the base year​ (Year 1) and in the following two years. Product Base Year​ (Year 1) Quantity Price in the Base Year Price in Year 2 Price in Year 3 Pizza 20 ​$3.50 ​$4.38 ​$4.55 ​T-Shirts 3 ​$20.00 ​$18.00 ​$20.00 Rent 1 ​$350.00 ​$385.00 ​$437.50 The inflation rate between Year 1 and Year 2 is nothing​%. ​ (Round both answers to one decimal place.​) The inflation rate between Year 2 and Year 3 is nothing​%.

Exact Photo Service purchased a new color printer at the beginning of Year 1 for $39,700. The printer is expected to have a four-year useful life and a $3,700 salvage value. The expected print production is estimated at $1,770,500 pages. Actual print production for the four years was as follows:

The printer was sold at the end of Year 4 for $4,100.

Required
a. Compute the depreciation expense for each of the four years, using double-declining-balance depreciation.

epreciation Expense

Year 1

Year 2

Year 3

Year 4

Total accumulated depreciation$0

Haas Company manufactures and sells one product. The following information pertains to each of the company’s first three years of operations:

During its first year of operations, Haas produced 40,000 units and sold 40,000 units. During its second year of operations, it produced 55,000 units and sold 30,000 units. In its third year, Haas produced 20,000 units and sold 45,000 units. The selling price of the company’s product is $46 per unit.

Required:

1. Compute the company’s break-even point in unit sales.

2. Assume the company uses variable costing:

a. Compute the unit product cost for Year 1, Year 2, and Year 3.

b. Prepare an income statement for Year 1, Year 2, and Year 3. Assume the company uses variable costing.

3. Assume the company uses absorption costing:

a. Compute the unit product cost for Year 1, Year 2, and Year 3.

b. Prepare an income statement for Year 1, Year 2, and Year 3. Assume the company uses absorption costing. (Round your intermediate calculations to 2 decimal places.)

The following data come from the financial statements of Naina Company for 20X8. Dividends declared and paid during the year.............................................................................................. $95 Decrease in total assets during the year....................................................................................................... 370 Depreciation expense for the year................................................................................................................. 35 Increase in interest payable during the year................................................................................................. 11 Total cash received from operating activities during the year.................................................................... 124 Increase in accumulated depreciation during the year................................................................................ 32 Increase in cash during the year..................................................................................................................... 15 Net LOSS for the year...................................................................................................................................... 190 Decrease in total liabilities during the year................................................................................................. 170 Interest expense for the year.......................................................................................................................... 55 Cash paid for insurance during the year....................................................................................................... 85 Cash paid to repurchase shares of stock during the year........................................................................... 0 What was the amount of cash received through the issuance of new shares of stock by Naina Company during the year 20X8? Write the dollar amount of your answer. (Do not write the dollar sign.)

A German car will cost $45,000 and have fuel usage of 21mpg for the first 5 years, and decrease
by 1% thereafter to year 8. Repair cost will start at $1000 in year 1 and increase by 4% per year.
It will have a salvage value of $7000 at the end of year 8. Insurance cost will be $850 the first year,
increasing by 2% per year thereafter.
The American car will cost $35,000 and have fuel usage of 20mpg for the first 3 years, and will
decrease by 3% per year thereafter. Repair cost will be $800 in year 1, increasing by 4% per year
thereafter. Being an American, the graduate will price the pride of owning an American car at $0.4
for every 20 miles driven, increasing by 2% per year. Insurance cost will be $800 per year
increasing by 2.2% per year. The car can be sold for $5500 at the end of year 8.
If the graduate anticipates driving 150000 miles by the end of year 8 and the average interest rate
is expected to remain at 5% per year, which car is economically affordable based on present worth
analysis? Assume fuel cost will be $3 per gallon in year 1 and increase by an average of 2% per
year. Show all your workings.

                                THE BUSINESS SITUATION

                When Shelley Jones became president-elect of the Circular Club of Auburn, Kansas,

she was asked to suggest a new fundraising activity for the club. After a considerable

amount of research, Shelley proposed that the Circular Club sponsor a professional

rodeo. In her presentation to the club, Shelley said that she wanted a

fundraiser that would (1) continue to get better each year, (2) give back to the community,

and (3) provide the club a presence in the community. Shelley’s goal was to

have an activity that would become an “annual community event” and that would

break even the first year and raise $5,000 the following year. In addition, based on

the experience of other communities, Shelley believed that a rodeo could grow in

popularity so that the club would eventually earn an average of $20,000 annually.

                A rodeo committee was formed. Shelley contacted the world’s oldest and

largest rodeo-sanctioning agency to apply to sponsor a professional rodeo. The

sanctioning agency requires a rodeo to consist of the following five events:

Bareback Riding, Bronco Riding, Steer Wrestling, Bull Riding, and Calf Roping.

Because there were a number of team ropers in the area and because they

wanted to include females in the competition, members of the rodeo committee

added Team Roping and Women’s Barrels. Prize money of $3,000 would be paid

to winners in each of the seven events.

                Members of the rodeo committee contracted with RJ Cattle Company, a livestock

contractor on the rodeo circuit, to provide bucking stock, fencing, and

chutes. Realizing that costs associated with the rodeo were tremendous and that

ticket sales would probably not be sufficient to cover the costs, the rodeo committee

sent letters to local businesses soliciting contributions in exchange for

various sponsorships. Exhibiting Sponsors would contribute $1,000 to exhibit

their products or services, while Major Sponsors would contribute $600. Chute

Sponsors would contribute $500 to have the name of their business on one of the

six bucking chutes. For a contribution of $100, individuals would be included in

a Friends of Rodeo list found in the rodeo programs. At each performance the

rodeo announcer would repeatedly mention the names of the businesses and individuals

at each level of sponsorship. In addition, large signs and banners with

the names of the businesses of the Exhibiting Sponsors, Major Sponsors, and

Chute Sponsors were to be displayed prominently in the arena.

CaseA local youth group was contacted to provide concessions to the public and

divide the profits with the Circular Club. The Auburn Circular Club Pro Rodeo

Roundup would be held on June 1, 2, and 3. The cost of an adult ticket was set

at $8 in advance or $10 at the gate; the cost of a ticket for a child 12 or younger

was set at $6 in advance or $8 at the gate. Tickets were not date-specific. Rather,

one ticket would admit an individual to one performance of his or her choice—

Friday, Saturday, or Sunday. The rodeo committee was able to secure a location

through the county supervisors board at a nominal cost to the Circular Club. The

arrangement allowed the use of the county fair grounds and arena for a one week

period. Several months prior to the rodeo, members of the rodeo committee

had been assured that bleachers at the arena would hold 2,500 patrons. On

Saturday night, paid attendance was 1,663, but all seats were filled due to poor

gate controls. Attendance was 898 Friday and 769 on Sunday.

                The following revenue and expense figures relate to the first year of the rodeo.

Receipts

Contributions from sponsors $22,000

Receipts from ticket sales 28,971

Share of concession profits 1,513

Sale of programs 600

Total receipts $53,084

Expenses

Livestock contractor 26,000

Prize money 21,000

Contestant hospitality 3,341*

Sponsor signs for arena 1,900

Insurance 1,800

Ticket printing 1,050

Sanctioning fees 925

Entertainment 859

Judging fees 750

Port-a-patties 716

Rent 600

Hay for horses 538

Programs 500

Western hats to first 500 children 450

Hotel rooms for stock contractor 325

Utilities 300

Sand for arena 251

Miscellaneous fixed costs 105

Total expenses 61,410

Net loss $(8,326)

*The club contracted with a local caterer to provide a tent and food for the contestants. The

cost of the food was contingent on the number of contestants each evening. Information concerning

the number of contestants and the costs incurred are as follows:

Contestants Total Cost

Friday 68 $ 998

Saturday 96 1,243

Sunday 83 1,100

$3,341

On Wednesday after the rodeo, members of the rodeo committee met to

Discuss and critique the rodeo. Jonathan Edmunds, CPA and President of the

Circular Club, commented that the club did not lose money. Rather, Jonathan

said, “The club made an investment in the rodeo.”

                Answer each of the below question.

12. Rather than hire the local catering company to cater the contestant hospitality tent, members of the club are considering asking Shady’s Bar-B-Q to cater the event in exchange for a $600 Major sponsor spot. Several member of the club are opposed to this consideration arguing that the 2 major sponsor spots will take away from the money to be earned through other sponsors. Adrian Stein has explained to the members that the major sponsor signs for the arena cost only $48 each. In addition there is more than enough room to display 2 additional sponsors signs. What would you encourage the clue to do concerning the constant hospitability tent? Would your answer be different if the arena were limited in the number of addition signs that could be displayed? What kind of cost would we consider in this situation that would not be found on a financial statement?

For example the amount invested is 240,000 so the annual inflow would be the following:

Year 1-100,000
Year 2-80,000
Year 3-50,000
Year 4-50,000
Year 5-50,000
Year 6-30,000
Year 7-30,000


What year is the payback?

What is the accrual accounting rate of return for the similar problem?
  

What is the net present value if the expected rate of return is 14%?

Partial-Year Depreciation

Equipment acquired at a cost of $99,000 has an estimated residual value of $6,000 and an estimated useful life of 10 years. It was placed into service on April 1 of the current fiscal year, which ends on December 31.

If necessary, round your answers to the nearest cent.

a. Determine the depreciation for the current fiscal year and for the following fiscal year by the straight-line method.

b. Determine the depreciation for the current fiscal year and the following fiscal year by the double-declining-balance method.