A company that records credit purchases in a purchases journal and records purchases returns

ACC 225 Week 7

Exercise 7-16

A company that records credit purchases in a purchases journal and records purchases returns in a general journal made the following errors. Indicate when each error should be discovered.
1. Posted a purchases return to the Accounts Payable account and to the creditor’s subsidiary account but did not post the purchases return to the Inventory account.
2. Posted a purchases return to the Inventory account and to the Accounts Payable account but did not post to the creditor’s subsidiary account.
3. Correctly recorded a $4,000 purchase in the purchases journal but posted it to the creditor’s subsidiary account as a $400 purchase.
4. Made an addition error in determining the balance of a creditor’s subsidiary account.
5. Made an addition error in totaling the Office Supplies column of the purchases journal.


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An investment of $185,575 is expected to generate returns of $65,000 per year for each of the next four years

An investment of $185,575 is expected to generate returns of $65,000 per year for each of the next four years. What is the investment's internal rate of return?

Click here for the solution: An investment of $185,575 is expected to generate returns of $65,000 per year for each of the next four years

You have two assets and must calculate their values today based on their different payment streams and appropriate required returns

E6–6 You have two assets and must calculate their values today based on their different payment streams and appropriate required returns. Asset 1 has a required return of 15% and will produce a stream of $500 at the end of each year indefinitely. Asset 2 has a required return of 10% and will produce an end-of-year cash flow of $1,200 in the first year, $1,500 in the second year, and $850 in its third and final year.

Click here for the solution: You have two assets and must calculate their values today based on their different payment streams and appropriate required returns

The expected annual returns are 15% for investment 1 and 12% for investment 2

E8–3 The expected annual returns are 15% for investment 1 and 12% for investment 2. The standard deviation of the first investment’s return is 10%; the second investment’s return has a standard deviation of 5%. Which investment is less risky based solely on standard deviation? Which investment is less risky based on coefficient of variation? Which is a better measure given that the expected returns of the two investments are not the same?

Click here for the solution: The expected annual returns are 15% for investment 1 and 12% for investment 2

Given the information below, compute annualized returns

1. Given the information below, compute annualized returns

Asset Income Price change Initial price Time period
A $2 $6 $29 15 months
B 0 10 40 11months
C 50 70 30 7 years
D 3 -8 20 24 month

2. Given the information below, compute annualized returns:

Asset Purchase price Current price Income received Time period
A $20 $26 $2 75 weeks
B 15 18 0.40 3 month
C 150 130 0 2 years
D 3.50 3.00 0.20 8 months

Click here for the solution: Given the information below, compute annualized returns