Week 5 DQ and wileyplus exercise problem

Chapter 6

Use of PV Calculations

When might we use present value calculations? When might we use future value calculations? Which is more likely to be used in accounting? Why?

Effects of Interest Rates on PV Calculations

What effect do interest rates have on the calculation of future and present value? How does the length of time affect future and present value? How do these two factors correlate?

Question 1

For each of the following cases, indicate (a) to what rate columns, and (b) to what number of periods you would refer in looking up the interest factor.

1. In a future value of 1 table:

		Annual Rate		Number of Years Invested		Compounded		(a) Rate of Interest			(b) Number of Periods
a.		9%		9		Annually			%
b.		12%		5		Quarterly			%
c.		10%		15		Semiannually			%

2. In a present value of an annuity of 1 table:

		Annual Rate		Number of Years Invested		Number of Rents Involved		Frequency of Rents		(a) Rate of Interest			(b) Number of Periods
a.		9%		25		25		Annually			%
b.		10%		15		30		Semiannually			%
c.		12%		7		28		Quarterly			%

E23-10.

(Classification of Transactions) 2 8 Following are selected balance sheet accounts of Allman Bros. Corp. at December 31, 2014 and 2013, and the increases or decreases in each account from 2013 to 2014. Also presented is selected income statement information for the year ended December 31, 2014, and additional information. Selected balance sheet accounts 2014 2013 Increase (Decrease) Assets Accounts receivable $   34,000  $   24,000  $ 10,000  Property, plant, and equipment 277,000  247,000  30,000  Accumulated depreciation—plant assets (178,000) (167,000) (11,000) Liabilities and stockholders' equity Bonds payable $   49,000  $   46,000  $    3,000  Dividends payable 8,000  5,000  3,000  Common stock, $1 par 22,000  19,000  3,000  Additional paid-in capital 9,000  3,000  6,000  Retained earnings 104,000  91,000  13,000  Selected income statement information for the year ended December 31, 2014 Sales revenue $  155,000  Depreciation 33,000  Gain on sale of equipment 14,500  Net income 31,000  Additional information: 1.   During 2014, equipment costing $45,000 was sold for cash. 2.   Accounts receivable relate to sales of merchandise. 3.   During 2014, $20,000 of bonds payable were issued in exchange for property, plant, and equipment. There was no amortization of bond discount or premium. Instructions Determine the category (operating, investing, or financing) and the amount that should be reported in the statement of cash flows for the following items. (a)   Payments for purchase of property, plant, and equipment. (b)   Proceeds from the sale of equipment. (c)   Cash dividends paid. (d)   Redemption of bonds payable. Download complete A+ Answers : Click HERE