Premium Essay

Accounting Homework 4 Solutions

In: Business and Management

Submitted By sgoel5
Words 2125
Pages 9
Chapter 13:
1) E13-14 (5 points);
2) E13-16 (5 points);
3) E13-18 (5 points);
4) E13-19 (1 point);
5) P13-23A (8 points);
6) P13-25A (8 points);
7) P13-33A parts a, b and c only (8 points);
8) P13-39B (8 points);
9) P13-42B (7 points)

Solutions:

E13-14 (5 points):

(a) The cash payback period is: $48,000 ÷ $8,000 = 6 years The net present value is: | | Time Period | | CashFlows | × | 9% DiscountFactor | = | PresentValue | Present value of net annual cash flows | | 1–8 | | $8,000 | | 5.53482 | | $44,279 | Present value of salvage value | | 8 | | 20,000 | | 0.50187 | | 10,037 | | | | | | | | | 54,316 | Capital investment | | | | | | | | 48,000 | Net present value | | | | | | | | $6,316 |

Using financial calculator:
CF0=-48,000; C01=8,000; F01=7; C02 = 28,000; F02 = 1; I = 9; CPT NPV = 6,315.88

(b) In order to meet the cash payback criteria, the project would have to have a cash payback period of less than 5.6 years (8 × 70%). It does not meet the criteria. However, the net present value is positive, suggesting the project should be accepted. The reason for the difference is that the project’s high estimated salvage value increases the present value of the project. The net present value is a better indicator of the project’s worth.

E13-16 (5 points): Project A: | | Time Period | | CashFlows | × | 10% DiscountFactor | = | PresentValue | Present value of net annual cash flows | | 1–8 | | $20,000 | | 5.33493 | | $106,699 | Present value of salvage value | | 8 | | — | | — | | — | | | | | | | | | $106,699 | Capital investment | | | | | | | | 98,000 | Net present value | | | | | | | | $8,699 |

Using financial calculator:
CF0=-98,000; C01=20,000; F01=8; I = 10; CPT NPV = 8,698.52
Total PV of net cash flows = NPV + Initial Investment =…...

Similar Documents

Premium Essay

Intermediate Accounting Solutions

...presents an organized array of assets, liabilities, and shareholders’ equity at a point in time. It is a freeze frame or snapshot picture of financial position at the end of a particular day marking the end of an accounting period. Question 3-2 The balance sheet does not portray the market value of the entity (number of common stock shares outstanding multiplied by price per share) for a number of reasons. Most assets are not reported at fair value, but instead are measured according to historical cost. Also, there are certain resources, such as trained employees, an experienced management team, and a good reputation, that are not recorded as assets at all. Therefore, the assets of a company minus its liabilities, as shown in the balance sheet, will not be representative of the company’s market value. Question 3-3 Current assets include cash and other assets that are reasonably expected to be converted to cash or consumed during one year, or within the normal operating cycle of the business if the operating cycle is longer than one year. The typical asset categories classified as current assets include: — Cash and cash equivalents — Short-term investments — Accounts receivable — Inventories — Prepaid expenses Question 3-4 Current liabilities are those obligations that are expected to be satisfied through the use of current assets or the creation of other current liabilities. So, this classification will......

Words: 12426 - Pages: 50

Premium Essay

Chapter 4 Solution Accounting

...CHAPTER 4 Accrual Accounting Concepts Study Objectives 1. Explain the revenue recognition principle and the matching principle. 2. Differentiate between the cash basis and the accrual basis of accounting. 3. Explain why adjusting entries are needed, and identify the major types of adjusting entries. 4. Prepare adjusting entries for deferrals. 5. Prepare adjusting entries for accruals. 6. Describe the nature and purpose of the adjusted trial balance. 7. Explain the purpose of closing entries. 8. Describe the required steps in the accounting cycle. 9. Understand the causes of differences between net income and cash provided by operating activities. 10. Describe the purpose and the basic form of a worksheet. Summary of Questions by Study Objectives and Bloom’s Taxonomy |Item | | 1. | | 1. | | 1. | | 1. ...

Words: 9678 - Pages: 39

Premium Essay

Accounting Homework

... _____E____ Utilities expense List the numbers of the above transactions and describe the effect of each transaction on assets, liabilities, and owner's equity. For example, the first answer is: (1) Increase in assets and increase in owner's equity. E1-7 Brandon Computer Timeshare Company entered into the following transactions during May 2010. 1. Purchased computer terminals for $20,000 from Digital Equipment on account. Increase in assets and increase in liabilities. 2. Paid $4,000 cash for May rent on storage space. Decrease in assets and decrease in owner’s equity. 3. Received $15,000 cash from customers for contracts billed in April. Increase in assets and increase in owner’s equity. 4. Provided computer services to Fisher Construction Company for $3,000 cash. Increase in assets and increase in owner’s equity. 5. Paid Northern States Power Co. $11,000 cash for energy usage in May. Decrease in assets and decrease in owner’s equity. 6. Brandon invested an additional $32,000 in the business. Increase in assets and increase in owner’s equity. 7. Paid Digital Equipment for the terminals purchased in (1) above. Decrease in assets and decrease in liabilities. 8. Incurred advertising expense for May of $1,200 on account. Increase in assets and as increase in liabilities. E1-10 Lily Company had the following assets and liabilities on the dates indicated. December......

Words: 1184 - Pages: 5

Free Essay

Cmis Homework 1 Solutions

...Here is one possible solution to Assignment 1. Following the solution, I have written some important general comments on programming issues and submitting assignments. Program Description: This program will accept the lengths and widths of four rooms from the user, then use this data to compute the total area. The result will be displayed for the user. Analysis: Inputs: There are eight inputs: the lengths and widths of each room. Outputs: There is one output: the total area. Obtaining the Outputs from the Inputs: For each room, we have to multiply the length by the width to get the area. Then the four room areas are added to get the total area. Mathematical Formulas: Area of a rectangle: Area = Length * Width. Total area of a complex figure: add the areas of the parts. Variables table: Name Data Type Usage Length1 Float Length of room 1 in feet Width1 Float Width of room 1 in feet. Length2 Float Length of room 2 in feet Width2 Float Width of room 2 in feet. Length3 Float Length of room 3 in feet Width3 Float Width of room 3 in feet. Length4 Float Length of room 4 in feet Width4 Float Width of room 4 in feet. Area1 Float Area of room 1 in square feet Area2 Float Area of room 2 in square feet Area3 Float Area of room 3 in square feet Area4 Float Area of room 4 in square feet TotalArea Float Total area in square feet Test Cases: [I omit this as nearly everyone presented good cases] Pseudocode: BEGIN PROGRAM Declare Length1, Width1,......

Words: 410 - Pages: 2

Premium Essay

Accounting-Chapter3 Solutions

...Chapter 3 Accrual Accounting and the Financial Statements Questions 1. Under accrual accounting, the accountant recognizes the impact of a business transaction on an entity when the transaction occurs, whether or not cash is received or paid. Revenues are recognized when they are earned, and expenses are recognized when they are incurred—not necessarily when the cash changes hands. The cash basis of accounting recognizes revenues only when cash is received and expenses only when cash is paid. 2. The revenue principle provides guidance on (a) when to record revenue. (b) the amount of revenue to record. 3. The matching principle directs the accounting for expenses. Accountants identify all the expenses incurred during the period, measure those expenses, and match them against the revenue earned during the period. Matching expenses against revenues means to subtract the expenses from the revenues to compute net income or net loss for the period. Chapter 3 Accrual Accounting and the Financial Statements 153 4. Five categories of adjusting entries, with examples, are: a. Prepaid expenses — prepaid rent, prepaid insurance, and supplies b. Amortization — amortization of buildings, furniture, and equipment c. Accrued expenses — accrued salary expense and accrued interest expense d. Accrued revenues — accrued service revenue and accrued interest revenue e. Unearned revenues — unearned service revenue and unearned subscription revenue 5. Yes, all adjusting entries......

Words: 12546 - Pages: 51

Premium Essay

Solution Accounting

...Advanced Accounting Beams Anthony 11th Edition Solutions Manual Click here to download immediately!!! http://solutionsmanualtestbanks.blogspot.com/2011/10/advanced-accountingbeams-anthony-11th.html ----------------------------------------------------------------------Advanced Advanced Advanced Advanced Accounting Accounting Accounting Accounting Beams Beams Beams Beams Anthony Anthony Anthony Anthony 11th 11th 11th 11th Edition Edition Edition Edition Solutions Solutions Solutions Solutions Manual Manual Manual Manual -------------------------------------------------------------------------***THIS IS NOT THE ACTUAL BOOK. YOU ARE BUYING the Solution Manual in e-version of the following book*** Name: Advanced Accounting Author: Beams Anthony Edition: 11th ISBN-10: 0132568969 Type: Solutions Manual - The file contains solutions and questions to all chapters and all questions. All the files are carefully checked and accuracy is ensured. - The file is either in .doc, .pdf, excel, or zipped in the package and can easily be read on PCs and Macs. - Delivery is INSTANT. You can download the files IMMEDIATELY once payment is done. If you have any questions, please feel free to contact us. Our response is the fastest. All questions will always be answered in 6 hours. This is the quality of service we are providing and we hope to be your helper. Delivery is in the next moment. Solution Manual is accurate. Buy now below and the DOWNLOAD LINK WILL APPEAR IMMEDIATELY once payment......

Words: 19905 - Pages: 80

Premium Essay

Accounting Solutions

...2,3 | AP | 30. | 2,3,4 | AP | *39. | 5 | AP | 4. | 1 | AP | 13. | 2,3 | C | 22. | 2,3 | AP | 31. | 3 | AP | *40. | 5 | AP | 5. | 1 | AP | 14. | 2,3 | C | 23. | 2,3 | AP | 32. | 3 | AP | *41. | 5 | AP | 6. | 1 | AP | 15. | 2,3 | AN | 24. | 2,3 | AP | 33. | 3 | AP | | | | 7. | 1,2 | AP | 16. | 2,3 | AN | 25. | 2,3 | AP | 34. | 3 | AP | | | | 8. | 1,2 | AP | 17. | 2,3 | AP | 26. | 2,3 | AP | 35. | 4 | AP | | | | 9. | 1,2 | AP | 18. | 2,3 | AP | 27. | 2,3 | AP | 36. | 4 | AP | | | | Note: C = Comprehension AN = Analysis AP = Application * This topic is dealt with in an Appendix to the chapter. SUMMARY OF QUESTIONS BY LEVEL OF DIFFICULTY (LOD) Item | SO | LOD | Item | SO | LOD | Item | SO | LOD | Item | SO | LOD | Item | SO | LOD | Exercises | 1. | 1 | M | 10. | 2 | E | 19. | 2,3 | E | 28. | 2,3 | H | *37. | 5 | M | 2. | 1 | E | 11. | 2 | M | 20. | 2,3 | E | 29. | 2,3,4 | H | *38. | 5 | H | 3. | 1 | M | 12. | 2 | H | 21. | 2,3 | E | 30. | 2,3,4 | H | *39. | 5 | H | 4. | 1 | E | 13. | 2,3 | H | 22. | 2,3 | M | 31. | 3 | E | *40. | 5 | E | 5. | 1 | E | 14. | 2,3 | H | 23. | 2,3 | E | 32. | 3 | M | *41. | 5 | E | 6. | 1 | M | 15. | 2,3 | E | 24. | 2,3 | H | 33. | 3 | M | | | | 7. | 1,2 | E | 16. | 2,3 | E | 25. | 2,3 | H | 34. | 3 | M | | | | 8. | 1,2 | E | 17. | 2,3 | M | 26. | 2,3 | H | 35. | 4 | E | | | | 9. | 1,2 | M | 18. | 2,3 | M | 27. | 2,3 | H | 36. | 4 | M | | | | Note: E = Easy M =......

Words: 12342 - Pages: 50

Premium Essay

Accounting Solution

...1-24. a. BS d. BS g. SCF and SE b. IS e. SCF h. SCF and SE c. BS f. BS and SE i. IS, SE, and SCF E1-28. ($ millions) a. Using the accounting equation: ($ millions) | Assets | = | Liabilities | + | Equity | Intel | $63,186 | | $13,756 | | $49,430 | b. Starting with the accounting equation at the beginning of the year: ($ millions) | Assets | = | Liabilities | + | Equity | JetBlue | $6,549 | | $5,003 | | $1,546 | Using the accounting equation at the end of the year: ($ millions) | Assets | = | Liabilities | + | Equity | JetBlue | $6,549+$44 | | $5,003-$64 | | $1,654 | c. Starting with the accounting equation at the end of the year: ($ millions) | Assets | = | Liabilities | + | Equity | Walt Disney | $72,124 | | $29,864+$2,807 | | $39,453 | Using the accounting equation at the beginning of the year: ($ millions) | Assets | = | Liabilities | + | Equity | Walt Disney | $72,124-$2,918 | | $29,864 | | $39,342 | Alternative approach to solving part (b): Assets($425) = Liabilities($200) + Equity(?) where “” refers to “change in.” Thus: Ending Equity = $44 + $64 = $108 and Ending equity = $1,546 + 108 = $1,654 P1-35. a. ------------------------------------------------- General Mills, Inc. ------------------------------------------------- Income Statement ------------------------------------------------- For Year Ended May......

Words: 320 - Pages: 2

Premium Essay

Homework Solution

...Solution Manual Chapter 1 - Accounting for Intercorporate Investments 1. a. If the investor acquired 100% of the investee at book value, the Equity Investment account is equal to the Stockholders’ Equity of the investee company. It, therefore, includes the assets and liabilities of the investee company in one account. The investor’s balance sheet, therefore, includes the Stockholders’ Equity of the investee company, and, implicitly, its assets and liabilities. In the consolidation process, the balance sheets of the investor and investee company are brought together. Consolidated Stockholders’ Equity will be the same as that which the investor currently reports; only total assets and total liabilities will change. b. If the investor owns 100% of the investee, the equity income that the investor reports is equal to the net income of the investee, thus implicitly including its revenues and expenses. Replacing the equity income with the revenues and expense of the investee company in the consolidation process will yield the same net income. 2. FASB ASC 323-10 provides the following guidance with respect to the accounting for receipt of dividends using the equity method: The equity method tends to be most appropriate if an investment enables the investor to influence the operating or financial decisions of the investee. The investor then has a degree of responsibility for the return on its investment, and it is appropriate to include in the results of operations...

Words: 5410 - Pages: 22

Premium Essay

Homework 4

...HOMEWORK 4 1. The reason a firm goes bankrupt will likely be a sign of the real value of its assets. If a firm goes bankrupt due to its core business its assets are probably overvalued and therefore it will most likely default on its loans. If the bankruptcy is not related to the companies core business then it is likely that the value of the assets is not overvalued and are closer to their actual book value. So a company that goes bankrupt due to risky investments is likely to have more valuable collateral. 2. The company has increased advertising costs each year since 2013 in 2015 they spent 94.3 million on advertising. Capital expenditures are as follows: Changes in fixed assets 2014-15 (1435873000-214112000)-(1490604000-223296000)=-45637000 Depreciation for 15 (however this includes amortization) 145242000-136081000=9161000 Capital expenditures -45637000+9161000= 36476000 Dividends for 2015 70832000 Share repurchases 306255000 The company spent 553500000 for all of the above items, which is about 18.5 percent of their total revenues. The amount spent each year has also increased therefore I would not conclude that the company has been trying to save money on the above items. 3. A.)Cash flow from operations: 368611000 Average liabilities: [(418475000+970825000+125033000)+(466110000+832302000+129098000))/2=1470921500 cash flow from operations to average total liabilities ratio: 368611000/1470921500=.2506 B.)current......

Words: 360 - Pages: 2

Free Essay

Bmgt220 Week 1 Homework Solutions

...BMGT220 Week 1 homework solutions Click Link Below To Buy: http://hwaid.com/shop/bmgt220-week-1-homework-solutions/ Problem 1 Record the following journal entries below. The first two are done for you as examples. Date Event 1/2/2010 Amanda Smith invested $20,000 cash in capital stock of newly formed corporation 1/4/2010 Purchased equipment on account for $15,000. Note that when you see on account it means the customer will pay later. 1/12/2010 Received $30,000 from customers for services rendered. 1/15/2010 Received a bill for construction supplies used in the amount of $4,000. 1/18/2010 Provided $6,400 of services on account. 1/20/2010 Paid employees $4,600 for wages earned. 1/22/2010 Collected the amount due for work provided on January 18. 1/23/2010 Paid the amount due on equipment purchased on January 4. 1/25/2010 Purchased (and used immediately) construction supplies for cash in the amount of $1,200. 1/31/2010 The company paid Amanda Smith a $3,000 dividend PROBLEM 2 Record the following journal entries below. Hint - some transactions do not require a journal entry Date Event 6/2/2011 Jose Alverado invested $50,000 cash in the capital stock of a new corporation 6/3/2011 Paid rent for June in amount of $2,000. 6/6/2011 Hired an assitant to be paid $6,000 per month. 6/7/2011 Signed contract with Alpha Company to provide services for $15,000. 6/8/2011 Purchased on account and immediately used......

Words: 404 - Pages: 2

Free Essay

Bmgt220 Week 4 Homework Solutions

...BMGT220 Week 4 homework solutions Click Link Below To Buy: http://hwaid.com/shop/bmgt220-week-4-homework-solutions/ Compute the ending inventory using the perpetual weighted average method below. These are the same transactions used in week 3 homework: units price 1-Jan Beginning inventory 3,500 $ 3.00 14-Jan Bought 1,500 $ 3.15 5-Feb Sold 1,000 22-Feb Bought 2,000 $ 3.20 7-Mar Sold 1,500 15-Mar Sold 2,000 5-Apr Bought 1,000 $ 3.25 10-Apr Sold 800 12-Apr Sold 800 22-Apr Sold 500 4-May Sold 600 10-May Bought 2,000 $ 3.30 25-May Sold 500 Problem 2 Complete journal entries for the following transactions: 1. Sales for the month of June, 2014 were $75,000. Using a percentage allowance method of 1% record the allowance. 2. On June 30, it was determined that two customers with receivables totaling $980 were not likely to pay 3. On July 15, surprisingly one of the customers who owed $400 and was written off on June 30, paid their bill 4. On July 30, our fiscal year ends, the allowance for doubtful accounts has a balance of......

Words: 269 - Pages: 2

Premium Essay

Bmgt220 Week 5 Homework Solutions

...BMGT220 Week 5 homework solutions Click Link Below To Buy: http://hwaid.com/shop/bmgt220-week-5-homework-solutions/ To the side of each senario, record the three required journal entries for a purchase at par, a premium purchase, and a purchase of bonds at discount. The first entry has been made for you. Dorchester Inc. invested $100,000 in 5-year bonds issued by Ace Brick Company. The bonds were purchased at par on January 1, 20X1, and bear interest at a rate of 8% per annum, payable semiannually. (a) Prepare the journal entry to record the initial investment on January, 20X1. (b) Prepare the journal entry that Dorchester would record on each interest date. (c) Prepare the journal entry that Dorchester would record at maturity of the bonds. Problem 2 Evaluate the following features or comments and decide if the description would pertain to a capital lease or an operating lease. Operating Lease Capital Lease The lessee reports the leased asset on its balance sheet x Payments are reported fully as rent expense x Ownership of the property passes to the lessee by the end of the lease term x The lease term is at least 75% of the remaining life of the property x Interest expense is measured and reported by the lessee x Depreciation of the leased asset is not reported by the lessee x At the inception of the lease, the lessee records both an asset and liability ......

Words: 452 - Pages: 2

Premium Essay

Bmgt220 Week 6 Homework Solutions

...BMGT220 Week 6 homework solutions Click Link Below To Buy: http://hwaid.com/shop/bmgt220-week-6-homework-solutions/ Problem 1 On October 1, 20X4, Farmer Engineering Services purchased a new laser surveying instrument. Farmer paid $5,000 down and executed the following promissory note: ………………………. ………………….. Problem 2 Examine the following items and prepare the current liabilities section of the Balance sheet for Annapolis Corporation as of December 31, 2007 The beginning of year accounts payable was $100,000. Purchases on trade accounts during the year were $650,000, and payments on account were $610,000. The company incurs substantial costs for electricity to run its servers and air conditioning systems. As of December 31, 2007, it is estimated that $55,000 of electricity has been used, although the monthly billing for December has not yet been received. Annapolis Corporation sells web hosting plans for as low as $25 per month. However, it requires its customers to prepay in 6-month increments. As of the end of the year, $375,000 had been collected for 2008 web hosting plans. Web hosting services are subject to sales taxes, and Annapolis Corporation collected $65,000 during the year. All of these amounts have been remitted to taxing authorities, with the exception of $5,000 that is due to be paid in January, 2008. The company has total bank loans of $1,500,000. This debt bears interest at 6%, payable monthly. As of December 31, 2007, all......

Words: 405 - Pages: 2

Premium Essay

Accounting Homework

... aa. Annual report n. Income from operations bb. Income statement o. Net income _s_ 1.The difference between the total amount invested by the owners and the par value or stated value of the stock issued. _h_2. Outflows or using up of assets or incurrence of liabilities during a period from delivering or producing goods, rendering services, or carrying out other activities that constitute the entity’s major operations. _b_3. The financial statement that is a list of the entity’s assets, liabilities, and owners’ equity at a point in time. aa_ 4. A document distributed to stockholders that contains the financial statements for the fiscal year of the reporting firm with the report of the external auditor’s examination of the financial statements. _u_ 5. A distribution of earnings to the owners of a corporation. _v_ 6. An arbitrary value assigned to a share of stock when the corporation is organized. _p_ 7. Net income available to the common stockholders divided by the average number of shares of common stock outstanding during the period. _f_ 8. Items held by an entity for sale to potential customers in the normal course of business. _g_ 9. Inflows of cash or increase in other assets, or settlement of liabilities during a period from ...

Words: 3569 - Pages: 15