Question

15 and 16 please

of these answer choices are correct. 15. Udon Inc. adopted dollar-value LIFO (DVL) as of January 1, 2018, when it had an costs and the cost index was 1.20. What was DVL inventory on December 31, 20118? inventory of $710,000. Its inventory as of December 31, 2018, was $904,800 at year-end A. $754,000. B. $852,000. C. $904,800. D. $762,800. 16. Molly Corporation obtained a $45,000 note receivable from a customer on June 30, 2018. The note, along with interest at 4 %, is due on June 30, 2019. On September 30, 2018, Molly discounted the note at Cloverdale bank. The bank's discount rate is 8%. What amount of cash did Molly receive from Cloverdale Bank? y5,000 Diahty A. $41,400. B. $43,992. C. $42,192. D.$45,450. ut

Answer 1

Answer:

15) DVL inventory on December 31, 2018,

Date	Dollar value	Cost index	Calculations	DVL Inventory
1/1/2018	710,000	1		710,000
	904,800	1.20	904,800/1.20=754,000	754,000
				44,000
		1.20	44,000*1.20=44,880	52,800
DVL inventory on December 31,2018			710,000+44,800=754,800	762,800

Therefore, Option-D is correct answer.

16)

The maturity value of the note receivable on June 30, 2019

= Principal + Interest

= $45,000 + $45,000 x 4%

= $ 46,800

The note is discounted on September 30, 2018. Time period remaining to go till maturity as on September 30, 2018 = 12 - 3 months = 9 months. ( July, Aug and Sep)

From September 30, 2018 at bank's discount rate which is the required rate of return by the bank.

Amount of deduction = $ 46,800 x 8% x 9/12 = $2,808.

So, Cash received by Molly = Maturity value - Amount of deduction

   = $ 46,800 - $ 2,808

Cash received by Molly= $ 43,992

Therefore, Option B is the correct option.