P9-28A P10A-9B
P11-29A
P9-28A Swifty Delivery
Service
P10A-9B Axel needs new
manufacturing equipment
P11-29A The balance sheet of
Ballcraft, Inc
P9-28A On January 9,2010,
Swifty Delivery Service purchased a truck at a cost of $67,000. Before placing
the truck in service, Swifty spent $2,200 painting it, $500 replacing tires,
and $5,000 overhauling the engine. The truck should remain in service for 6
years and have a residual value of $14,700. The truck’s annual mileage is
expected to be 15,000 miles in each of the first 4 years and 10,000 miles in
each of the next 2 years-80,000 miles in total. In deciding which depreciation
method to use, Jerry Speers, the general manager, requests depreciation
schedule for each of the depreciation methods (straight-line,
units-of-production, and double-declining-balance.)
Requirements
1. Prepare a depreciation
schedule for each deprecation methods, showing asset cost, depreciation
expense, accumulated depreciation, and asset book value.
2.Swifty prepares financial
statements using the depreciation method that repost the highest net income in
the early years of the asset use. For income-tax purposes, the company uses the
depreciation method that minimizes income taxes in the early years. Consider
the first year that Swifty uses the truck. Identify the depreciation methods
that meet the general manager’s objectives, assuming the income tax authorities
permit the use of the any of the methods.
P10A-9B
Axel needs new manufacturing equipment. Two companies can provide similar
equipment but under different payment plans: Plan A: MRE offers to let Axel pay
$55,000 each year for five years. The payments include interest at 12% per
year. Plan B: Westernhome will make a single payment of $425,000 at the end of
five years. This payment includes both principal and interest at 12%.
Requirements
1. Calculate the present value of
Plan
A. 2. Calculate the present value
of Plan B.
3. Axel will purchase the
equipment that costs the least, as measured by present value. Which equipment
should Axel select? Why? (Challenge)
P11-29A The balance sheet of
Ballcraft, Inc., reported the following:
Preferrerd stock, $6 par,6% 5,000
shares authorized and issued
$30,000
Common stock $4.00
par value, 45,000
shares authorized; 10,000
shares issued $40,000
Additional paid-in-capital-common
219,000
Total paid-in-capital $289,000
Retained earnings 90,000
Total stockholders’ equity
$379,000
Preferred dividends are in
arrears for two years, including the current year. On the balance sheet date,
the market value of the Ballcraft common stock was $31 per share.
Requirements
1. Is the preferred stock
cumulative or noncumulative? How can you tell ?
2. What is the total
paid-in-capital of the company ?
3. What was the total market
value of the common stock ?
4. Compute the book value per
share of the common stock?
TUTORIAL PREVIEW
P9-28A
Req.1
|
Staright-Line Depreciation Schedule
|
||||||
|
Date
|
Asset Cost
|
Depreciation Rate
|
Depreciable Cost
|
Depreciation Expense
|
Accumulated Depreciation
|
Asset Book Value
|
|
January 9,2010
|
$74,700
|
|
|
|
|
$74,700
|
|
December 31, 2010
|
|
1/6
|
60,000
|
$10,000
|
$10,000
|
64,700
|
File name: P9-28A P10A-9B P11-29A.xlsx File type: docx PRICE:$25
