72. Short Company purchased land by paying $10,000 cash on the
purchase date and agreeing to pay $10,000 for each of the next ten
years beginning one-year from the purchase date. Short's
incremental borrowing rate is 10%. At what amount would the land be
reported at on the balance sheet?
A. $100,000
B. $38,550
C. $110,000
D. $71,446
74. Libby Company purchased equipment by paying $5,000 cash on
the purchase date and agreeing to pay $5,000 every six months
during the next four years; the first payment is due six months
after the purchase date. Libby's incremental borrowing rate is 8%.
At what amount would the liability be reported on the balance sheet
as of the purchase date, after the initial $5,000 payment was
made?
A. $45,000
B. $33,664
C. $38,664
D. $40,000
72 | D. $71,446 | ||
The liability is calculated by discounting the 10,000 future payments | |||
(10 of them) to their future value at a 10% interest rate plus 10,000 | |||
$10,000 + $10,000 x 6.14457 = $71,446 | |||
annuity table we use the factor where n=10 payments, i=10% i.e. 6.14457 | |||
74 | C. $38,664 | ||
The equipment cost $38,664 is equal to the present value of the eight remaining | |||
payments [$5,000 x 6.7327 (present value of a 4%, 8-period ordinary annuity) | |||
plus the initial payment. | |||
72. Short Company purchased land by paying $10,000 cash on the purchase date and agreeing to...
Short Company purchased land by paying $10,000 cash on the purchase date and agreeing to pay $10,000 for each of the next ten years beginning one-year from the purchase date. Short's incremental borrowing rate is 10%. (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use the appropriate factor(s) from the tables provided.) The land reported on the balance sheet is closest to: Multiple Choice $100,000. $110,000. Oo oo $71,446. $38,550.
ZIL 14. Short Company purchased land by paying $10,000 cash on the purchase date and agreeing to pay $10,000 for each of the next ten years beginning one-year from the purchase date. Short's incremental borrowing rate is 10%. (FV of $1; PV of $1, FVA of $1, and PVA of $1) (Use the appropriate factor(s) from the tables provided.) The land reported on the balance sheet is closest to: a. $100,000. Pie b. $38,550. . C. $110,000. d. $71,446.
75. Rae Company purchased a new vehicle by paying $10,000 cash on the purchase date and agreeing to pay $3,000 every three months during the next five years; the first payment is due three months after the purchase date. Rae's incremental borrowing rate is 12%. At what amount would the liability be reported at on the balance sheet as of the purchase date, after the initial $10,000 payment was made? A. $44,633 B. $50,000 C. $54,633 D. $60,000 76. Rae...
Short Company purchased land by paying $24,000 cash on the purchase date and agreed to pay $24,000 for each of the next nine years beginning one-year from the purchase date. Short's incremental borrowing rate is 12%. The land reported on the balance sheet is closest to: (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use appropriate factor(s) from the tables provided.) $216,000. $77,892. $240,000. $151,878.
78. Rusty Corporation purchased a rust-inhibiting machine by paying $50,000 cash on the purchase date and agreeing to pay $10,000 every three months during the next two years; the first payment is due three months after the purchase date. Rusty's incremental borrowing rate is 8%. At what amount would the liability be reported at on the balance sheet as of the purchase date, after the initial $50,000 payment was made? A. $123,255 B. $130,000 C. $80,000 D. $73,255 80. Rachel...
Libby Company purchased equipment by paying $5,200 cash on the purchase date and agreed to pay $5,200 every six months during the next four years. The first payment is due six months after the purchase date. Libby's incremental borrowing rate is 6%. The liability reported on the balance sheet as of the purchase date, after the initial $5,200 payment was made, is closest to: (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use appropriate factor(s)...
why is the answer a and not c?
Jackson Company purchased land by paying $12,000 cash on the purchase date and agreeing to pay $12,000 for each of the next ten years beginning one-year from the purchase date. Jackson's incremental borrowing rate is 10%. 000 At what amount would the land be reported at on the balance sheet? Seeis bo CIONI OG, \21000,PMTPN A$ 85,735 B. $120,000 C.$ 73,735 D.$132,000 E. $191,249 ds owol od Iliw OL ol od Iliw...
Poe Company purchased equipment by paying $11,400 cash on the purchase date and agreeing to pay $4,400 every three months during the next five years. If Poe records a liability of $79,401, what is the interest rate Poe is being charged (choose the answer closest to the number you calculate)?
Drake Company purchased a building by paying $90,500 cash on the purchase date and pay $50,100 at the end of each of the next at 8 years. Drake also has a final payment of $100,500 that is to be made at the end of the 10th year. Drake's incremental borrowing rate is 8%. How much should Drake report as the purchase price of the building as of the purchase date (choose the answer closest to the number you calculate)?
Fordham Company purchased a truck for $11,000, paying $1,000 cash upon delivery and agreeing to pay $10,000 in six months. As a result of this transaction: Multiple Choice Assets will be increased by $10.000 O Assets will be unchanged Equity will be decreased by $10.000 Assets will be increased by $1,000 Assets will be decreased by $10,000