Accounting Answers

a) HairNice Production Sdn Bhd is considering the production of a new conditioning shampoo which will require the purchase of new mixing machinery. 

The machinery will cost RM375,000, is expected to have a useful life of 10 years and is expected to have a salvage value of RM50,000 at the end of 10 years. 

The machinery will also need a RM35,000 overhaul at the end of year six. 

A RM40,000 increase in working capital will be needed for this investment project. 

The working capital will be released at the end of the 10 years. 

The new shampoo is expected to generate net cash inflows of RM85,000 per year for each of the 10 years. 

HairNice Production's discount rate is 16%.

i）Compute the net present value (NPV) of the investment opportunity? 

ii) Based on your answer to (a) above, should Anita go ahead with the new conditioning shampoo?      

explain the meaning of cost of capital and its relevance in a net present value (NPV) analysis.

On September 30th, Company “A” sold a vehicle for 20,000 . to company “B”, the historical cost for the vehicle was 100,000 . and its accumulated depreciation was 90,000 . at the time of sale. What are the required Journal entries to be made in both companies?

On December 31, 2018, Company “A” had a loan commitment amounted 100,000 ., classified as follows:- 40,000 . as short-term, 60,000. as long-term. On January 10, 2019, the company agreed to refinance the loan commitments with an extra 10,000 . of interest, so the loan classifies as follows:-

25,000 . as short-term, 85,000 as long-term.

What’s the loans balance that’s should appear on the company’s financial statements, note that the financial statements were issued on February 12, 2019? Why

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.

explain the meaning of cost of capital and its relevance in a net present value (NPV) analysis.

 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?