DEVRY ACCT 550 Week 4 Homewor .pdf
Original filename: DEVRY ACCT 550 Week 4 Homewor.pdf
This PDF 1.5 document has been generated by Microsoft® Office Word 2007, and has been sent on pdf-archive.com on 17/01/2017 at 11:35, from IP address 43.224.x.x.
The current document download page has been viewed 247 times.
File size: 229 KB (3 pages).
Privacy: public file
Download original PDF file
DEVRY ACCT 550 Week 4 Homework
Check this A+ tutorial guideline at
For more classes visit
ACCT 550 Week 4 Homework Assignment
E6-5 (Computation of Present Value)
Using the appropriate interest table, compute the present values of the following
periodic amounts due at the end of the designated periods.
(a) $30,000 receivable at the end of each period for 8 periods compounded at 12%.
(b) $30,000 payments to be made at the end of each period for 16 periods at 9%.
(c) $30,000 payable at the end of the seventh, eighth, ninth, and tenth periods at
E6-12 (Analysis of Alternatives)
The Black Knights Inc., a manufacturer of low-sugar, low-sodium, low-cholesterol TV
dinners, would like to increase its market share in the Sunbelt. In order to do so,
Black Knights has decided to locate a new factory in the Panama City area. Black
Knights will either buy or lease a site depending upon which is more advantageous.
The site location committee has narrowed down the available sites to the following
Building A: Purchase for a cash price of $600,000, useful life 25 years.
Building B: Lease for 25 years with annual lease payments of $69,000 being made at
the beginning of the year.
Building C: Purchase for $650,000 cash. This building is larger than needed;
however, the excess space can be sublet for 25 years at a net annual rental of $7,000.
Rental payments will be received at the end of each year. The Black Knights Inc. has
no aversion to being a landlord.
E7-2 (Determining Cash Balance)
Presented below are a number of independent situations.
Instructions For each individual situation, determine the amount that should be
reported as cash. If the item(s) is not reported as cash, explain the rationale.
1. Checking account balance $925,000; certificate of deposit $1,400,000; cash
advance to subsidiary of $980,000; utility deposit paid to gas company $180.
2. Checking account balance $600,000; an overdraft in special checking account at
same bank as normal checking account of $17,000; cash held in a bond sinking fund
$200,000; petty cash fund $300; coins and currency on hand $1,350.
3. Checking account balance $590,000; postdated check from customer $11,000; cash
restricted due to maintaining compensating balance requirement of $100,000;
certified check from customer $9,800; postage stamps on hand $620.
4. Checking account balance at bank $37,000; money market balance at mutual fund
(has checking privileges) $48,000; NSF check received from customer $800.
5. Checking account balance $700,000; cash restricted for future plant expansion
$500,000; short-term Treasury bills $180,000; cash advance received from customer
$900 (not included in checking ac- count balance); cash advance of $7,000 to
company executive, payable on demand; refundable de- posit of $26,000 paid to
federal government to guarantee performance on construction contract.
E7-5 (Recording Sales Gross and Net)
On June 3, Arnold Company sold to Chester Company merchandise having a sale
price of $3,000 with terms of 2/10, n/60, f.o.b. shipping point. An invoice totaling
$90, terms n/30, was received by Chester on June 8 from John Booth Transport
Service for the freight cost.
On June 12, the company received a check for the balance due from Chester
(a) Prepare journal entries on the Arnold Company books to record all the events
noted above under each of the following bases.
(1) Sales and receivables are entered at gross selling price.
(2) Sales and receivables are entered at net of cash discounts.
(b) Prepare the journal entry under basis 2, assuming that Chester Company did not
remit payment until July 29
E7-7 (Recording Bad Debts)
Duncan Company reports the following financial information before adjustments.
Allowance for Doubtful Accounts
Sales Revenue (all on credit)
Sales Returns and Allowances
Prepare the journal entry to record Bad Debt Expense assuming Duncan Company
estimates bad debts at (a) 1% of net sales and (b) 5% of accounts receivable