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Benjamin O'Henry has owned and operated O'Henry's Data Services since its beginning ten years ago.

Benjamin O'Henry has owned and operated O'Henry's Data Services since its beginning ten years ago. From all appearances, the business has prospered. In the past few years, you have become friends with O'Henry and his wife. Recently, O'Henry mentioned that he has lost his zest for the business and would consider selling it for the right price. You are interested in buying this business, and you obtain its most recent monthly unadjusted trial balance which follows:
 
O'Henry's Data Services
Unadjusted Trial Balance
November 30, 20XX

Cash……………………………… $9,700 Accounts receivable……………………… 7,900 Prepaid expenses………… 2,600 Furniture, fixtures, & equipment 151,300 Accumulated depreciation $15,600 Accounts payable………… 3,800 Salary payable……………… Unearned service revenue 6,700 Benjamin O'Henry, capital 137,400 Benjamin O'Henry, withdrawals 2,000 Service revenue………… 14,300 Rent expense…………… Salary expense………… 3,400 Utilities expense……… 900 Depreciation expense Supplies expense…… Total…………………………………………. $177,800 $177,800

Revenues and expenses vary little from month to month, and November is a typical month. Your investigation reveals that the unadjusted trial balance does not include the effects of monthly revenues of $2,100 and monthly expenses totaling $2,750. If you were to buy O'Henry's Data Services, you would hire a manager who would require a monthly salary of $3,000.

The most you would pay for the business is 20 times the monthly net income you could expect to earn from it. Compute this possible price. The least O'Henry will take for the business is his ending capital. Compute this amount. Under these conditions, how much should you offer O'Henry? Give your reason.
 
File name: Benjamin-OHenry.doc File type: application/msword Price: $8

The net income of Simon and Hobbs, a department store, decreased sharply during 2000. Carol Simon,


Salaries owed to employees: $900
Prepaid insurance that has expired: $400

Why is Simon taking this action? Is her action ethical? Give your reason, identifying the parties helped and the parties harmed by Simon's action.

New Your Key is planning a $50 million expansion. The expansion is to be financed by selling $20 million in


a. 7.5%
b. 9.2%
c. 10.4%
d. 13.8%

What is the current value of the future payments if Jean will receive $8,500 per year for the next 15 years

What is the current value of the future payments if Jean will receive $8,500 per year for the next 15 years from her trust applying 7% interest?
 

A14. (Stock valuation) Suppose Toyota has nonmaturing (perpetual) preferred stock

A14. (Stock valuation) Suppose Toyota has nonmaturing (perpetual) preferred stock


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P3-2A Neosho River Resort, Inc. opened for business on June 1 with eight air-conditioned units. Its trial

P3-2A Neosho River Resort, Inc. opened for business on June 1 with eight air-conditioned units. Its trial balance before adjustment on August 31 is as follows.
 
NEOSHO RIVER RESORT, INC.
Trial Balance
August 31, 2008
Account Number Debit Credit
101 Cash 19,600 126 Supplies 3,300  130 Prepaid Insurance 6,000  140 Land 25,000  143 Cottages 125,000  149 Furniture 26,000  201 Accounts Payable $ 6,500  208 Unearned Rent 7,400  275 Mortgage Payable 80,000  311 Common Stock 100,000  332 Dividends 5,000 429 Rent Revenue 80,000  622 Repair Expense 3,600 726 Salaries Expense 51,000 732 Utilities Expense 9,400 $273,900 $273,900

In addition to those accounts listed on the trial balance, the chart of accounts for Neosho River Resort also contains the following accounts and account numbers: No. 112 Accounts Receivable, No. 144 Accumulated Depreciation—Cottages, No. 150 Accumulated Depreciation—Furniture, No. 212 Salaries Payable, No. 230 Interest Payable, No. 320 Retained Earnings. No. 620 Depreciation Expense—Cottages, No. 621 Depreciation Expense—Furniture, No. 631 Supplies Expense, No. 718 Interest Expense, and No. 722 Insurance Expense.

Other data:
1. Insurance expires at the rate of $400 per month.
2. A count on August 31 shows $600 of supplies on hand.
3. Annual depreciation is $6,000 on cottages and $2,400 on furniture.
4. Unearned rent of $4,100 was earned prior to August 31.
5. Salaries of $400 were unpaid at August 31.
6. Rentals of $1,000 were due from tenants at August 31. (Use Accounts Receivable.)
7. The mortgage interest rate is 9% per year. (The mortgage was taken out on August 1.)

Instructions
(a) Journalize the adjusting entries on August 31 for the 3-month period June 1–August 31.
(b) Prepare a ledger using the three-column form of account. Enter the trial balance amounts and post the adjusting entries. (Use J1 as the posting reference.)
(c) Prepare an adjusted trial balance on August 31.
(d) Prepare an income statement and a retained earnings statement for the 3 months ending August 31 and a balance sheet as of August 31.
 
File name: Neosho-River-Resort-Inc.xls File type: application/vnd.ms-excel Price: $10

Caladonia Corp is considering two investments with one-year lives. The more expensive of the two is the


Year Project A Project B
0 -$195,000 $-$1,200,000
1 $240,000 $1,650,000

Determine the present value and net present value and payback period of a project that has a total cost of

Determine the present value and net present value and payback period of a project that has a total cost of $20,000 for the three year period, utilizing an 8% discount rate. That forecasts incremental increases in profit over the next three years of $8,000, $9,000 and $10,000.

Caledonia Corp is considering two additional mutually exclusive projects. The cash flows associated with


Year Project A Project B
0 -$100,000 -$100,000
1 32,000 0
2 32,000 0
3 32,000 0
4 32,000 0
5 32,000 $200,000

The required rate of return on these projects is 11 %.
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The final two mutually exclusive projects that Caledonia is considering involve mutually exclusive pieces of

The final two mutually exclusive projects that Caledonia is considering involve mutually exclusive pieces of machinery that perform the same task. The two alternatives available provide the following set of after-tax net cash flows:
Year Equipment A Equipment B
0 -$100,000 -$100,000
1 65,000 32,500
2 65,000 32,500
3 65,000 32,500
4 32,500
5 32,500
6 32,500
7 32,500
8 32,500
9 32,500

The equipment has an expected life of 3 years, whereas equipment B has an expected life of 9 years. Assume req'd Rate of return is 14%

File name: Caledonia-is.xls File type: application/vnd.ms-excel Price: $5

Doug Maltbee formed a lawn service business as a summer job. To start the business on May 1, he

Doug Maltbee formed a lawn service business as a summer job. To start the business on May 1, he deposited $1,000 in a new bank account in the name of the proprietorship. The $1,000 consisted of a $600 loan from his father and $400 of his own money. Doug rented lawn equipment, purchased supplies, and hired fellow students to mow and trim his customer's lawns.
At the end of each month, Doug mailed bills to his customers. On August 31, he was ready to dissolve the business and return to Louisiana State University for the fall semester. Because he was so busy, he kept few records other than his check book and a list of amounts owed to him by customers.

At August 31, Doug's check book shows a balance of $690, and his customers still owe him $500. During the summer, he collected $4,250 from customers. His check book lists payments for supplies totalling $400, and he still has gasoline, weed eater cord, and other supplies that cost a total of $50. He paid his employees $1,900, and he still owes them $200 for the final week of the summer.

Doug rented some equipment from Scholes Machine Shop. On May 1, he signed a six-month lease on mowers and paid $600 for the full lease period. Scholes will refund the unused portion of the prepayment if the equipment is in good shape. To get the refund, Doug has kept the mower in excellent condition. In fact, he had to pay $300 to repair a mower.
 
To transport employees and equipment to jobs, Doug used a trailer that he bought for $300. He figures that the summer's work used up one-third of the trailer's service potential. The business check book lists a payment of $460 for cash withdrawals by Doug during the summer. Doug paid his father back during August.

As a team, prepare the income statement of Maltbee Lawn Service for the four months May through August. Prepare the classified balance sheet of Maltbee Lawn Service at August 31.

According to Horngren & Harrison, 2007 the accounting cycle consist of eight steps and are as follows:

1. Start with the beginning accounts balance
2. Analyze and journalize transactions as they occur
3. Post to the account
4. Compute the unadjusted balance in each account
5. Enter the trial balance on the work sheet, and complete the work sheet (optional)
6. Prepare the financial statements
7. Journalize and post the adjusting entries and the closing entries
8. Prepare the post closing trial balance

File name: Doug-Maltbee-formed.xls File type: application/vnd.ms-excel Price: $9

What is the future value of the following cash flows at the end of year 3 if the interest rate is 7.25 percent?


Year 1: $6,800
Year 2: $2,100
Year 3: 0

Please show me how to do this on a financial calculator.

A10. (Dividend discount model) Assume RHM is expected to pay a total cash dividend of

A10. (Dividend discount model) Assume RHM is expected to pay a total cash dividend of $5.60 next year and its dividends are expected to grow at a rate of 6% per year forever. Assuming annual dividend payments, what is the current market value of a share of RHM stock if the required return on RHM common stock is 10%?

A1. (Bond valuation) A $1,000 face value bond has a remaining maturity of 10 years and a required return

A14. (Stock valuation) Suppose Toyota has nonmaturing (perpetual) preferred stock

A14. (Stock valuation) Suppose Toyota has nonmaturing (perpetual) preferred stock outstanding that pays a $1.00 quarterly dividend and has a required return of 12% APR (3% per quarter). What is the stock worth?
 

A12. (Required return for a preferred stock) James River $3.38 preferred is selling for $45.25. The

A12. (Required return for a preferred stock) James River $3.38 preferred is selling for $45.25. The preferred dividend is non growing. What is the required return on James River preferred stock?
 

Bonds having a face value of $5,000,000 are being offered for sale by Markham, Inc. The market rate of interest for bonds of this type is 10%, but the coupon rate is 8%. The bonds have an expected life of 20

When you undertook the preparation of the financial statements for Green Company at January 31, 2010,

When you undertook the preparation of the financial statements for Green Company at January 31, 2010, the following data were available:


..............................................At Cost...At Retail

Inventory, February 1, 2009........$70,800...$98,500

Markdowns.............................................35,000

Markups.................................................63,000

Markdown cancellations.............................20,000

Markup cancellations................................10,000

Purchases...............................219,500....294,000

Sales...................................................345,000

Purchases returns and allowances....4,300.....5,500

Sales returns and allowances.....................10,000

Instructions
Compute the ending inventory at cost as of January 31, 2010, using the retail method which approximates lower of cost or market. Your solution should be in good form with amounts clearly labeled.
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On December 31, 2010 Brown Company's inventory burned. Sales and purchases for the year had been

A share of common stock has just paid a dividend of $2.00. If the expected long-run growth rate for this

A share of common stock has just paid a dividend of $2.00. If the expected long-run growth rate for this stock is 7%, and if investors require a(n) 11% rate of return, what is the price of the stock?

 

Amount of each cash flows On Dec 31, 2017 Michael McDowell desires to have 60000

Amount of each cash flows On Dec 31, 2017 Michael McDowell desires to have 60000. He plans to make six deposit in a fund to provide this amount. Interest is compounded annually at 12%.


Compute the equal annual the McDowell must deposit, assuming that he make the first deposit
1. December, 31 2012
2. December, 31 2011
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What is the future value on Dec 31 2019 of 10 cash flows of 20000 with the first cash


What is the future value on June 30, 2020 of 20 cash flows of 15000 with the first cash payment made on Dec 31, 2010 and the annual interest rate of 10% being compound semiannually?

What is the future value on Dec 31, 2020 of 20 cash flows of 15000 with the first cash payment made on Dec 31, 2010 and the annual interest rate of 10% being compounded semiannually?

What is the future value on Dec 31 2014 of deposit of 35000 made on Dec 31 2010 assuming interest of


What is the future value on Dec 31 2014 of a deposit of 10000 made on Dec 31, 2010 assuming interest of 16% compounded quarterly?

What is the future value on Dec 31, 2014 of a deposit of 25000 made o Dec 2010 assuming interest of12% compounded semi-annually?

The following items were selected from among the transactions completed by emerald bay stores co

The following items were selected from among the transactions completed by emerald bay stores co. during the current year.


Jan 15. Purchased merchandise on account from hood Co., $200,000, terms n/30.
Feb 14. Issued 60-day, %6 note for $200,000 to Hood Co on account.
April 15. Paid Hood Co. the amount owed on the note of February 14.
June2. Borrowed $187,500 from Acme Bank, issuing a 60-day, 8% note.
July 10. Purchased tools by issuing a $190,000, 90-day note to Columbia supply Co., which discounted the note at the rate of 6%.
Aug 1. Paid Acme Bank the interest rate due on the note of June 2 and renewed the loan by issuing a new 60-day, 10% not for $187,500 (Journalize both the debit and credit to the notes payable account.)
Sept 30. Paid Acme Bank the amount due on the note of August 1.
Oct 8. Paid Columbia Supply co. the amount due on the note of July 10.
Dec 1. Purchased office equipment from Mountain Equipment co. for $120,000 paying $20,000 and issuing a series of ten 6% notes for $10,000 each coming due at 30-day intervals.
Dec 5. Settled a product liability lawsuit with a customer for $76,000, payable in January. Emerald Bay accrued the loss in litigation claims payable account.
Dec 31. paid the amount due Mountain Equipment co. on the first note in the series issued on December 1.

Instructions:
1. Journalize the transactions.
2. Journalize the adjusting entry for each of the following accrued expenses at the end of the current year.
(a) product warranty cost $16,400;
(b) interest on the nine remaining notes owed to Mountain Equipment co.
 
File name: emerald-bay-stores-co.doc File type: application/msword  Price: $6

1. Bond. What is the value of a $1,000 par value bond with annual payments of an


a. 11% coupon with a maturity of 20 years and a 15% required return?
b. 12% coupon with a maturity of 10 years and a 7% required return?
c. 8% semiannual coupon with a maturity of 10 years and a 11% required return?
d. 8% semiannual coupon with a maturity of 20 years and a 6% required return?

2. Bond. What is the yield to maturity of a $1000 par value bond with an
a. 10% semiannual coupon and 20 years to maturity and a $1,000 price?
b. 6.5% semiannual coupon and 13 years to maturity and a $890 price?
c. 7.5% annual coupon and 19 years to maturity and a $788 price?
d. 4.5% annual coupon and 7 years to maturity and a $800 price?

Neosho River Resort, Inc. opened for business on June 1 with eight air-conditioned units. Its trial balance EXCEL TEMPLATE

Neosho River Resort, Inc. opened for business on June 1 with eight air-conditioned units. Its trial balance before adjustment on August 31 is as follows.
 
NEOSHO RIVER RESORT, INC.
Trial Balance August 31, 2008

Account Number Debit Credit
101 Cash $ 19,600 126 Supplies 3,300 130 Prepaid Insurance 6,000 140 Land 25,000 143 Cottages 125,000 149 Furniture 26,000 201 Accounts Payable $ 6,500 208 Unearned Rent 7,400 275 Mortgage Payable 80,000 311 Common Stock 100,000 332 Dividends 5,000 429 Rent Revenue 80,000 622 Repair Expense 3,600 726 Salaries Expense 51,000 732 Utilities Expense 9,400 $273,900 $273,900

Problems: Set A 129 (c) Adj. trial balance $41,550 Prepare adjusting entries, post, and prepare adjusted trial balance, and financial statements. (SO 5, 6, 7) In addition to those accounts listed on the trial balance, the chart of accounts for Neosho River Resort also contains the following accounts and account numbers: No. 112 Accounts Receivable, No. 144 Accumulated Depreciation—Cottage No. 150 Accumulated Depreciation—Furniture,
No. 212 Salaries Payable, No. 230 Interest Payable, No. 320 Retained Earnings, No. 620 Depreciation Expense—Cottages, No. 621 Depreciation Expense—Furniture, No. 631 Supplies Expense,
No. 718 Interest Expense, and No. 722 Insurance Expense.

Other data:
1. Insurance expires at the rate of $400 per month.
2. A count on August 31 shows $600 of supplies on hand.
3. Annual depreciation is $6,000 on cottages and $2,400 on furniture.
4. Unearned rent of $4,100 was earned prior to August 31.
5. Salaries of $400 were unpaid at August 31.
6. Rentals of $1,000 were due from tenants at August 31. (Use Accounts Receivable.)
7. The mortgage interest rate is 9% per year. (The mortgage was taken out on August 1.)
 
Instructions
(a) Journalize the adjusting entries on August 31 for the 3-month period June 1–August 31.
(b) Prepare a ledger using the three-column form of account. Enter the trial balance amounts and post the adjusting entries. (Use J1 as the posting reference.)
(c) Prepare an adjusted trial balance on August 31.
(d) Prepare an income statement and a retained earnings statement for the 3 months ending August 31 and a balance sheet as of August 31.u

SOLUTION PREVIEW [EXCEL TEMPLATE]
(a) Journalize the adjusting entries on August 31 for the 3-month period June 1–August 31.
J1
Date
 
Account/Description
Debit
Credit
Aug.
31
Insurance Expense ($400 X 3)
1,200
 
 
 
        prepaid insurance
 
1,200
 
 
(To record expired insurance)
 
 
 
31
Supplies Expense($3,300-$600)
2,700
 
 
 
        Supplies
 
2,700
 
 
(To record supplies used)
 
 
 
31
Depreciation Expense – Cottages($6,000 X ¼)
1,500
 


File name: Neosho-River-Resort-Inc.xls File type: application/vnd.ms-excel Price: $10

1. (Expected Rate of Return and Risk) B. J. Orange Enterprises is evaluating a security. One-year Treasury

1. (Expected Rate of Return and Risk) B. J. Orange Enterprises is evaluating a security. One-year Treasury bills are currently paying 1.9 percent (with little risk – 1 percent). Calculate the investment's expected return and its standard deviation. Should Orange invest in this security or the Treasury bills? You should calculate the expected return, standard deviation, and coefficient of variation.
Probability Return
.15             6%
.30             5%
.40            11%
.15            14%

2. (Historic Rate of Return and Risk) Consider an investment in one of two common stocks. Given the information that follows, which investment was better, based on risk (as measured by the standard deviation), return, and coefficient of variation?

Common Stock A Common Stock B
Return  Return
10%     8%
13%     15%
20%     19%

File name: B.-J.-Orange-Enterprises.xls File type: application/vnd.ms-excel Price: $8

Bethel Corp. is a retail company and had the following transactions during March, 2007, its first month of

Bethel Corp. is a retail company and had the following transactions during March, 2007, its first month of operations:
March 1 - The owner invested $12,000 into the business.
March 1 - The company bought inventory for cash of $7,500.
March 7 - This month's rent was paid in cash totaling $1,500.
March 12 - Advertising was incurred during
March for $540. The bill will be paid in April.
March 13 - The company sold merchandise for $9,000.

Cash collected from the customers for these goods was $7,000, the remainder will be collected next month. March 13 - The cost of the merchandise sold in the previous transaction was $5,000.

March 31 - During the month the employees were paid $1,000 in cash and an additional $300 of wages was owed to them, but had not been paid.

Required: Using the above transactions prepare the following statements: A. Income Statement (10 points) B. Balance Sheet (5 points)
 

Your division is considering two projects with the following net cash flows Project A 0= -$25 1= $5 2= $10 3= $17 Project B 0= -$20 1= $10 2= $9 3= $6

Your division is considering two projects with the following net cash flows.

Project A 0= -$25 1= $5 2= $10 3= $17
Project B 0= -$20 1= $10 2= $9 3= $6

What are the projects NPV's assuming the WACC is 5%? 10%? and 15%?
What are the projects IRR,s at each of these WACC's?
If the WACC was 5% and project A and B were mutually exclusive, which project would you choose?
What if the WACC was 10%? 15%?


SOLUTION PREVIEW
Project A
Project B
Year
Cash flows
PV @5%
PV @10%
PV @15%
Year
Cash flows
PV @5%
PV @10%
PV @15%
0
-25
 $   -25.00
 $   -25.00
 $   -25.00
0
-20
 $   -20.00
 $   -20.00
 $   -20.00
1
5
 $       4.76
 $       4.55
 $       4.35
1
10
 $       9.52
 $       9.09
 $       8.70

 File name: Project_A_and_B.xlsx  File type:  .doc  PRICE: $12

The ledger of Hixson Company at the end of the current year shows accounts receivable 120,000, sales

The ledger of Hixson Company at the end of the current year shows accounts receivable 120,000, sales 840,000 and sales returns and allowance 30,000.
 
Instructions
A) If Hixson uses the direct write off method to account for uncollectible accounts, journalize the adjusting entry at December 31, assuming Hixson determines that fells 1.400 balance is uncollectible.

B) If allowance for doubtful accounts has a credit balance of 2,100 in the trial balance journalize the adjusting entry at December 31, assuming bad debts are expected to be (1) 1 % of net sales, and (2) 10 % of accounts receivable

C) If allowance for doubtful accounts has a debit balance of $200 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be (1) 0.75% of net sales and (2) 6% of accounts receivable.

File name:E9-3-The-ledger-of-Hixson.doc File type:application/msword Price: $5

E10-2 Trudy Company incurred the following costs. 1. Sales tax on factory machinery purchased $5,000 2.

E10-2 Trudy Company incurred the following costs.

1. Sales tax on factory machinery purchased $5,000
2. Painting of and lettering on truck immediately upon purchase 700
3. Installation and testing of factory machinery 2,000
4. Real estate broker’s commission on land purchased 3,500
5. Insurance premium paid for first year’s insurance on new truck 880
6. Cost of landscaping on property purchased 7,200
7. Cost of paving parking lot for new building constructed 17,900
8. Cost of clearing, draining, and filling land 13,300
9. Architect’s fees on self-constructed building 10,000

Instructions:
 Indicate to which account Trudy would debit each of the costs.
 
File name: Trudy-Company.doc File type: application/msword  Price: $3

E10-13 Herzogg Company, organized in 2008, has the following transactions related to intangible assets

E10-13 Herzogg Company, organized in 2008, has the following transactions related to intangible assets. 1/2/08 Purchased patent (7-year life) $560,000
4/1/08 Goodwill purchased (indefinite life) 360,000
7/1/08 10-year franchise; expiration date
7/1/2018 440,000
9/1/08  Research and development costs 185,000

Instructions

 Prepare the necessary entries to record these intangibles. All costs incurred were for cash. Make the adjusting entries as of December 31, 2008, recording any necessary amortization and reporting all intangible asset balances accurately as of that date.

File name:Herzogg-Company.doc File type:application/msword Price: $4