2.99 See Answer

Question: For a real interest rate of 1%


For a real interest rate of 1% per month and an inflation rate of 1% per month, the nominal inflated interest rate per year is closest to:
(a) 1%
(b) 2%
(c) 24%
(d) 24.12%


> On March 31, 2018, the Accounts Receivable balance of Dunham Manufacturing, Inc., is $173,000. The Allowance for Uncollectible Accounts has a $1,650 credit balance. Dunham Manufacturing, Inc., prepares the following aging schedule for its accounts recei

> Beckett Appliance Repair, Inc., ended December 2017 with Accounts Receivable of $2,400 and a debit balance of $175 in Allowance for Uncollectible Accounts. During January 2018, Beckett Appliance Repair, Inc., completed the following transactions: Requi

> Advantage Electronics, Inc., uses the direct write-off method to account for bad debts. Record the following transactions that occurred during the year:

> Information from Grey’s Photography, Inc., Cash account as well as the July bank statement are presented next. Check 210 was written for $500 to pay salaries expense. Requirements 1. Prepare the bank reconciliation on July 31. 2. Pr

> Casey’s Construction, Inc.’s checkbook lists the following: Casey’s Construction, Inc.’s September bank statement shows the following: Requirements 1. Prepare Caseyâ€&

> Calculate the answers for the missing data:

> Lakota Equipment reported the following items on December 31, 2018 (last year’s amounts are also given as needed): Requirements 1. Compute Lakota Equipment’s (a) quick ratio, (b) current ratio, and (c) accounts recei

> Consider the following data: Requirements 1. Calculate the quick assets and the quick ratio for each company (round your final answers to two decimal places). 2. Calculate the current ratio for each company (round your final answers to two decimal plac

> Valley Hardware Supply, Inc., sells on account. When a customer account becomes four months old, Valley Hardware Supply converts the account to a note receivable. During 2018, Valley Hardware Supply completed these transactions: Requirement 1. Record t

> Let’s look at Dick’s Sporting Goods (Dick’s) some more. Think about Dick’s. What assets did Dick’s need to operate? Return to Dick’s Annual Report (see the Continuing Financial Statement Analysis Problem in Chapter 2 for instructions on how to access the

> Journalize the following transactions of Lawn Pro, Inc., which ends its accounting year on September 30:

> On April 30, 2018, Seattle First National Bank loaned $100,000 to Pugliese Produce, Inc., on a one-year, 8 percent note. Requirements 1. Compute the interest on the note for the years ended December 31, 2018, and December 31, 2019. Round interest calcul

> River City Supply, Inc., uses the allowance method to account for uncollectible accounts. On December 31, 2018, Allowance for Uncollectible Accounts has a $375 credit balance. Journalize the year-end adjusting entry for uncollectible accounts, assuming t

> On December 31, 2018, the Accounts Receivable balance of TDS Distribution, Inc., is $194,000. The Allowance for Uncollectible Accounts has a $1,200 credit balance. TDS Distribution, Inc., prepares the following aging schedule for its accounts receivable:

> DJ’s Auto Repair, Inc., ended December 2017 with Accounts Receivable of $8,500 and a credit balance of $275 in Allowance for Uncollectible Accounts. During January 2018, DJ’s Auto Repair, Inc., completed the following

> Ellison Heating and Air Conditioning, Inc., uses the direct write-off method to account for bad debts. Record the following transactions that occurred during the year:

> Information from DT Photography’s Cash account as well as the January bank statement are presented next. Check 210 was written for $310 to pay salaries expense. Requirements 1. Prepare the bank reconciliation on January 31. 2. Prepa

> Cryer’s Produce, Inc.’s checkbook lists the following: Cryers’s Produce, Inc.’s November bank statement shows the following: Requirements 1. Prepare Cryer’s Pro

> Calculate the answers for the missing data:

> Julia’s Jungle, Inc., has the following information as of August 31, 2018: Requirements 1. Compute the rate of inventory turnover for Julia’s Jungle, Inc., for the year ended August 31, 2018. Round the result to two

> Let’s continue our examination of Dick’s Sporting Goods (Dick’s). Return to Dick’s Annual Report (see the Continuing Financial Statement Analysis Problem in Chapter 2 for instructions on how to access the Annual Report). Now answer the following question

> Tune Time, Inc., sells and installs audio equipment. Tune Time, Inc.’s entire inventory was destroyed during a recent fire that occurred at its warehouse. Tune Time, Inc.’s accounting records reflect the following information: Beginning Inventory ………………

> Jacob’s Upholstery, Inc., reported the following comparative income statements for the years ended September 30, 2018, and September 30, 2017. During 2018, Jacob’s Upholstery, Inc., discovered that the 2017 ending in

> Parts Plus, Inc., had the following FIFO perpetual inventory record for one of its inventory items at September 30, the end of the fiscal year. A physical count of the inventory performed at year’s end revealed $83.25 (nine items) of

> Eagle Resources, Inc., has the following account balances at October 31, 2018. The inventory balance was determined using FIFO. Eagle Resources, Inc., has determined that the replacement cost (current market value) of the October 31, 2018, ending inven

> Assume McCormack Tire, Inc., completed the following perpetual inventory transactions for a line of tires: Beginning Inventory …………………….. 27 tires @ $140 Purchase ……………………………….……. 39 tires @ $136 Sale …………………………………………… 42 tires @ $204 Requirements 1. C

> Refer to the data for The Bike Hub, Inc., in E5-31B. Requirements 1. Compute the cost of ending inventory under FIFO. 2. Compute the cost of ending inventory under LIFO. 3. Which method results in a higher cost of ending inventory? E5-31B: Assume The B

> Assume The Bike Hub, Inc., bought and sold a line of comfort bikes during July as follows: The Bike Hub, Inc., uses a perpetual inventory system. Requirements 1. Compute the cost of goods sold under FIFO. 2. Compute the cost of goods sold under LIFO.

> Refer to the data for E5-28B. However, instead of the FIFO method, assume Tee Time, Inc., uses the average cost method. Requirements 1. Prepare a perpetual inventory record for the putters on the average cost basis to determine the cost of ending invent

> Refer to the data for E5-28B. However, instead of the FIFO method, assume Tee Time, Inc., uses the LIFO method. Requirements 1. Prepare a perpetual inventory record for the putters on the LIFO basis to determine the cost of ending inventory and cost of

> Tee Time, Inc., carries a line of monogrammed putters. Tee Time uses the FIFO method and a perpetual inventory system. The sale price of each putter is $170. Company records indicate the following activity for putters for the month of January: Requirem

> Let’s resume our examination of Dick’s Sporting Goods (Dick’s). Return to Dick’s Annual Report (see the Continuing Financial Statement Analysis Problem in Chapter 2 for instructions on how to access the Annual Report). Now answer the following questions:

> Brava Landscaping, Inc., completed the following transactions during its first month of operations for January 2018: a. Gabrielle Brava invested $8,500 cash and a truck valued at $16,000 to start Brava Landscaping, Inc.; the business issued common stock

> The price of a car you want is $42,000 today. Its price is expected to increase by $1000 each year. You now have $25,000 in an investment account, which is earning 10% per year. How many years will it be before you have enough to buy the car without borr

> The PW of five independent projects have been calculated at an MARR of 12% per year. Select the best combination at a capital investment limit of (a) $25,000, (b) $49,000, and (c) unlimited.

> The chief engineer at Clean Water Engineering has established a capital investment limit of $710,000 for next year for projects related to concentrate management. (a) Select any or all of the following independent projects, using a MARR of 10% per year.

> Dwayne has four independent vendor proposals to contract the nationwide oil recycling services for the Ford Corporation manufacturing plants. All combinations are acceptable, except that vendors B and C cannot both be chosen. Revenue sharing of recycled

> A financial services consulting company bought an office building for $900,000. The company has 10 professional staff members. Monthly expenses for salaries, utilities, grounds maintenance, etc. are $1.1 million. The average billing rate per professional

> Feng Seawater Desalination Systems has established a capital investment limit of $800,000 for next year for projects that target improved recovery of highly brackish groundwater. All projects have a 4-year life and the MARR is 10% per year. (a) Select a

> Determine which of the following independent projects should be selected for investment if a maximum of $240,000 is available and the MARR is 10% per year. Use the PW method to evaluate mutually exclusive bundles to perform your analysis.

> If the market interest rate is 12% per year and the inflation rate is 5% per year, the number of future dollars in year 7 that will be equivalent to $2000 now is best represented by the equation: (a) Future dollar amount = 2000(1 + 0.198)7 (b) Future dol

> The cost of a well-equipped F-150 truck was $29,350 three years ago. If the cost increased only by the inflation rate and the price today is $33,015, the inflation rate over the 3-year period was closest to: (a) 3% (b) 4% (c) 5% (d) 6%

> When the market interest rate is less than the real interest rate, then: (a) The inflated interest rate is higher than the real interest rate (b) The real interest rate is zero (c) A deflationary condition exists (d) An inflationary condition exists

> At what electricity cost would the following alternatives just break even? (a) Alternatives 1 and 2, (b) alternatives 1 and 3, (c) alternatives 1 and 4.

> In order to convert inflated dollars into constant value dollars, it is necessary to: (a) Divide by (1 + if )n (b) Divide by (1 + f )n (c) Divide by (1 + i)n (d) Multiply by (1 + f )n

> When all future cash flows are expressed in then current dollars, the rate that should be used to find the present worth is the: (a) Real MARR (b) Inflation rate (c) Inflated interest rate (d) Real interest rate

> For a real interest rate of 12% per year and an inflation rate of 7% per year, the market interest rate per year is closest to: (a) 5.7% (b) 7% (c) 12% (d) 19.8%

> Assume you save $6000 each year starting this year until your planned retirement 40 years from now. The buying power of the money in terms of today’s dollars at the market interest rate of 10% per year and inflation rate of 5% per year is closest to: (a)

> An industrial robot with a controller, teach pendants, and job-specific peripherals has an initial cost of $85,000 now, and the future cost will increase exactly by the inflation rate. The cost of a similar robot 3 years from now at a market interest rat

> You expect to receive an inheritance of $50,000 six years from now. Its present worth at a real interest rate of 4% per year and an inflation rate of 3% per year is closest to: (a) $27,600 (b) $29,800 (c) $33,100 (d) $50,000

> An investment of $1000 was made 25 years ago. The amount available 10 years from now at the market interest rate of 5% per year and an inflation rate of 2% per year is closest to: (a) $3085 (b) $5430 (c) $5515 (d) $35,000

> Two methods to control newly discovered poisonous weeds in bar-ditches on the sides of county roads in New Farmendale are under consideration. Method A involves use of a 20-year life lining at an initial cost of $14,000 and an annual maintenance cost of

> The cost of equipment to apply epoxy paint to a warehouse floor is $1400. Materials and supplies (masking tape, surface repair material, solvents, cleanup supplies, etc.) will cost $2.03 per ft2. Alternatively, a contractor can be hired annually to do th

> If the cost of electricity decreased to 8 ¢∕kWh, which alternative would be the most cost-effective?

> Ma Bryan sells homemade preserves. The profit relation for the following estimates at a quantity that is 10% above breakeven is closest to: Fixed cost = $500,000 per year Cost per 100 units = $200 Revenue per 100 units = $250 (a) Profit = 200(11,000) − 2

> A mixing process for laboratory-grade sodium phosphate has an estimated first cost of $320,000 with annual costs of $40,000. Income is expected to be $98,000 per year. At a MARR of 20% per year, the payback period is closest to: (a) 3 years (b) 15 years

> A wireless monitored process has fixed cost of $40,000 per year and variable cost of $30 per unit. An IoT-based process using “Internet of Things” technology has fixed costs of $80,000 per year. If the two processes break even at a production level of 40

> A jalapeno canning company is faced with a make/ buy decision. Cardboard shipping cartons can be purchased for $0.60 each or made in-house. If manufactured, two machines will be required. Machine X will cost $20,000 and have a life of 6 years with a $200

> The pieces of equipment required to place 160 cubic yards of concrete in 1 day by experienced workmen are two gasoline engine vibrators and one concrete pump. If the vibrators cost $76 per day and the concrete pump costs $580 per day, the variable cost o

> Revcon Products has two subcontractor bids to automate a composite winding process. Process A will have fixed costs of $42,000 per year and will require two workers at $80 per day each. Together, these workers can generate 100 units. Process B will have

> You saw that there was a gasoline price war going on in a small town 27 miles from where you live (54 miles round trip), so you are thinking about driving there to fill the tank in your pick-up truck, which gets 18 miles per gallon. You think it will tak

> A milling process is accomplished using either method X or Y. Method X has fixed costs of $10,000 per year with a variable cost of $50 per unit. Method Y is an automated process with a fixed cost of $5,000 per year and a variable cost of only $30 per uni

> For the following two AW relations, the breakeven point QBE in miles per year is closest to: AW1 =−23,000(A/P,10%,10) + 4000(A/F,10%,10)− 5000 − 4X AW2 = −8,000(A/P,10%,4) − 2000 − 6X (a) 1984 (b) 1224 (c) 1090 (d) 655

> An automobile leasing company has a contract with a new car dealer to do major repairs for $720 per car. The leasing company estimates that for $400,000, it could buy equipment to service their own cars at a cost of $300 per car. If the equipment will ha

> If hardness removal were to be discontinued at the treatment plant, which alternative would be the most cost-effective?

> In linear breakeven analysis, if process A has a variable cost of $45 per unit and process B has a variable cost of $31 per unit, which alternative would be preferred if the breakeven point is 7400 units and production is expected to be 6200 units? (a) P

> The independent projects shown below are under consideration for possible implementation by Renishaw, Inc. If the company’s MARR is 14% per year and it uses the IROR method of capital budgeting, the projects it should select under a bud

> All of the following are true when formulating mutually exclusive bundles of independent projects, except: (a) One of the bundles is the do-nothing project. (b) A bundle may consist of only one project. (c) The capital limit may be exceeded as long as it

> All of the following are correct when a capital budgeting problem is solved using the 0-1 integer linear programming model, except: (a) Partial investment in a project is acceptable. (b) The objective is to maximize the present worth of the investments.

> The National Potato Cooperative purchased a deskinning machine last year for $150,000. Revenue for the first year was $50,000. Over the total estimated life of 8 years, use a spreadsheet to estimate the remaining equivalent annual revenues (years 2 throu

> Mid-Valley Industrial Extension Service, a state-sponsored agency, provides water quality sampling services to all business and industrial firms in a 10-county region. Last month, the service purchased all necessary lab equipment for full in-house testin

> Mid-Valley Industrial Extension Service, a state-sponsored agency, provides water quality sampling services to all business and industrial firms in a 10-county region. Last month, the service purchased all necessary lab equipment for full in-house testin

> Mid-Valley Industrial Extension Service, a state-sponsored agency, provides water quality sampling services to all business and industrial firms in a 10-county region. Last month, the service purchased all necessary lab equipment for full in-house testin

> Wilson Partners manufactures thermocouples for remote temperature monitoring of electronics applications. The current system has a fixed cost of $400,000 per year and a variable cost of $10 per unit. Wilson sells the units for $14 each. A newly proposed

> A possible disadvantage of the ABC method is: (a) It does not allocate costs to the way production work occurs (b) It is more expensive to operate than a traditional allocation system (c) It does not help understand the economic impact of management deci

> If the efficiency of the sludge recirculation pump were reduced from 90% to 70%, would the net savings difference between alternatives 3 and 4 increase, decrease, or stay the same?

> The delivered equipment cost for setting up a production and assembly line for two-way floating ball valves is $650,000. If the direct cost and indirect cost factors are 1.82 and 0.31, respectively, and only the direct cost factor applies to delivered eq

> If a hospital cafeteria is the activity to receive indirect cost allocation for the year, cost driver(s) for the ABC method that seem reasonable may be: 1 – Number of cafeteria employees 2 – Number of meals 3 – Hospital patient volume (a) 1 (b) 2 (c) 3 (

> The IT department allocates indirect costs to user departments on the basis of CPU time at the rate of $2000 per second. For the first quarter, the two heaviest use departments logged 900 and 1300 seconds, respectively. If the IT indirect budget for the

> The equipment for applying specialty coatings that provide a high angle of skid for the paperboard and corrugated box industries has a delivered cost of $390,000. If the overall cost factor for the complete system is 3.96, the total plant cost is approxi

> The delivered equipment cost for setting up a production and assembly line for high-sensitivity, gas-damped accelerometers is $650,000. If the direct cost and indirect cost factors are 1.36 and 0.31, respectively, and both factors apply to delivered equi

> If the cost of an imported high-speed assemblyline robot is $80,000 and the in-country cost for one with twice the capacity is $120,000, the value of the exponent in the cost-capacity equation is closest to: (a) 0.51 (b) 0.58 (c) 0.62 (d) 0.69

> The cost of an electrode position control system in an electric arc furnace was $16,000 when the applicable equipment cost index had a value of 1192. If the current index value is 1364 and the exponent in the cost-capacity equation has a value of 0.65, t

> The cost for a 200-horsepower pump with a VFD controller is $42,000. The cost estimate of a similar pump of 300 horsepower capacity, provided the exponent in the cost-capacity equation is 0.64, is closest to: (a) $47,240 (b) $48,520 (c) $53,780 (d) $54,4

> An assembly line robot arm with a first cost of $75,000 in 2001 had a cost of $89,750 in 2017. If the equipment cost index for robots was 307 in 1995 and the robot cost increased exactly in proportion to the index, the value of the index in 2017 was clos

> The cost for constructing a small building in 1999 was $700,000. The construction cost index was 6059 at that time. The estimated cost of a similar building when the index value is 10,000 is closest to: (a) $424,130 (b) $1,155,300 (c) $1,347,200 (d) $1,3

> The 3-year MACRS recovery rates are 33.33%, 44.45%, 14.81%, and 7.41%, respectively. (a) What are the corresponding rates for the alternative MACRS straight line ADS method with the half-year convention imposed? (b) Compare the PWD values for these two m

> The total mechanical and electrical unit costs for a library are listed as $40 per square foot, while total project cost is estimated at $119 per square foot. Based on these values, the percentage of total costs represented by mechanical and electrical c

> Wilson Partners manufactures thermocouples for remote temperature monitoring of electronics applications. The current system has a fixed cost of $400,000 per year and a variable cost of $10 per unit. Wilson sells the units for $14 each. A newly proposed

> A stone and gravel quarry in Texas can use a percentage depletion rate of 5% of gross income, or a cost depletion rate of $1.28 per ton. Quarry first cost = $3.2 million; estimated total tonnage = 2.5 million tons; tonnage this year = 65,000; gross incom

> Rayonier Forrest Resources purchased a small tract of timberland for $70,000 that contained 25,000 trees. The value of the bare land was estimated to be $20,000. The annual percentage depletion factor for timber is 10%. In the first year of operation, th

> South African Gold Mines, Inc. is writing off its $210 million investment using the cost depletion method. An estimated 700,000 ounces of gold are available in its developed mines. This year 35,000 ounces were produced at an average price of $400 per oun

> All of the following statements about the Alternative Depreciation System (ADS) are true, except: (a) The half-year convention applies (b) Salvage value is neglected (c) The recovery periods are shorter than in GDS (d) The straight line method is require

> Under the General Depreciation System (GDS) of asset classification, any asset that is not in a stated class is automatically assigned a recovery period of: (a) 5 years (b) 7 years (c) 10 years (d) 15 years

> An industrial robot that is depreciated by the MACRS method has B = $60,000 and a 5-year depreciable life. If the depreciation charge in year 3 is $8640, the salvage value that was used in the depreciation calculation is closest to: (dt values for years

> A currently-owned asset has B = $150,000, S = $95,000, and a 10-year depreciable life. The book value at the end of year 3 according to the MACRS method would be closest to: (Note: dt values for years 1, 2, 3, and 4 are 10.00%, 18.00%, 14.40%, and 11.52%

> Gisele is performing a make/buy study involving the retention or disposal of a 4-year-old machine that was to be in production for 8 years. It cost $500,000 originally. Without a market value estimate, she decided to use the current book value plus 20% f

> Use the computations in Equations [16A.11] through [16A.13] to determine the MACRS annual depreciation for the following asset data: B = $50,000 and a recovery period of 7 years

> An 8-year recovery-period conveyor system for grading eggs is planned for DDB depreciation. The system had a first cost of $30,000 with a $9000 salvage value. The annual operating cost allocated to the conveyor is $7000 per year. The book value at the en

> A motorized cultivator with a first cost of $28,000 and salvage value of 25% of the first cost is depreciated by the DDB method over a 5-year period. If the operating cost is $43,000 per year, the depreciation charge for year 2 is closest to: (a) $18,000

2.99

See Answer