Accounting Answers

You have the following information for MrVuong’s store for fiscal year 20X0:

February:

1st Hire a sale assistant @700 per month, salary is paid at the end of each month. Also, purchase an insurance contract for the vending machine (@50 per month, the length of the contract is 12 months and cash pay full in advance).

2nd Invest more 3,000 cash into the business.

5th Purchase goods at cost of 5.000 on credit.

12th Make a payment of 7.000 cash to supplier of goods.

18th Sell goods (which originally cost 5.000) @3.000 in cash (due to an impairment of the quality of sold goods).

20th Borrow 1.000 cash from bank.

25th Sell goods (which originally cost 2.000) @3.000 and 50% of this is received in cash (the rest is on credit).

28thPay salary (@50 cash) for sale assistant.

Requirement: Record the transactions in February and prepare Trial Balance for the month.

You have the following information for MrVuong’s store for fiscal year 20X0:

January:

1^stInvest 15.000 in cash to open up the store, also sign a 3-months rental contract for the store (@500 per month and pay full in advance)

      3^rd Purchase goods at cost of 3.000 by cash

      5^th Purchase vending machine at cost of 5.000 on credit(Depreciation is estimated @$50 per month)

      6^th Sell goods @3.500 and receive cash (the mount of good originally costs 2.500)

      11^th Pay for the vending machine by cash (@5.000)

      17^th Invest more 5.000 in cash to the business

      20^th Deposit 8.000 cash to open-up a bank account

      26^thPurchase goods at cost of 10.000 on credit

      31^stSell goods (which originally cost 7.000) @9.000 on credit 

Requirement:

1.     Record the transactions in January and prepare Trial Balance for the month

Flame Holdings is a company with a called up and paid up capital of 100,000 ordinary

shares of £1 each and 20,000 10% redeemable preference shares of £1 each.

The gross profit was £200,000 and trading expenses were £50,000. Flame Holdings

paid the required preference share dividend and an ordinary dividend of £ 0.42 per

share. The tax charge for the year was estimated at £40,000.

Required

Calculate basic EPS for the year

Answer the following problems

e. Consider a given bond that has five years maturity, Br.1000 face value and a 12 percent coupon rate. Suppose a broker’s commission of Br.50 is imposed by brokers to buy or sell the bond. Assume further, that the discount rate (minimum required rate of return) is 10 percent and the bond pays interest annually. What is the price of the bond?

f. Project X requires an immediate investment of $150,000 and will generate net cash inflows of $60,000 for the next three years. The project’s discount rate is 7%. If net present value is used to appraise the project, should Project X be undertaken?

The following are the monthly rates of return for Madison Cookies and for Sophie Electric during a six-month period

Month Madison Cookies Sophie Electric

1. -0.04 0.07
2. 0.06 -0.02
3. -0.07 -0.01
4. 0.02 0.15
5. -0.02 -0.06
6. 0.05 0.02

Instruction

a. Average monthly rate of return for each stock

b. Standard deviation of returns for each stock

c. Covariance between the rates of return

d. The correlation coefficient between the rates of return

e. Would these two stocks be good choices for diversification? Why or why not?

Consider two bonds, HI and LI. The HI bond has a 10% coupon rate and the LI bond has a 5% coupon rate. Both bonds pay interest annually and are priced to yield 10%. Suppose the following interest scenarios are possible at the point in time when both bonds have five years remaining to maturity:

possible interest rate 5%,10,15

possibility of interest rate 10%, 50,40

Required:

a. Calculate the expected value for each bond.

b. Calculate the standard deviation of possible values for each bond.

c. Which bond is riskier? Why?

On January 1, 2019, Joan Campbell borrows $20,000 from Susan Rone and agrees to repay this amount in payments of $4,000 a year until the debt is paid in full. Payments are to be of an equal amount and are to include interest at 12% on the unpaid balance of principal at the beginning of each period. Assuming that the first payment is to be made on January 1, 2020, determine the number of payments of $4,000 each to be made and the amount of the final payment.

What is the future value on December 31, 2026, of 7 annual cash flows of $10,000 with the first cash payment made on December 31, 2019, and interest at 12% being compounded annually?

1. You own a farm and grow seasonal products such as pumpkins, squash, and pears. Most of your business revenues are earned during the months of October to December. The rest of your year supports the growing process, where revenues are minimal, and expenses are high. In order to cover the expenses from January to September, you consider borrowing a short-term note from a bank for $300,000. Based on this scenario, please complete the following:

Research the lending practices of a local bank.

Determine the interest rate charged for a $300,000 loan.

Determine the collateral the bank requires to secure the loan?

Determine your overall payback amount if you were to repay the loan in less than one year.

conducting your research, would you consider borrowing the money?

What positive and negative outcomes accompany borrowing the money?

2. How much did you know about interest and borrowing money before starting Unit 6?

3. What have you learned about interest and borrowing money in this unit that may help you?

A common practice for government entities, particularly schools, is to issue short-term (promissory) notes to cover daily expenditures until revenues are received from tax collection, lottery funds, and other sources. School boards approve the note issuances, with repayments of principal and interest typically met within a few months. The goal is to fully cover all expenses until revenues are distributed from the state. However, revenues distributed fluctuate due to changes in collection expectations, and schools may not be able to cover their expenditures in the current period. . Based on this information, compose a paper that addresses the following:

• What would you do if you found your school in this situation?
• Would you issue more debt? Explain.
• Are there alternatives? Explain.
• What are some positives and negatives to the promissory note practice?
• Please explain at leasttwo positivesand at leasttwo negatives.

Consider two bonds, HI and LI. The HI bond has a 10% coupon rate and the

LI bond has a 5% coupon rate. Both bonds pay interest annually and are priced to yield

10%. Suppose the following interest scenarios are possible at the point in time when both

bonds have five years remaining to maturity:

possible interest rate possibility of interest rate

5% 10%

10 50

15 40

Required:

a. Calculate the expected value for each bond.

b. Calculate the standard deviation of possible values for each bond.

c. Which bond is riskier? Why?