Which of the following statements is the best description of reversing entries?
Answer(s): D
Reversing entries are made at the beginning of a period to reverse the effects of adjusting entries made at the end of the preceding period. They are optional entries made for the sake of convenience in recording the transactions of the period. In order for reversing entries to reverse the prior adjustments, they must be the exact opposite of the adjustments made in the previous period.
The relationship between the present value of a future sum and the future value of a present sum can be expressed in terms of their respective interest factors. lithe present value of US $200, 000 due at the end of 8 years. at 10%. is US $93, 300. what is the approximate future value of US $200, 000 invested for the same length of time and at the same rate?
The interest factor for the future value of a present sum is equal to the reciprocal of the interest factor for the present value of a future sum. Thus, the future value is US $428, 724 [($200, 000 $93, 300) x $200, 000].
Risoner Company plans to purchase a machine with the following conditions:· Purchase price = US $300, 000· The down payment = 10% of purchase price with remainder financed at an annual interest rate of 16%. The financing period is 8 years with equal annual payments made every year.· The present value of an annuity of US $1 per year for 8 years at 16% is 4.3436. · The present value of US $1 due at the end of 8 years at 16% is 3050 The annual paymentrounded) is
Answer(s): C
The periodic payment is found by dividing the amount to be accumulatedUS $300, 000 price - $30.000 down payment = US $270, 000) by the interest factor for the present value of an ordinary annuity for 8 years at 16%. Consequently, the payment is US $62.160$270, 000 - 4.3436).
On March 15, Year 1. Kathleen Corp. adopted a plan to accumulate US $1.000.000 by September 1. Year 5. Kathleen plans to make four equal annual deposits to a fund that will earn interest at 10% compounded annually. Kathleen made the first deposit on September 1, Year 1. Future value and future amount factors are as follows:Future value of US $1 at 1 O% for four periods 1.46 Future amount of ordinary annuity of US $1at 10% for four periods 4.64Future amount of annuity in advance of US $1at 10% for four periods 5.11Kathleen should make four annual depositsrounded) of
The depositor wishes to have US $1 .000.000 at the end of a 4-year periodfrom 9/I r 1 to 9111Yr 5). The amount will be generated from four equal annual paymentsan annuity) to be made starting at the beginning of the 4-year period. The annual payment for this annuity can be calculated advance by dividing the desired future amount of US $1.000.000 by the factor for the future amount of an amount in advance of US $1 at 10% for four periods. Each annual deposit should therefore equal US $195.700$1.000.000 - 5.11).
If the amount to be received in 4 years is US $137, 350, and given the correct factor from the 10% time-value-¬of-money table below, what is the current investment?
The current investment is the present value of the given future amount. It equals the future amount multiplied by the factor for the present value of US $1 for four periods at 10%. Accordingly, the current investment is US $93, 810.05$137, 350 .6830).
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