Ch6_9_5e - Practice Exam Chapters 6-9 Problem I Short...

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Practice Exam Chapters 6-9 Short answer exercises (Answer in the space provided) 1. On April 30, 2009, Jonathan Wells purchased a big screen TV from the Great Guys Department Store for $2,600. Jonathan will make 12 equal monthly payments, beginning May 31, 2009. The annual interest rate implicit in this agreement is 12%. Required: Calculate the monthly payment necessary for Jonathan to pay for his purchase. 2. Mary Riley is about to go to court for injuries sustained in an accident. The insurance company of the other party has offered Mary three alternatives to settle the case before it goes to trial: 1. $200,000 cash payment to be paid immediately. 2. A 10-year annuity of $24,000 beginning immediately. 3. A 10-year annuity of $28,000 beginning in five years. Required: Mary has decided she wants to settle the case before it goes to trial. Which alternative should she choose assuming that she is able to invest funds at a 5% rate? The Tidwell Company began 2009 with accounts receivable of $180,000 and an allowance for uncollectible accounts of $12,000 (credit balance). Bad debt expense for the year was $15,000 and the ending balance in the allowance for uncollectible accounts account was $17,000. The accounts receivable turnover ratio for
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Ch6_9_5e - Practice Exam Chapters 6-9 Problem I Short...

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