Accounting Answers

 Lisa Company's required rate of return is 14%. The company is considering the purchase of a new machine that will save RM10,000 per year in cash operating costs. The machine will cost RM40,000 and will have an eight-year useful life with zero salvage value.

i.       Compute the machine's internal rate of return to the nearest whole percent. Would you recommend purchase of the machine? Explain.

ii.       The company would like to use NPV to evaluate the project now. Compute the machine's NPV, assuming cost of capital is 10%. Would you recommend purchase of the machine? Explain.

Discuss the implications for project investment priority based on your answer in (i) and (ii).      

(Ignore income taxes in this problem.) Allen Company's required rate of return is 14%. The company is considering the purchase of a new machine that will save $10,000 per year in cash operating costs. The machine will cost $40,000 and will have an 8-year useful life with zero salvage value. Straight-line depreciation will be used.

Explain at least 3 points the meaning of cost of capital and its relevance in a net present value (NPV) analysis.

Q1.   Depreciation Methods:

As the Manager of TAMCC Hotel, Inc., - Restaurant and Bar, you just purchased a doughnut making machine for $100,000. It has a salvage value of $10,000 and the useful life of 5 years. The machine is expected to produce 360,000 doughnuts: 70,000 in year 1; 80,000 in year 2; 90,000 in year 3; 70,000 in year 4; and 50,000 year 5.

i.                  Calculate the annual depreciation expense using the FIVE methods.

Select one method and show how it will be recorded in the Final Accounts

Jones Co has the following transactions 1st March 2020: Payment of sh. 400 cash to Mbogo for credit purchaces what is the correct ledger entries to record this transaction?

1. What classification of taxpayer are sole proprietorship form of business organization?
2. What items are considered to be deductions of gross sales that are subject to 8 percent income tax rate?
3. How much is the ceiling amount fixed by law to determine VAT registrable taxpayers?
4. How do you call a taxpayer who receives income from employment and business or practice of profession?

1. The government has called upon its residents and citizens to pay taxes and assume monetary burdens so that it can finance public needs and perform its functions. Mr. Dela Cruz refused to pay taxes. Accordingly, he does not care whether the government continue to exist or not. Aside from that, he just wanted to save all his millions for himself. Is the contention of Mr. Dela Cruz correct? Why?

1. What are the nature of the state's power to tax?

The controller of Pane Co. was preparing the company's financial statements. Pane had a wholly owned subsidiary in a foreign country that used the euro as its currency. At December 31, the exchange rate was $1 U.S. for 1.25 euro. The weighted average exchange rate for the year was $1 U.S. for 1.50 euro. At December 31, the subsidiary had assets of 1 million euro and revenue for the year of 2 million euro. What amounts would assets and revenue translate for consolidation?   

1. The government has called upon its residents and citizens to pay taxes and assume monetary burdens so that it can finance public needs and perform its functions. Mr. Dela Cruz refused to pay taxes. Accordingly, he does not care whether the government continue to exist or not. Aside from that, he just wanted to save all his millions for himself. Is the contention of Mr. Dela Cruz correct? Why?

Enter the following transactions in the accounts:

20X9 May 1

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Started in business with £18,000 in the bank. Bought goods on credit from B Hind £1,455. Bought goods on credit from G Smart £472. Sold goods for cash £210.

We returned goods to B Hind £82.

Bought goods on credit from G Smart £370. Sold goods on credit to P Syme £483.

Sold goods for cash £305.

Took £250 of the cash and paid it into the bank. Bought a printer by cheque £620.

Sold goods on credit to H Buchan £394.

P Syme returned goods to us £160.

H Buchan returned goods to us £18.

We returned goods to G Smart £47.

We paid Hind by cheque £1,373.

Bought machinery on credit from A Cobb £419.