Accounting

In 1987, Herman Moore Company completed the construction of a building at a cost of $2,660,000 and first occupied it in January 1988. It was estimated that the building will have a useful life of 40 years and a salvage value of $79,800 at the end of that time.

In 1987, Herman Moore Company completed the construction of a building at a cost of $2,660,000 and first occupied it in January 1988. It was estimated that the building will have a useful life of 40 years and a salvage value of $79,800 at the end of that time. Early in 1998, an addition to …

In 1987, Herman Moore Company completed the construction of a building at a cost of $2,660,000 and first occupied it in January 1988. It was estimated that the building will have a useful life of 40 years and a salvage value of $79,800 at the end of that time. Read More »

E11-12 (Depreciation Computation- Addition, Change in Estimate) In 1987, Herman Moore Company completed the construction of a building at a cost of $2,000,000 and first occupied it in January 1988. It was estimated that the building will have a useful life of 40 years and a salvage value of $60,000 at the end of that time. Early in 1998, an addition to the building was constructed at a cost of $500,000. At that time, it was estimated that the remaining life of the building would be, as originally estimated, an addition 30 years, and that the addition would have a life of 30 years and a salvage value of $20,000. In 2016, it is determined that the probable life of the building and addition will extend to the end of 2047, or 20 years beyond the original estimate. a. using the straight-line method, compute the annual depreciation that would have been charged from 1988 and through 1997. b. Compute the annual depreciation that would have been charged from 1998 through 2015. c. Prepare the entry, if necessary, to adjust the account balances because of the revision of the estimated life in 2016. d. Compute the annual depreciation to be charged, beginning with 2016.

E11-12 (Depreciation Computation- Addition, Change in Estimate) In 1987, Herman Moore Company completed the construction of a building at a cost of $2,000,000 and first occupied it in January 1988. It was estimated that the building will have a useful life of 40 years and a salvage value of $60,000 at the end of that …

E11-12 (Depreciation Computation- Addition, Change in Estimate) In 1987, Herman Moore Company completed the construction of a building at a cost of $2,000,000 and first occupied it in January 1988. It was estimated that the building will have a useful life of 40 years and a salvage value of $60,000 at the end of that time. Early in 1998, an addition to the building was constructed at a cost of $500,000. At that time, it was estimated that the remaining life of the building would be, as originally estimated, an addition 30 years, and that the addition would have a life of 30 years and a salvage value of $20,000. In 2016, it is determined that the probable life of the building and addition will extend to the end of 2047, or 20 years beyond the original estimate. a. using the straight-line method, compute the annual depreciation that would have been charged from 1988 and through 1997. b. Compute the annual depreciation that would have been charged from 1998 through 2015. c. Prepare the entry, if necessary, to adjust the account balances because of the revision of the estimated life in 2016. d. Compute the annual depreciation to be charged, beginning with 2016. Read More »

Kiely Company Inc. has buildings that cost $1,000,000 with accumulated depreciation of $500,000 on December 31, Year 1. On that date Kiely Company determines that the market value of these buildings is $800,000. Kiely company wishes to carry buildings on the December 31, Year 1 balance sheet at a revalued amount. Kiely Company uses treatment 2 under the revaluation PPE method. Record the necessary journal entries for the elimination of accumulated depreciation and the entry to revalue the building.

Kiely Company Inc. has buildings that cost $1,000,000 with accumulated depreciation of $500,000 on December 31, Year 1. On that date Kiely Company determines that the market value of these buildings is $800,000. Kiely company wishes to carry buildings on the December 31, Year 1 balance sheet at a revalued amount. Kiely Company uses treatment …

Kiely Company Inc. has buildings that cost $1,000,000 with accumulated depreciation of $500,000 on December 31, Year 1. On that date Kiely Company determines that the market value of these buildings is $800,000. Kiely company wishes to carry buildings on the December 31, Year 1 balance sheet at a revalued amount. Kiely Company uses treatment 2 under the revaluation PPE method. Record the necessary journal entries for the elimination of accumulated depreciation and the entry to revalue the building. Read More »

First National Bank of Conway is considering installing two ATMs in its Southside branch. The new machines are expected to cost $31000 apiece. Installation costs will amount to about $14000 per machine. Each machine has a projected useful life of 9 years. Due to rapid growth in the Southside district, these two machines (combined) are expected to handle 51000 cash transactions per year. On average, each cash transaction is expected to save $0.21 in teller expenses. If First National has a 0.12 cost of capital, what is the NPV of this project?

First National Bank of Conway is considering installing two ATMs in its Southside branch. The new machines are expected to cost $31000 apiece. Installation costs will amount to about $14000 per machine. Each machine has a projected useful life of 9 years. Due to rapid growth in the Southside district, these two machines (combined) are …

First National Bank of Conway is considering installing two ATMs in its Southside branch. The new machines are expected to cost $31000 apiece. Installation costs will amount to about $14000 per machine. Each machine has a projected useful life of 9 years. Due to rapid growth in the Southside district, these two machines (combined) are expected to handle 51000 cash transactions per year. On average, each cash transaction is expected to save $0.21 in teller expenses. If First National has a 0.12 cost of capital, what is the NPV of this project? Read More »

D. If the probability of payment exceeds 0.90 Terry’s Place is currently experiencing a bad debt ratio of 4%. Terry is convinced that, with looser credit controls, this ratio will increase to 8%; however, she expects sales to increase by 10% as a result. The cost of goods sold is 80% of the selling price. Per $100 of current sales, what is Terry’s expected profit under the proposed credit standards? A. $26.00 B. $15.40 C. $13.20 D. $25.60

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2. Hoang Long joint stock company issued fixed rate bonds bearing interest at 11% pa. The bonds have a par value of VND 1,000,000 and will mature after 9 years. Interest are payable annually. If the yield to maturity (YTM) of the bonds is 10%, what is the present value of the bond?

2. Hoang Long joint stock company issued fixed rate bonds bearing interest at 11% pa. The bonds have a par value of VND 1,000,000 and will mature after 9 years. Interest are payable annually. If the yield to maturity (YTM) of the bonds is 10%, what is the present value of the bond? EXPERT ANSWER

Question 3: You have been reading about the Madison Computer Company (MCC), which currently retains 90 percent of its earnings ($5 a share this year). It earns an ROE of almost 30 percent. a. Assuming a required rate of return of 14 percent, how much would you pay for MCC on the basis of the earnings multiplier model? Discuss your answer and justify with examples. b. What would you pay for Madison Computer if its retention rate was 60 percent and its ROE was 19 percent? Show your work.

EXPERT ANSWER Answer : (a.) Given the following Information : Required rate of return = 14% or 0.14 Return on equity = 30% or 0.30 Retention ratio = 90% or 0.90 Dividend Payout Ratio = 1 – 0.90 = 0.10 Earnings per share = $5.00 Growth rate = Retention Ratio x ROE = 0 .90 x …

Question 3: You have been reading about the Madison Computer Company (MCC), which currently retains 90 percent of its earnings ($5 a share this year). It earns an ROE of almost 30 percent. a. Assuming a required rate of return of 14 percent, how much would you pay for MCC on the basis of the earnings multiplier model? Discuss your answer and justify with examples. b. What would you pay for Madison Computer if its retention rate was 60 percent and its ROE was 19 percent? Show your work. Read More »

February 1, 2010, Ohio Contractors agreed to construct a building at a contract price of $6,000,000. Ohio estimated total construction costs would be $4,000,000 and the project would be finished in 2012. Fiscal year ended 31 Dec. Information relating to the costs and billings for this contract is as follows:

 February 1, 2010, Ohio Contractors agreed to construct a building at a contract priceof $6,000,000. Ohio estimated total construction costs would be $4,000,000 and theproject would be finished in 2012. Fiscal year ended 31 Dec. Information relating to thecosts and billings for this contract is as follows:2010 2011 2012Variation to the contract price-increase $200,000Total costs …

February 1, 2010, Ohio Contractors agreed to construct a building at a contract price of $6,000,000. Ohio estimated total construction costs would be $4,000,000 and the project would be finished in 2012. Fiscal year ended 31 Dec. Information relating to the costs and billings for this contract is as follows: Read More »

ACR4.2 Lars Linken opened Lars Cleaners on March 1, 2020. During March, the following transac- tions were completed. Mar. 1 Shareholders invested €15.000 cash in the business in exchange for ordinary shares. 1 Borrowed €6,000 cash by signing a 6-month, 6%, €6,000 note payable. Interest will be paid the first day of each subsequent month. 1 Purchased used truck for €8.000 cash. 2 Paid €1,500 cash to cover rent from March 1 through May 31. 3 Paid €2,400 cash on a 6-month insurance policy effective March 1. 6 Purchased cleaning supplies for €2,000 on account. 14 Billed customers €3,700 for cleaning services performed. 18 Paid €500 on amount owed on cleaning supplies. 20 Paid €1,750 cash for employee salaries. 21 Collected €1,600 cash from customers billed on March 14. 28 Billed customers €4,200 for cleaning services performed. 31 Paid €350 for gas and oil used in truck during month (use Maintenance and Repairs Expense). 31 Declared and paid a €900 cash dividend. The chart of accounts for Lars Cleaners contains the following accounts: Cash, Accounts Receivable, counts Payable, Salaries and Wages Payable, Notes Payable, Interest Payable, Share Capital-Ordinary. Supplies Expense, Depreciation Expense, Insurance Expense Salaries Retained Earnings, Dividends, Income Summary, Service Revenue, Maintenance and Repairs Expense, pense, and Interest Expense. -4 Wage- Expense. Rent Ex- 文 Comprehensive Accc Instructions a. Journalize the March transactions. b. Post to the ledger accounts. (Use T-accounts.) c. Prepare a trial balance at March 31. d. Journalize the following adjustments. 1. Services performed but unbilled and uncollected at March 31 were €200. 2. Depreciation on equipment for the month was €250. 3. One-sixth of the insurance expired. 4

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