Indiana Jones Corporation enters into a 6-year lease of equipment on January 1, 2012 (A+)

Indiana Jones Corporation enters into a 6-year lease of equipment on January 1, 2012, which requires 6 annual payments of $40,000 each, beginning January 1, 2012. In addition, Indiana Jones guarantees the lessor a residual value of $20,000 at lease-end. The equipment has a useful life of 6 years. Prepare Indiana Jones\’ January 1, 2012, journal entries assuming an interest rate of 10%. (Round your answer to the nearest dollar eg 58,591).

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3. For each of the following items, indicate whether its amount affects the bank or book side of a bank reconciliation (A+)

For each of the following items, indicate whether its amount affects the bank or book side of a bank reconciliation and represents an addition or a subtraction in a bank reconciliation:

Items Bank or Book Addition or Subtraction

a. Outstanding checks

b. Debit memos

c. NSF checks

d. Unrecorded deposits

e. Interest on cash balance

f. Credit memos

g. Bank service charges

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Mercedes Brown starts a merchandising business on December 1 and enters into three inventory purchases (A+)

Mercedes Brown starts a merchandising business on December 1 and enters into three inventory purchases:

December 7 10 units @ $ 9 cost

December 14 20 units @ $10 cost

December 21 15 units @ $12 cost

Brown sells 18 units for $35 each on December 15. Seven of the sold units are from the December 7 purchase and eleven are from the December 14 purchase. Brown uses a perpetual inventory system.

Required:

Determine the costs assigned to the December 31 ending inventory based on FIFO.

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A company reports the following beginning inventory and purchases for the month of January (A+)

A company reports the following beginning inventory and purchases for the month of January. On January 26, the company sells 360 units.

Units Unit Cost

Beginning inventory on January 1 320 $6.00

Purchase on January 9 85 6.40

Purchase on January 25 110 6.60

Required:

What is the cost of the 155 units that remain in ending inventory at January 31, assuming the costs assigned to ending inventory based on a perpetual inventory system and use of LIFO.

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The ledger of Avril Company includes the following accounts with normal balances (A+)

The ledger of Avril Company includes the following accounts with normal balances: L. Avril, Capital $6,000; L. Avril, Withdrawals $400; Services Revenue $10,000; Wages Expense $5,200; and Rent Expense $800.

Required:

Prepare the necessary closing entries from the available information at December 31.

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You have the choice between $10,000 now and $25,000 in 10 year’s time (A+)

You have the choice between $10,000 now and $25,000 in 10 year’s time. If the appropriate discount rate is 5 percent per annum, what should you choose?

(b) The following amounts are saved at the end of each month: $500, $450, $300, $600, $720, $560. What will be their total value at the end of the period if the interest rate is 6 percent per annum (compounding monthly).

(c) How much should you pay for a bond that promises to pay 7 percent per annum on its face value of $100 and has a maturity of 30 years. The appropriate discount rate is 8 percent per annum.

(d) A company currently pays $0.65 in dividends each year. If you expect the growth rate of the dividends to be a constant 12 percent per annum, what should the shares sell for? Your discount rate is 15 percent per annum.

Question Five

Briefly outline (in no more than 2 paragraphs) two (2) reasons why a firm might find it difficult to change its dividend policy?

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Jumpin Jehora Phats was incorporated on January 1, 2012 and a year later it needs $10,000,000 to expand operations (A+)

Jumpin Jehora Phats was incorporated on January 1, 2012 and a year later it needs $10,000,000 to expand operations. JJ Phats is the sole shareholder of the corporation. The corporation is considering three methods to raise the capital: 1.issuing common shares at FMV 2.issuing preferred stock with par = $1000 3. issuing 10 year bonds with par = $1000 You have been hired to determine the best way for the company to obtain the funds needed which might be a single method or combination of methods. Using the following information, discuss the pros and cons of each method and provide necessary calculations to support the position you recommend. *The company is authorized to issue 1,000,000 shares with a par value of $1.00 * On January 1, 2013 an appraisal of the company indicates that it has a current value of $25,000,000. * On January 1, 2013 current interest rates are 3.5% APR and rising. *On December 1, 2012 the competition (LeapinLizards Inc) issued 10,000 ten year cumulative preferred shares with par = $1000 at 3.4%

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3. Feng Company installs a computerized manufacturing machine in its factory at the beginning of the year at a cost of $42,300 (A+)

Feng Company installs a computerized manufacturing machine in its factory at the beginning of the year at a cost of $42,300. The machine’s useful life is estimated at 10 years, or 363,000 units of product, with a $6,000 salvage value. During its second year, the machine produces 35,000 units of product.

Required:

1 Determine the machine\’s second-year depreciation using the double-declining-balance method

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2. Feng Company installs a computerized manufacturing machine in its factory at the beginning of the year at a cost of $42,300 (A+)

Feng Company installs a computerized manufacturing machine in its factory at the beginning of the year at a cost of $42,300. The machine’s useful life is estimated at 10 years, or 363,000 units of product, with a $6,000 salvage value. During its second year, the machine produces 35,000 units of product.

Required:

1 Determine the machine’s second-year depreciation using the units-of-production method.

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What is meant by the term ‘depreciation’ in financial accounting, and where do the depreciation calculations impact on entries in both the balance sheet and the profit and loss accounts (A+)

What is meant by the term ‘depreciation’ in financial accounting, and where do the depreciation calculations impact on entries in both the balance sheet and the profit and loss accounts? (10%)

b) A company has production machinery and delivery vehicles, both currently valued at £150,000. The company has two options for depreciation – straight line depreciation at 20% per annum or an accelerating depreciation method of 25% of net book value. Select the method you would advise for both asset types (with justifications) and calculate the depreciation charge for this year. (30%)

c) What is meant by the term Financial Ratios, giving examples of typical ratios used to assist investors in comparing company accounts? (30%)

d) In comparing the accounts of two companies the cost of production for the companies was as follows. Comment fully upon these results from an investor perspective (explain why you think the figures differ, how this might lead you to conclusions on efficiency etc..) (30%)

Company A Company B

Sales Revenue £2,000,000 £2,000,000

Less cost of sales

Plant depreciation £300,000 £50,000

Production labour £500,000 £700,000

Materials £500,000 £550,000

GROSS PROFIT £700,000 £700,000

Please Follow Instruction:

No more than 1500 words.

No plagiarism, Please reference everything.

The referencing is Harvard style.

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