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Unformatted text preview: Quiz Chapter 10 Section 6 Name . Multiple Choice 1. A company receives $132, of which $12 is for sales tax. The journal entry to record the sale would include a a. debit to Sales Tax Expense for $12. b. credit to Sales Tax Payable for $12. c. debit to Sales for $132. d. debit to Cash for $120. 2. On January 1, 2010, Keisler Company, a calendaryear company, issued $400,000 of notes payable, of which $100,000 is due on January 1 for each of the next four years. The proper balance sheet presentation on December 31, 2010, is a. Current Liabilities, $400,000. b. Longterm Debt , $400,000. c. Current Liabilities, $100,000; Longterm Debt, $300,000. d. Current Liabilities, $300,000; Longterm Debt, $100,000. 3. If you are able to earn a 15% rate of return, what amount would you need to invest to have $2,000 one year from now? a. $1,980.20. b. $1,750.00. c. $1,700.00. d. $1,739.14. 4. Which of the following discount rates will produce the smallest present value? a. 6%. b. 7%. c. 8%. d. 3%. 5. Suppose you have a winning lottery ticket and you are given the option of accepting $1,000,000 three years from now or taking the present value of the $1,000,000 now. The sponsor of the prize uses a 5% discount rate. If you elect to receive the present value of the prize now, the amount you will receive is a. $863,840. b. $839,620. c. $890,000. d. $1,000,000. [Type text] [Type text] [Type text] 6. Barnard Company is considering investing in an annuity contract that will return $40,000 annually at the end of each year for 12 years. Barnard has obtained the following values related to the time value of money to help in its planning process and compounded interest decisions. Present value of 1 for 12 periods at 9% 0.35554 Future value of 1 for 12 periods at 9% 2.81267 Present value of an annuity of 1 for 12 periods at 9% 7.16073 Future value of an annuity of 1 for 12 periods at 9% 20.14072 To the closest dollar, what amount should Ritz Company pay for this investment if it earns a 9% return? a. $497,066. b. $592,507. c. $805,629. d. $286,429. 7. Anderson Corporation issues an 8%, 9year mortgage note on January 1 2009, to obtain financing for new equipment. The terms provide for semiannual installment payments of $131,600. The following values related to the time value of money were available to Anderson to help them with their planning process and compounded interest decisions. Present value of 1 for 9 periods at 8% 0.50025 Present value of 1 for 18 periods at 4% 0.49363 Future value of 1 for 9 periods at 8% 1.99900 Future value of 1 for 18 periods at 4% 2.02582 Present value of an annuity of 1 for 9 periods at 8% 6.24689 Present value of an annuity of 1 for 18 periods at 4% 12.65930 Future value of an annuity of 1 for 9 periods at 8% 12.48756 Future value of an annuity of 1 for 18 periods at 4% 25.64541 Quiz Chapter 10 Section 6 Name ....
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 Spring '11
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