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ch6_9_spe

# ch6_9_spe - balance = \$2,270,000(cash collections 3...

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Practice Exam Chapters 6-9 Solutions Problem I 1. \$2,600 ÷ 11.25508 = \$231 = required monthly payments Present value of an ordinary annuity of \$1: n=12, i=1% (from Table 4) 2. Choose the alternative with the highest present value. Alternative 1: PV = \$200,000 Alternative 2: PV = PVAD = \$24,000 x 8.10782 = \$194,588 Present value of an annuity due of \$1: n=10, i=5% (from Table 6) Alternative 3: PVA = \$28,000 x 7.72173 = \$216,208 Present value of an ordinary annuity of \$1: n=10, i=5% (from Table 4) PV = \$216,208 x .82270 = \$177,875 Present value of \$1: n=4, i=5% (from Table 2) Mary should choose alternative 1 .

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Problem II 1. \$12,000 + 15,000 – 17,000 = \$10,000 in write offs 2. CGS = 6.0 x \$200,000 = \$1,200,000 Sales equals \$1,200,000/.50 = \$2,400,000 \$2,400,000/10 = \$240,000 = average receivables Therefore, since beginning receivables are \$180,000, ending receivables must be \$300,000 \$180,000 + 2,400,000 – 10,000 (write offs) – 300,000 (ending

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Unformatted text preview: balance) = \$2,270,000 (cash collections) 3. \$180,000 + 3,000,000 – 10,000 (write offs) – 400,000 (ending balance) = \$2,770,000 (cash collections) Problem III 1. \$2,124 million higher (given) 2. \$2,124 – 1,863 = 261 million decrease in cost of goods sold. \$261 million x (1 - .27) = \$190.5 Net income would be \$190.5 million higher 3. Retained earnings would be higher by \$2,124 x (1 - .27) = \$1,550.5 million Problem IV 1. Cost Retail Inventory, beginning 28,900 40,000 Purchases 86,200 111,800 Purchase returns (1,500) (1,800) Markups ______ 15,000 113,600 165,000 113,600--------- = 69% = cost-to-retail % (rounded) 165,000 Markdowns (4,000 ) 161,000 Less: net sales (116,000 ) Ending inventory at retail 45,000 X .69 Ending inventory at cost 31,050 2. \$44,100 ÷ 1.05 = \$42,000 Beginning \$28,900 Layer \$2,000 x 1.05 x .80 1,680 30,580...
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ch6_9_spe - balance = \$2,270,000(cash collections 3...

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