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2 years ago

Sub-prime loan company is thinking of opening a new office, and the key data are shown below.

1 answer:

Nookie1986 [14]2 years ago

5 0

To complete the above question, please see below:

Sub-Prime Loan Company is thinking of opening a new office, and the key data are shown below. The company owns the building that would be used, and it could sell it for $100,000 after taxes if it decides not to open the new office. The equipment for the project would be depreciated by the straight-line method over the project's 3-year life, after which it would be worth nothing and thus it would have a zero salvage value. No change in net operating working capital would be required, and revenues and other operating costs would be constant over the project's 3-year life. What is the project's NPV? (Hint: Cash flows are constant in Years 1-3.)

WACC 10.0% 
Opportunity cost $100,000 
Net equipment cost (depreciable basis) $65,000 
Straight-line depreciation rate for equipment 33.333% 
Annual sales revenues $123,000 
Annual operating costs (excl. depreciation) $25,000 
Tax rate 35%

The answer is 12,271

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Entertainment Tonight, Inc. manufactures and sells stereo systems that include an assurance-type warranty for the first 90 days.

meriva

Answer:

Given:

The total transaction price for the sale of the stereo system and the extended warranty is $3,000.

The standalone price of each is $2,300 and $900, respectively.

The estimated cost of the assurance-warranty is $350.

Here, in this case the warranty expenses against sale of stereo is on basis of expected expenses .

Expected expenses in future is for certainty and sum collected against this expenses. Therefore, $ 900 is gathered under assurance-warranty while no cost is incurred. Therefore, they will credit the unearned warranty revenue of $ 900

Option (4) is correct.

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2 years ago

A manufacturer of ice creams introduces a new mint and lime flavored ice cream. According to the product/market matrix, the amou

Umnica [9.8K]

Answer:

The correct answer is: low.

Explanation:

According to the traditional product-market matrix, innovativeness risk can imply different variations in a company's process of production. However, in the case of the ice cream manufacturers, the only change is a flavor that is likely to represent little to no change risk because the technology involved to produce it will be almost the same as producing the rest of the flavors.

4 0

2 years ago

The following transactions are February activities of Swing Hard Incorporated, which offers indoor golfing lessons in the northe

Greeley [361]

Answer:

cash 15,000 debit

accounts receivable 15,000 credit

cash 150 debit

gift card liaiblity 150 credit

accounts receivable 4,000 debit

services revenue 4,000 credit

cash 2,250 debit

unearned revenue 2,250 credit

accounts receivable 125 debit

service revenues 125 credit

Explanation:

we increase cash and decrease the customers accounts

we record the cash proceeds and use a liability for the obligation in the near future to provide services to a customer

we recognize the revenue and increase our accounts receivable

as the colleciton is in advance the revenue is not earned. this is a liability as we now have the obligation to perform services in the near future

we must match the revenue whn the time it occurs and that time was february not march.

3 0

2 years ago

On January 1, 2021, Gundy Enterprises purchases an office building for $316,000, paying $56,000 down and borrowing the remaining

andreyandreev [35.5K]

Total Payments $378,542.00

Actual Payment on loan $260,000.00

Interest Expenses $118,542.00

Explanation

Date General Journal Debit credit

1-Jan-18

Office $316,000

Cash $56,000

Mortgage Payable $260,000

(To record buying office)

2. Amortization Schedule:

Date Cash Paid interest expense Decrease in Carrying

value value

1/1/2018 0 0 0 260000

1/31/2018 3154.52 1733.33 1421.19 258578.81

2/28/2018 3154.52 1723.86 1430.66 257148.15

Date General Journal Debit Credit

1-Jan-18

Mortgage Payable $1,421.19

Interest expenses $1,733.33

Cash $3,154.52

(To record first month payments)

Interest Expenses Reducing the carrying value

First Payment $1,733.33 $1,421.19

4. Total Payments $378,542.00

Actual Payment on loan $260,000.00

Interest Expenses $118,542.00

8 0

2 years ago

The following selected transactions were taken from the records of Shipway Company for the first year of its operations ending D

Damm [24]

Answer:

Shipway Company

Journal Entries:

a. Direct Method:

Apr. 13. Debit Bad Debts Expense $2,120

Credit Accounts Receivable (Dean Sheppard) $2,120

To write-off account deemed uncollectible.

May 15. Debit Cash $1,060

Debit Bad Debts Expense $1,760

Credit Accounts Receivable (Dan Pyle) $2,820

To record the receipt of cash and write-off of uncollectible balance.

July 27. Debit Accounts Receivable $2,120

Credit Bad Debts Expense $2,120

To reinstate the account.

Debit Cash $2,120

Credit Accounts Receivable $2,120

To record the receipt of cash.

Dec. 31 Debit Bad Debts Expense $13,375

Credit Accounts Receivable $13,375

To write-off the following uncollectible accounts: Paul Chapman $2,120 Duane DeRosa 3,590 Teresa Galloway 4,640 Ernie Klatt 1,310 Marty Richey 1,715.

b. Allowance Method:

Apr. 13. Debit Allowance for Uncollectibles $2,120

Credit Accounts Receivable (Dean Sheppard) $2,120

To write-off account deemed uncollectible.

May 15. Debit Cash $1,060

Debit Allowance for Uncollectibles $1,760

Credit Accounts Receivable (Dan Pyle) $2,820

To record the receipt of cash and write-off of uncollectible balance.

July 27. Debit Accounts Receivable $2,120

Credit Allowance for Uncollectibles $2,120

To reinstate a previously written-off account.

Debit Cash $2,120

Credit Accounts Receivable $2,120

To record the receipt of cash on account.

Dec. 31 Debit Allowance for Uncollectibles $13,375

Credit Accounts Receivable $13,375

To write-off of uncollectible accounts.

c. The amount by which Shipway Company’s net income would have been higher (lower) under the direct write-off method than under the allowance method is:

= $0

Explanation:

a) Data and Analysis:

Direct Method:

Apr. 13. Bad Debts Expense $2,120 Accounts Receivable (Dean Sheppard) $2,120

May 15. Cash $1,060 Bad Debts Expense $1,760 Accounts Receivable (Dan Pyle) $2,820

July 27. Accounts Receivable $2,120 Bad Debts Expense $2,120 Cash $2,120 Accounts Receivable $2,120

Dec. 31 Bad Debts Expense $13,375 Accounts Receivable $13,375

Uncollectible accounts: Paul Chapman $2,120 Duane DeRosa 3,590 Teresa Galloway 4,640 Ernie Klatt 1,310 Marty Richey 1,715

Allowance Method:

Apr. 13. Allowance for Uncollectibles $2,120 Accounts Receivable (Dean Sheppard) $2,120

May 15. Cash $1,060 Allowance for Uncollectibles $1,760 Accounts Receivable (Dan Pyle) $2,820

July 27. Accounts Receivable $2,120 Allowance for Uncollectibles $2,120 Cash $2,120 Accounts Receivable $2,120

Dec. 31 Allowance for Uncollectibles $13,375 Accounts Receivable $13,375

Uncollectible accounts: Paul Chapman $2,120 Duane DeRosa 3,590 Teresa Galloway 4,640 Ernie Klatt 1,310 Marty Richey 1,715

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1 year ago