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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This note was uploaded on 12/06/2009 for the course FIN fin213 taught by Professor Keith during the Spring '09 term at Sabancı University.

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

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