Homework Answers
| Sr No | Account | Debit | Credit |
| 1. a. | Equipment | 50100 | |
| GST (50100 * 5%) | 2505 | ||
| Sales Tax | 3507 | ||
| Accounts Payable | 56112 | ||
| (To record purchase of equipment on credit) | |||
| b. | Accounts Payable | 56112 | |
| Purchase Discount (56112 * 2%) | 1122 | ||
| Cash | 54990 | ||
| (To record payment to vendor) | |||
| 2. a. | Equipment (New) | 50100 | |
| Accumulated Depreciation (39500 - 2100) | 37400 | ||
| Profit (9800 - 2100) | 7700 | ||
| Accounts Payable | 40300 | ||
| Equipment (Old) | 39500 | ||
| (To record exchange of equipment) | |||
| b. | Accounts Payable | 40300 | |
| Cash | 40300 | ||
| (To record payment to vendor) | |||
| 3. a. | Equipment (20100 * PVIAF 11%, 3 years) | 49119 | |
| Discount on notes payable | 11181 | ||
| Notes Payable (20100 * 3) | 60300 | ||
| (To record purchase of equipment on credit) | |||
| b. | Interest Expense | 5403 | |
| Notes Payable | 14697 | ||
| Cash | 20100 | ||
| (To record first payment to vendor) | |||
| c. | Interest Expense | 3786 | |
| Notes Payable | 16314 | ||
| Cash | 20100 | ||
| (To record second payment to vendor) |
Calculation of interest expense
| Year 1 | Year 2 | Year 3 | |
| Opening | 49119 | 34422 | 18109 |
| Interest @ 11% | 5403 | 3786 | 1992 |
| Payment | 20100 | 20100 | 20100 |
| Closing | 34422 | 18109 | 0 |
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TABLE PV.2 Present Value of an Annuity of 1 PV = 1- (40 2/½ % (n)...
Exercise 10-13 Ivanhoe Engineering Corporation purchased conveyor equipment with a list price of $45,200. Three independent...
Exercise 10-13 Ivanhoe Engineering Corporation purchased conveyor equipment with a list price of $45,200. Three independent cases that are related to the equipment follow. Assume that the equipment purchases are recorded gross. 1. Geddes paid cash for the equipment 25 days after the purchase, along with 5% GST (recoverable) and provincial sales tax of $3,164, both based on the purchase price. The vendor's credit terms were 1/10, n/30. 2. Geddes traded in equipment with a book value of $1,000 (initial...
Using the following table, determine the present value of an annuity of $50,000 to be received...
Using the following table, determine the present value of an annuity of $50,000 to be received at the end of each of five years at 6 percent interest. Present value of an annuity of $1 at compound interest: Periods 4.0% 4.5% 5.0% 5.5% 6.0% 6.5% 7.0% 10.0% 11.0% 12.0% 13.0% 1 0.96154 0.95694 0.95238 0.94787 0.94340 0.93897 0.93458 0.90909 0.90090 0.89286 0.88496 2 1.88609 1.87267 1.85941 1.84632 1.83339 1.82063 1.80802 1.73554 1.71252 1.69005 1.66810 3 2.77509 2.74896 2.72325 2.69793 2.67301...
PV = TABLE 2 Present Value of $1 $1 (1+1)" wi 1.0% 1 0.99010 2 0.98030...
PV = TABLE 2 Present Value of $1 $1 (1+1)" wi 1.0% 1 0.99010 2 0.98030 3 0.97059 4 0.96098 5 0.95147 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 0.98522 0.98039 0.97561 0.97087 0.96618 0.96154 0.97066 0.96117 0.95181 0.94260 0.93351 0.92456 0.95632 0.94232 0.92860 0.91514 0.90194 0.88900 0.94218 0.92385 0.90595 0.88849 0.87144 0.85480 0.92826 0.90573 0.88385 0.86261 0.84197 0.82193 4.5% 5.0% 5.5% 6.0% 7.0% 0.95694 0.95238 0.94787 0.94340 0.93458 0.91573 0.90703 0.89845 0.89000 0.87344 0.87630 0.86384 0.85161 0.83962 0.81630 0.83856 0.82270...
Pharoah Engineering Corporation purchased conveyor equipment with a list price of $51,700. Three independent cases that...
Pharoah Engineering Corporation purchased conveyor equipment
with a list price of $51,700. Three independent cases that are
related to the equipment follow. Assume that the equipment
purchases are recorded gross.
1.
Geddes paid cash for the equipment 25 days after the purchase,
along with 5% GST (recoverable) and provincial sales tax of $3,619,
both based on the purchase price. The vendor’s credit terms were
2/10, n/30.
2.
Geddes traded in equipment with a book value of $2,500 (initial
cost $40,400)...
Pharoah Inc. decided to purchase equipment from Central Ontario Industries on January 2, 2020, to expand its production...
Pharoah Inc. decided to purchase equipment from Central Ontario Industries on January 2, 2020, to expand its production capacity to meet customers' demand for its product. Pharoah issued a $929,000, 5-year, non-interest-bearing note to Central Ontario for the new equipment when the prevailing market interest rate for obligations of this nature was 12%. The company will pay off the note in 5 $185,800 instalments due at the end of each year of the note's life. (The tables in this problem...
As CFO of a small manufacturing firm, you have been asked to determine the best financing...
As CFO of a small manufacturing firm, you have been asked to determine the best financing for the purchase of a new piece of equipment. The vendor is offering repayment options of $9,000 at the end of each year for five years, or no payment for two years followed by one payment of $40,000. The current market rate of interest is 7%. Calculate present value of both options. (For calculation purposes, use 5 decimal places as displayed in the factor...
Cullumber Engineering Corporation purchased conveyor equipment with a list price of $52,200. Thre...
Cullumber Engineering Corporation purchased conveyor equipment
with a list price of $52,200. Three independent cases that are
related to the equipment follow. Assume that the equipment
purchases are recorded gross.
1.
Geddes paid cash for the
equipment 25 days after the purchase, along with 5% GST
(recoverable) and provincial sales tax of $3,500, both based on the
purchase price. The vendor’s credit terms were 2/10, n/30.
2.
Geddes traded in equipment
with a book value of $2,100 (initial cost $40,200),...
Periods 6% 1.06000 1.12360 1.19102 1.26248 1.33823 Table 1 : Future Value of 1 8% 9%...
Periods 6% 1.06000 1.12360 1.19102 1.26248 1.33823 Table 1 : Future Value of 1 8% 9% 1.08000 1.09000 1.16640 1.18810 1.25971 1.29503 1.36049 1.41158 1.46933 1.53862 10% 1.10000 1.21000 1.33100 1.46410 1.61051 12% 1.12000 1.25440 1.40493 1.57352 1.76234 Periods an 6% 0.94340 0.89000 0.83962 0.79209 0.74726 Table 2 : Present Value of 1 8% 9% 0.92593 0.91743 0.85734 0.84168 0.79383 0.77218 0.73503 0.70843 0.68058 0.64993 10% 0.90909 0.82645 0.75132 0.68301 0.62092 12% 0.89286 0.79719 0.71178 0.63552 0.56743 Periods いないか Table...
Present Value of Bonds Payable; Premium Moss Co. issued $710,000 of four-year, 12% bonds, with...
Present Value of Bonds Payable; Premium Moss Co. issued $710,000 of four-year, 12% bonds, with interest payable semiannually, at a market (effective) interest rate of 11%. Determine the present value of the bonds payable, using the present value tables in Exhibit 5 and Exhibit 7. Round to the nearest dollar. $ Exhibit 5 Present Value of $1 at Compound Interest 5% 572% 7% 10% Periods 1 2 3 4 4% 0.96154 0.92456 0.88900 0.85480 0.82193 0.79031 0.75992 0.73069 0.70259...
#5 #7 Present Value of Bonds Payable; Premium Moss Co. issued $280,000 of five-year, 11% bonds,...
#5
#7
Present Value of Bonds Payable; Premium Moss Co. issued $280,000 of five-year, 11% bonds, with interest payable semiannually, at a market (effective) interest rate of 10%. Determine the present value of the bonds payable, using the present value tables in Exhibit 5 and Exhibit 7. Round to the nearest dollar. Exhibit 5 Present Value of $1 at Compound Interest 10% 0.90909 Periods 1 2 3 4 5 6 7 4% 0.96154 0.92456 0.88900 0.85480 0.82193 0.79031 0.75992 0.73069...
Exercise 10-13 Ivanhoe Engineering Corporation purchased conveyor equipment with a list price of $45,200. Three independent cases that are related to the equipment follow. Assume that the equipment purchases are recorded gross. 1. Geddes paid cash for the equipment 25 days after the purchase, along with 5% GST (recoverable) and provincial sales tax of $3,164, both based on the purchase price. The vendor's credit terms were 1/10, n/30. 2. Geddes traded in equipment with a book value of $1,000 (initial...
Using the following table, determine the present value of an annuity of $50,000 to be received at the end of each of five years at 6 percent interest. Present value of an annuity of $1 at compound interest: Periods 4.0% 4.5% 5.0% 5.5% 6.0% 6.5% 7.0% 10.0% 11.0% 12.0% 13.0% 1 0.96154 0.95694 0.95238 0.94787 0.94340 0.93897 0.93458 0.90909 0.90090 0.89286 0.88496 2 1.88609 1.87267 1.85941 1.84632 1.83339 1.82063 1.80802 1.73554 1.71252 1.69005 1.66810 3 2.77509 2.74896 2.72325 2.69793 2.67301...
PV = TABLE 2 Present Value of $1 $1 (1+1)" wi 1.0% 1 0.99010 2 0.98030 3 0.97059 4 0.96098 5 0.95147 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 0.98522 0.98039 0.97561 0.97087 0.96618 0.96154 0.97066 0.96117 0.95181 0.94260 0.93351 0.92456 0.95632 0.94232 0.92860 0.91514 0.90194 0.88900 0.94218 0.92385 0.90595 0.88849 0.87144 0.85480 0.92826 0.90573 0.88385 0.86261 0.84197 0.82193 4.5% 5.0% 5.5% 6.0% 7.0% 0.95694 0.95238 0.94787 0.94340 0.93458 0.91573 0.90703 0.89845 0.89000 0.87344 0.87630 0.86384 0.85161 0.83962 0.81630 0.83856 0.82270...
Pharoah Engineering Corporation purchased conveyor equipment
with a list price of $51,700. Three independent cases that are
related to the equipment follow. Assume that the equipment
purchases are recorded gross.
1.
Geddes paid cash for the equipment 25 days after the purchase,
along with 5% GST (recoverable) and provincial sales tax of $3,619,
both based on the purchase price. The vendor’s credit terms were
2/10, n/30.
2.
Geddes traded in equipment with a book value of $2,500 (initial
cost $40,400)...
Pharoah Inc. decided to purchase equipment from Central Ontario Industries on January 2, 2020, to expand its production capacity to meet customers' demand for its product. Pharoah issued a $929,000, 5-year, non-interest-bearing note to Central Ontario for the new equipment when the prevailing market interest rate for obligations of this nature was 12%. The company will pay off the note in 5 $185,800 instalments due at the end of each year of the note's life. (The tables in this problem...
As CFO of a small manufacturing firm, you have been asked to determine the best financing for the purchase of a new piece of equipment. The vendor is offering repayment options of $9,000 at the end of each year for five years, or no payment for two years followed by one payment of $40,000. The current market rate of interest is 7%. Calculate present value of both options. (For calculation purposes, use 5 decimal places as displayed in the factor...
Cullumber Engineering Corporation purchased conveyor equipment
with a list price of $52,200. Three independent cases that are
related to the equipment follow. Assume that the equipment
purchases are recorded gross.
1.
Geddes paid cash for the
equipment 25 days after the purchase, along with 5% GST
(recoverable) and provincial sales tax of $3,500, both based on the
purchase price. The vendor’s credit terms were 2/10, n/30.
2.
Geddes traded in equipment
with a book value of $2,100 (initial cost $40,200),...
Periods 6% 1.06000 1.12360 1.19102 1.26248 1.33823 Table 1 : Future Value of 1 8% 9% 1.08000 1.09000 1.16640 1.18810 1.25971 1.29503 1.36049 1.41158 1.46933 1.53862 10% 1.10000 1.21000 1.33100 1.46410 1.61051 12% 1.12000 1.25440 1.40493 1.57352 1.76234 Periods an 6% 0.94340 0.89000 0.83962 0.79209 0.74726 Table 2 : Present Value of 1 8% 9% 0.92593 0.91743 0.85734 0.84168 0.79383 0.77218 0.73503 0.70843 0.68058 0.64993 10% 0.90909 0.82645 0.75132 0.68301 0.62092 12% 0.89286 0.79719 0.71178 0.63552 0.56743 Periods いないか Table...
Present Value of Bonds Payable; Premium Moss Co. issued $710,000 of four-year, 12% bonds, with interest payable semiannually, at a market (effective) interest rate of 11%. Determine the present value of the bonds payable, using the present value tables in Exhibit 5 and Exhibit 7. Round to the nearest dollar. $ Exhibit 5 Present Value of $1 at Compound Interest 5% 572% 7% 10% Periods 1 2 3 4 4% 0.96154 0.92456 0.88900 0.85480 0.82193 0.79031 0.75992 0.73069 0.70259...
#5
#7
Present Value of Bonds Payable; Premium Moss Co. issued $280,000 of five-year, 11% bonds, with interest payable semiannually, at a market (effective) interest rate of 10%. Determine the present value of the bonds payable, using the present value tables in Exhibit 5 and Exhibit 7. Round to the nearest dollar. Exhibit 5 Present Value of $1 at Compound Interest 10% 0.90909 Periods 1 2 3 4 5 6 7 4% 0.96154 0.92456 0.88900 0.85480 0.82193 0.79031 0.75992 0.73069...
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