P6-2 (Various Time Value Situations) Using the appropriate interest table, provide the solution to each of the following four questions by computing the unknowns.
(a) What is the amount of the payments that Ned Winslow must make at the end of each of 8 years to accumulate a fund of $90,000 by the end of the eighth year, if the fund earns 8% interest, compounded annually?
(b) Robert Hitchcock is 40 years old today and he wishes to accumulate $500,000 by his sixty-fifth birthday so he can retire to his summer place on Lake Hopatcong. He wishes to accumulate this amount by making equal deposits on his fortieth through his sixty-fourth birthdays. What annual deposit must Robert make if the fund will earn 12% interest compounded annually?
(c) Diane Ross has $20,000 to invest today at 9% to pay a debt of $47,347. How many years will it take her to accumulate enough to liquidate the debt?
(d) Cindy Houston has a $27,600 debt that she wishes to repay 4 years from today; she has $19,553 that she intends to invest for the 4 years. What rate of interest will she need to earn annually in order to accumulate enough to pay the debt?
Click here for the solution: (Various Time Value Situations) Using the appropriate interest table, provide the solution to each of the following four questions by computing the unknowns
Showing posts with label questions. Show all posts
Showing posts with label questions. Show all posts
Tuesday, April 12, 2016
Tuesday, November 10, 2015
Comprehensive Questions 11-21 (Assessing Control Risk) An auditor is required to obtain a sufficient understanding of each of the components
Comprehensive Questions 11-21 (Assessing Control Risk) An auditor is required to obtain a sufficient understanding of each of the components of an entity’s system of internal control to plan the audit of the entity’s financial statements and to assess control risk for the assertions embodied in the account balance, transaction class, and disclosure components of the financial statements.
Required
a. Explain the reasons an auditor may assess control risk at the maximum level for one or more assertions embodied in an account balance.
b. What must an auditor do to support assessing control risk at less than the maximum level when the auditor has determined that controls have been placed in operation?
c. What should an auditor consider when seeking a further reduction in the planned assessed level of control risk?
d. What are an auditor’s documentation requirements concerning an entity’s system of internal control and the assessed level of control risk?
AICPA (adapted)
Click here for the solution: Comprehensive Questions 11-21 (Assessing Control Risk) An auditor is required to obtain a sufficient understanding of each of the components
Required
a. Explain the reasons an auditor may assess control risk at the maximum level for one or more assertions embodied in an account balance.
b. What must an auditor do to support assessing control risk at less than the maximum level when the auditor has determined that controls have been placed in operation?
c. What should an auditor consider when seeking a further reduction in the planned assessed level of control risk?
d. What are an auditor’s documentation requirements concerning an entity’s system of internal control and the assessed level of control risk?
AICPA (adapted)
Click here for the solution: Comprehensive Questions 11-21 (Assessing Control Risk) An auditor is required to obtain a sufficient understanding of each of the components
Friday, September 18, 2015
Max Weinberg is studying for an accounting test and has developed the following questions about investments
ACC 291 Week 4 Assignment
E12-1 Max Weinberg is studying for an accounting test and has developed the following questions about investments.
1. What are three reasons why companies purchase investments in debt or stock securities?
2. Why would a corporation have excess cash that it does not need for operations?
3. What is the typical investment when investing cash for short periods of time?
4. What are the typical investments when investing cash to generate earnings?
5. Why would a company invest in securities that provide no current cash flows?
6. What is the typical stock investment when investing cash for strategic reasons?
Instructions
Provide answers for Max.
Click here for the solution: Max Weinberg is studying for an accounting test and has developed the following questions about investments
E12-1 Max Weinberg is studying for an accounting test and has developed the following questions about investments.
1. What are three reasons why companies purchase investments in debt or stock securities?
2. Why would a corporation have excess cash that it does not need for operations?
3. What is the typical investment when investing cash for short periods of time?
4. What are the typical investments when investing cash to generate earnings?
5. Why would a company invest in securities that provide no current cash flows?
6. What is the typical stock investment when investing cash for strategic reasons?
Instructions
Provide answers for Max.
Click here for the solution: Max Weinberg is studying for an accounting test and has developed the following questions about investments
Tuesday, September 8, 2015
Use the basic accounting equation to answer these questions
BE 1-8 Use the basic accounting equation to answer these questions.
(a) The liabilities of Cummings Company are $90,000 and the stockholders' equity is $230,000. What is the amount of Cummings Company's total assets?
(b) The total assets of Haldeman Company are $170,000 and its stockholders' equity is $90,000. What is the amount of its total liabilities?
(c) The total assets of Dain Co. are $800,000 and its liabilities are equal to one-fourth of its total assets. What is the amount of Dain Co.'s stockholders' equity?
Click here for the solution: Use the basic accounting equation to answer these questions
(a) The liabilities of Cummings Company are $90,000 and the stockholders' equity is $230,000. What is the amount of Cummings Company's total assets?
(b) The total assets of Haldeman Company are $170,000 and its stockholders' equity is $90,000. What is the amount of its total liabilities?
(c) The total assets of Dain Co. are $800,000 and its liabilities are equal to one-fourth of its total assets. What is the amount of Dain Co.'s stockholders' equity?
Click here for the solution: Use the basic accounting equation to answer these questions
Often, questions have been raised "regarding the responsibility of the independent auditor for the auditor for the discovery of fraud
Auditing P 6-22 Often, questions have been raised "regarding the responsibility of the independent auditor for the auditor for the discovery of fraud (including misappropriation of assets and fraudulent financial reporting), and concerning the proper course of conduct of the independent auditor when his or her audit discloses specific circumstances that arouse suspicion as to the existence of fraud."
Required:
a. What are (1) the function and (2) the responsibilities of the independent auditor in the audit of financial statements? Discuss fully, but in this part do not include fraud in the discussion.
b. What are the responsibilities of the independent auditor for the detection of fraud? Discuss fully.
c. What is the independent auditor's proper course of conduct when the audit discloses specific circumstances that arouse suspicion as to the existence of fraud?
Click here for the solution: Often, questions have been raised "regarding the responsibility of the independent auditor for the auditor for the discovery of fraud
Required:
a. What are (1) the function and (2) the responsibilities of the independent auditor in the audit of financial statements? Discuss fully, but in this part do not include fraud in the discussion.
b. What are the responsibilities of the independent auditor for the detection of fraud? Discuss fully.
c. What is the independent auditor's proper course of conduct when the audit discloses specific circumstances that arouse suspicion as to the existence of fraud?
Click here for the solution: Often, questions have been raised "regarding the responsibility of the independent auditor for the auditor for the discovery of fraud
Wednesday, July 15, 2015
Answer the following questions related to Dubois Inc
P6-7 (Time Value Concepts Applied to Solve Business Problems) Answer the following questions related to Dubois Inc.
(a) Dubois Inc. has $600,000 to invest. The company is trying to decide between two alternative uses of the funds. One alternative provides $80,000 at the end of each year for 12 years, and the other is to receive a single lump sum payment of $1,900,000 at the end of the 12 years. Which alternative should Dubois select? Assume the interest rate is constant over the entire investment.
(b) Dubois Inc. has completed the purchase of new Dell computers. The fair market value of the equipment is $824,150. The purchase agreement specifies an immediate down payment of $200,000 and semiannual payments of $76,952 beginning at the end of 6 months for 5 years. What is the interest rate, to the nearest percent, used in discounting this purchase transaction?
(c) Dubois Inc. loans money to John Kruk Corporation in the amount of $800,000. Dubois accepts an 8% note due in 7 years with interest payable semiannually. After 2 years (and receipt of interest for 2 years), Dubois needs money and therefore sells the note to Chicago National Bank, which demands interest on the note of 10% compounded semiannually. What is the amount Dubois will receive on the sale of the note?
(d) Dubois Inc. wishes to accumulate $1,300,000 by December 31, 2020, to retire bonds outstanding. The company deposits $200,000 on December 31, 2010, which will earn interest at 10% compounded quarterly, to help in the retirement of this debt. In addition, the company wants to know how much should be deposited at the end of each quarter for 10 years to ensure that $1,300,000 is available at the end of 2020. (The quarterly deposits will also earn at a rate of 10%, compounded quarterly.) (Round to even dollars.)
Click here for the solution: Answer the following questions related to Dubois Inc
(a) Dubois Inc. has $600,000 to invest. The company is trying to decide between two alternative uses of the funds. One alternative provides $80,000 at the end of each year for 12 years, and the other is to receive a single lump sum payment of $1,900,000 at the end of the 12 years. Which alternative should Dubois select? Assume the interest rate is constant over the entire investment.
(b) Dubois Inc. has completed the purchase of new Dell computers. The fair market value of the equipment is $824,150. The purchase agreement specifies an immediate down payment of $200,000 and semiannual payments of $76,952 beginning at the end of 6 months for 5 years. What is the interest rate, to the nearest percent, used in discounting this purchase transaction?
(c) Dubois Inc. loans money to John Kruk Corporation in the amount of $800,000. Dubois accepts an 8% note due in 7 years with interest payable semiannually. After 2 years (and receipt of interest for 2 years), Dubois needs money and therefore sells the note to Chicago National Bank, which demands interest on the note of 10% compounded semiannually. What is the amount Dubois will receive on the sale of the note?
(d) Dubois Inc. wishes to accumulate $1,300,000 by December 31, 2020, to retire bonds outstanding. The company deposits $200,000 on December 31, 2010, which will earn interest at 10% compounded quarterly, to help in the retirement of this debt. In addition, the company wants to know how much should be deposited at the end of each quarter for 10 years to ensure that $1,300,000 is available at the end of 2020. (The quarterly deposits will also earn at a rate of 10%, compounded quarterly.) (Round to even dollars.)
Click here for the solution: Answer the following questions related to Dubois Inc
Tuesday, July 7, 2015
20 Questions: A simple structure is characterized by
1. A simple structure is characterized by (Points : 5)
2. Complete the following sentence: "Virtual organizations __________ whereas modular organizations __________." (Points : 5)
3. The phrase that best defines a virtual organization is (Points : 5)
4. Effective ambidextrous organizations have alignment, which means that (Points : 5)
5. Important advantages of a holding company structure include (Points : 5)
6. An organization such as ConAgra that has dozens of different divisions with similar products will probably have the greatest success with which form of organization structure? (Points : 5)
7. What is the name of the practice that many modular organizations use to grow? (Points : 5)
8. Which of the following statements would least likely be found in a corporate credo? (Points : 5)
9. Leaders play a key role in developing and sustaining an organization's (Points : 5)
10. The "bottom-up" perspective of empowerment (Points : 5)
11. Which of the following is not a characteristic of a successful learning organization? (Points : 5)
12. Coercive power is (Points : 5)
13. Refusal to share information, conflicts over resources, conflicts between departments and divisions, and petty interpersonal differences are symptoms of which type of barrier to change? (Points : 5)
14. Expert power (Points : 5)
15. Strategic reasons for undertaking a corporate venture include which of the following? (Points : 5)
16. Product champions (Points : 5)
17. The innovation dilemma known as seeds versus weeds refers to (Points : 5)
18. __________ produce fundamental changes that can transform a company or even revolutionize an industry, while __________ enhance existing practices and often represent evolutionary applications of fundamental breakthroughs. (Points : 5)
19. Which kind of risk taking requires that a company borrow heavily or commit a large portion of its resources in order to grow? (Points : 5)
20. Real options analysis is most appropriate when (Points : 5)
Click here for the solution: 20 Questions: A simple structure is characterized by
2. Complete the following sentence: "Virtual organizations __________ whereas modular organizations __________." (Points : 5)
3. The phrase that best defines a virtual organization is (Points : 5)
4. Effective ambidextrous organizations have alignment, which means that (Points : 5)
5. Important advantages of a holding company structure include (Points : 5)
6. An organization such as ConAgra that has dozens of different divisions with similar products will probably have the greatest success with which form of organization structure? (Points : 5)
7. What is the name of the practice that many modular organizations use to grow? (Points : 5)
8. Which of the following statements would least likely be found in a corporate credo? (Points : 5)
9. Leaders play a key role in developing and sustaining an organization's (Points : 5)
10. The "bottom-up" perspective of empowerment (Points : 5)
11. Which of the following is not a characteristic of a successful learning organization? (Points : 5)
12. Coercive power is (Points : 5)
13. Refusal to share information, conflicts over resources, conflicts between departments and divisions, and petty interpersonal differences are symptoms of which type of barrier to change? (Points : 5)
14. Expert power (Points : 5)
15. Strategic reasons for undertaking a corporate venture include which of the following? (Points : 5)
16. Product champions (Points : 5)
17. The innovation dilemma known as seeds versus weeds refers to (Points : 5)
18. __________ produce fundamental changes that can transform a company or even revolutionize an industry, while __________ enhance existing practices and often represent evolutionary applications of fundamental breakthroughs. (Points : 5)
19. Which kind of risk taking requires that a company borrow heavily or commit a large portion of its resources in order to grow? (Points : 5)
20. Real options analysis is most appropriate when (Points : 5)
Click here for the solution: 20 Questions: A simple structure is characterized by
Thursday, July 2, 2015
Using Exchange Rates Take a look back at Figure 21.1 to answer the following questions
Using Exchange Rates Take a look back at Figure 21.1 to answer the following questions:
a) If you have $100, how many Euros can you get?
b) How much is one euro worth?
c) If you have 5 million Euros, how many dollars do you have?
d) Which is worth more, a New Zealand dollar or a Singapore dollar?
e) Which is worth more, a Mexican peso or a Chilean peso?
f) How many Mexican pesos can you get for a euro? What do you call this rate?
g) Per unit, what is the most valuable currency of those listed? The least valuable?
Click here for the solution: Using Exchange Rates Take a look back at Figure 21.1 to answer the following questions
(Forward Exchange Rate) Use the information in Figure 21.1 to answer the following questions
(Forward Exchange Rate) Use the information in Figure 21.1 to answer the following questions:
a) What is the six-month forward rate for the Japanese yen in yen per
U.S. dollar? Is the yen selling at a premium or a discount? Explain.
b) What is the three-month forward rate for Canadian dollars in U.S.
dollars per Canadian dollar? Is the dollar selling at a premium or a
discount? Explain.
c) What do you think will happen to the value of the dollar relative to
the yen and the pound, based on the information in the figure? Explain.
Click here for the solution: (Forward Exchange Rate) Use the information in Figure 21.1 to answer the following questions
Monday, June 29, 2015
Various Questions: Viva Inc. had bought machine X for $15,500 two years ago
1) Viva Inc. had bought machine X for $15,500 two years ago. The
machine had no residual value and had an estimated useful life of 10
years. If the company uses the straight line depreciation method,
calculate the current book value of the machine.
2) Henry Tax Planning Service bought production equipment for $9,600 on
January 1, 2015. It has an estimated useful life of 5 years and zero
residual value. Henry uses the straight-line method to calculate
depreciation and records depreciation expense in the books at the end of
every month. As of June 30, 2015, the book value of this equipment
shown on Henry's balance sheet will be:
3) Real Weight Losers, a diet magazine, collected $480,000 in
subscription revenue in May. Each subscriber will receive an issue of
the magazine for each of the next 12 months, beginning with the June
issue. The company uses the accrual method of accounting. Provide the
adjusting entry needed on June Assume the magazine initially records a
liability for the subscription revenue.
4) On July 1, Alpha Company prepaid rent for a small equipment storage
area. They paid $20,000 to rent the area for the period of July 1
through the end of the year. Provide the journal entry needed on July 1
when the payment is made. Assume the prepaid expense is initially
recorded as an asset.
5) Luminous Electrical Repair performed services costing $8,000 on
January 24 and invoiced the customer. Luminous received the $8,000 on
January 31. Provide the journal entry on January 31 when the cash was
received.
6) On January 1, 2015, the Accounts Receivable of Linda Company had a
debit balance of $20,000. During January, the company provided services
for $600,000 on account. The company collected $250,000 from its
customers on account in January. What was the ending balance in the
Accounts Receivable account at the end of January?
7) A company received $5,000 for 100 one-year subscriptions on July 1. The journal entry to record this is
8) On July 1, Alpha Company paid rent of $15,000 for a small equipment
storage area for the period of July 1 till December 31. Provide the
adjusting journal entry on July 31. Assume the prepaid expense is
initially recorded as an asset.
9) ABC Company signed a one-year $48,000 note payable at 8% interest on
May 1, 2014. If ABC only adjusts their accounts once a year at
year-end, how much interest expense was accrued on December 31, 2014?
10) The balances of select accounts of Sandra Company as at December 31, 2015 are given below:
Debit Credit
Building $120,000
Cash 5,000
Office Supplies 700
Furniture 3,000
Prepaid Insurance 450
Accumulated Depreciation—Furniture $1,000
Land 35,000
Accumulated Depreciation—Building 4,800
Accounts Receivable 2,500
The insurance has been prepaid for the next half year. What are the
total current assets that would be shown on the balance sheet?
11) Education for All sells tickets in advance for their weekly
productions and records the proceeds as Unearned Revenue. At the end of
each month, Education for All makes an adjusting entry to account for
the tickets used during the month (ticket revenue.) On March 1, the
Unearned Revenue account had a credit balance of $4,000. During March,
they sold 300 tickets at $20 each and 250 tickets were used during the
month. What is the balance in Unearned Revenue at the end of March?
12) Golden Oak Antique Shop had the following account balances at the end of the current accounting period:
Beginning inventory $73,000
Net purchases 58,250
Net sales revenue 87,500
The normal gross profit for the company is $45%. What was the company's estimated cost of goods sold for the accounting period?
13) Samson Company had the following balances and transactions during 2014:
Beginning Merchandise Inventory 10 units at $95
March 10 Sold 8 units
June 10 Purchased 20 units at $100
October 30 Sold 15 units
What is the amount of the company's Merchandise Inventory, as disclosed
in the December 31, 2014 balance sheet as per the periodic first-in,
first-out (FIFO) costing method?
14) Collins Computers stored its inventory in a warehouse which
suffered a fire in late November, 2014. Their sales office was at a
different location. In order to file a claim with the insurance company,
the owners ask you to estimate the inventory in the warehouse. The
following information is available:
Beginning inventory for November $375,500
Purchases through November 30 470,250
Net sales revenue through November 31 793,000
The company's gross profit has historically been 40% of Net sales
revenue. Estimate the value of the inventory destroyed in the fire using
the gross profit method.
15) The Allowance for Bad Debts account has a credit balance of $2,000.
The company's management estimates that 2% of net credit sales will be
uncollectible for the year 2015. Net credit sales for the year amounted
to $250,000. What will be the amount of Bad Debts Expense reported on
the income statement for 2015?
16) Art Parrish, the sole employee of Parrish Sales, has gross salary
for March of $4,000. The entire amount is under the OASDI limit of
$110,100, and thus subject to FICA. He is also subject to federal income
tax at a rate of 18%. Art has a deduction of $320 for health insurance
and $80 for United Way. Provide the Provide the journal entry to record
salaries expense and payroll withholdings. (Assume a FICA—OASDI Tax of
4.2% and FICA—Medicare Tax of 1.45%.)
17) A $35,000, two-month, 7% note payable was issued on December 1,
2015. What is the amount of interest expense recorded in the year 2016?
18) The following information is needed to reconcile the cash balance for Fire Steel Inc.
• A deposit of $5,800 is in transit.
• Outstanding checks total $1,500.
• The book balance is $6,800 at February 28, 2013.
• The bookkeeper recorded a $1,740 check as $17,400 in payment of the current month's rent.
• The bank balance at February 28, 2013 was $18,000.
• A deposit of $400 was credited by the bank for $4,000.
• A customer's check for $3,700 was returned for nonsufficient funds.
• The bank service charge is $60.
Based on this information, prepare a bank reconciliation for Fire Steel Inc. as of February 28, 2013.
Answer:
Bank Book
Balance, February 28, 2013 Balance, February 28,2013
Adjusted balance Feb. 28, 2013 Adjusted balance Feb. 28, 2013
Click here for the solution: Various Questions: Viva Inc. had bought machine X for $15,500 two years ago
Wednesday, June 17, 2015
ACC 421 Week 5 (Time Value Concepts Applied to Solve Business Problems) Answer the following questions related to Derek Lee Inc
ACC 421 Week Five (Week 5)
Problem 6-7 (P6-7) (Time Value Concepts Applied to Solve Business Problems) Answer the following questions related to Derek Lee Inc.
(a) Derek Lee Inc. has $572,000 to invest. The company is trying to decide between two alternative uses of the funds. One alternative provides $80,000 at the end of each year for 12 years, and the other is to receive a single lump sum payment of $1,900,000 at the end of the 12 years. Which alternative should Lee select? Assume the interest rate is constant over the entire investment.
(b) Derek Lee Inc. has completed the purchase of new Dell computers. The fair market value of the equipment is $824,150. The purchase agreement specifies an immediate down payment of $200,000 and semiannual payments of $76,952 beginning at the end of 6 months for 5 years. What is the interest rate, to the nearest percent, used in discounting this purchase transaction?
(c) Derek Lee Inc. loans money to John Kruk Corporation in the amount of $600,000. Lee accepts an 8% note due in 7 years with interest payable semiannually. After 2 years (and receipt of interest for 2 years), Lee needs money and therefore sells the note to Chicago National Bank, which demands interest on the note of 10% compounded semiannually. What is the amount Lee will receive on the sale of the note?
(d) Derek Lee Inc. wishes to accumulate $1,300,000 by December 31, 2017, to retire bonds outstanding. The company deposits $300,000 on December 31, 2007, which will earn interest at 10% compounded quarterly, to help in the retirement of this debt. In addition, the company wants to know how much should be deposited at the end of each quarter for 10 years to ensure that $1,300,000 is available at the end of 2017. (The quarterly deposits will also earn at a rate of 10%, compounded quarterly.) (Round to even dollars.)
Click here for the solution: ACC 421 Week 5 (Time Value Concepts Applied to Solve Business Problems) Answer the following questions related to Derek Lee Inc
Problem 6-7 (P6-7) (Time Value Concepts Applied to Solve Business Problems) Answer the following questions related to Derek Lee Inc.
(a) Derek Lee Inc. has $572,000 to invest. The company is trying to decide between two alternative uses of the funds. One alternative provides $80,000 at the end of each year for 12 years, and the other is to receive a single lump sum payment of $1,900,000 at the end of the 12 years. Which alternative should Lee select? Assume the interest rate is constant over the entire investment.
(b) Derek Lee Inc. has completed the purchase of new Dell computers. The fair market value of the equipment is $824,150. The purchase agreement specifies an immediate down payment of $200,000 and semiannual payments of $76,952 beginning at the end of 6 months for 5 years. What is the interest rate, to the nearest percent, used in discounting this purchase transaction?
(c) Derek Lee Inc. loans money to John Kruk Corporation in the amount of $600,000. Lee accepts an 8% note due in 7 years with interest payable semiannually. After 2 years (and receipt of interest for 2 years), Lee needs money and therefore sells the note to Chicago National Bank, which demands interest on the note of 10% compounded semiannually. What is the amount Lee will receive on the sale of the note?
(d) Derek Lee Inc. wishes to accumulate $1,300,000 by December 31, 2017, to retire bonds outstanding. The company deposits $300,000 on December 31, 2007, which will earn interest at 10% compounded quarterly, to help in the retirement of this debt. In addition, the company wants to know how much should be deposited at the end of each quarter for 10 years to ensure that $1,300,000 is available at the end of 2017. (The quarterly deposits will also earn at a rate of 10%, compounded quarterly.) (Round to even dollars.)
Click here for the solution: ACC 421 Week 5 (Time Value Concepts Applied to Solve Business Problems) Answer the following questions related to Derek Lee Inc
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