Accounting Answers

Answer the following problems

1. 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?

2. 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?

You are evaluating an investment project, Project YY, with the following Cash

flows

period cash flow

0 -$ 100,000

1 43,798

2 43,798

3 43,798

Required: Calculate the following:

a. Payback period

b. Discounted payback period, assuming a 10% cost of capital

c. Discounted payback period, assuming a 14% cost of capital

d. Net present value, assuming a 14% cost of capital

Answer the following problems

A stock is trading at $80 per share. The stock is expected to have a year-end dividend of $4 per share (D1 $4), which is expected to grow at some constant rate g throughout time. The stock’s required rate of return is 14%. If you are an analyst who believes in efficient markets, what is your forecast of g?

Answer the following problems

a. If you deposit $10,000 in a bank account that pays 10% interest annually, how much will be in your account after 5 years?

b. What is the present value of a security that will pay $5,000 in 20 years if securities of equal risk pay 7% annually?

c. Your parents will retire in 18 years. They currently have $250,000, and they think they will need $1,000,000 at retirement. What annual interest rate must they earn to reach their goal, assuming they don’t save any additional funds?

d. If you deposit money today in an account that pays 6.5% annual interest, how long will it take to double your money?

Key Insurance Agency was organized on October 1, 2020. Assume that the accounts are closed and financial statements prepared each month. The company occupies rented office space but owns office equipment estimated to have a useful life of 10 years from date of acquisition, October 1. The trial balance for Key Insurance Agency at December 31 is shown below.

Cash $22,565

Accounts Receivables 7.050

Office Equipment 9,600

Accumulated Depreciation: Office Equipment 160

Accounts Payable 2,260

Income Taxes Payable 4,965

Capital Stock 20,000

Retained Earnings 7,450

Dividends 2,500

Commissions Earned 31,080

Advertising Expense 2,400

Salaries Expense 18,000

Rent Expense 3,800

Totals $65,915 $65,915

calculate taxable income fore the month of December using 40% corporate rate

prepare income statement , statement of retained earing for the month ended December 31,2020

1. A new accountant just joined the company and needs your advice on the below transactions:

a) A loan of NGN15,000.00 granted to the customer on 10% interest. 

b) A loan loss write-off allowance of 2% to be made on every loan granted. 

Kindly advise her on the entries to pass in the book. 

2. What would be the treatment of IFRS 9 on receivables considering a company that core operation is granting loans to customers. 

Question Ltd is a fintech company that grants unsecured loans to an individual. 

Her capital formations are:

Equity (10,000 shares @NGN10/ share) NGN 10 million

Debt (Non-current) NGN15M 

Current Debt NGN2M

Below are the events that occurred in the year that just ended.

1. Profit recorded was NGN18M
2. Depreciation calculated was (Annual Allowance NGN650) NGN1,000
3. Provision for loan write off (Actual write-off of NGN3M included) NGN8M 
4. Gain on disposal of asset (selling price NGN8) NGN3
5. There was an adjustment to authorized share capital by 9,000 units in the year. This was allotted based on the initial holding by equity holders.
6. Non-current Debt has been for over 12 Months

a. What would be the net cash and cash equivalent of Question Ltd for the year ended?

b. What would likely be the tax payable for the assessable year?

on june 31, 2010 the statment of financial position of music Depot showed cash $11,000, accounts receivable $1,500 supplies $900, equipment $10,000 accounts payable $2600, during september, the following transactions occured . July 1 Lee chang made an additional investment in music Depot by depositing $2500 in music Depot,s cheeking account

on june 31, 2010 the statment of financial position of music Depot showed cash $11,000, accounts receivable $1,500 supplies $900, equipment $10,000 accounts payable $2600, during september, the following transactions occured . July 1 Lee chang made an additional investment in music Depot by depositing $2500 in music Depot,s cheeking account

 Key Insurance Agency was organized on October 1, 2020. Assume that the accounts are closed and financial statements prepared each month. The company occupies rented office space but owns office equipment estimated to have a useful life of 10 years from date of acquisition, October 1. The trial balance for Key Insurance Agency at December 31 is shown below.

Cash $22,565

Accounts Receivables 7.050

Office Equipment 9,600

Accumulated Depreciation: Office Equipment 160

Accounts Payable 2,260

Income Taxes Payable 4,965

Capital Stock 20,000

Retained Earnings 7,450

Dividends 2,500

Commissions Earned 31,080

Advertising Expense 2,400

Salaries Expense 18,000

Rent Expense 3,800

Totals $65,915 $65,915

a. Prepare the adjusting entry to record depreciation of the office equipment for the month of December, using the straight line method of computing depreciation expense.

b. adjusted trial balance.