Friday, 27 February 2015

Sahtlam Ltd. (Sahtlam) is a small construction company in northern Ontario. Sahtlam recently signed a contract to build a new town hall in one of the region’s larger cities. Sahtlam will receive $26,600,000 from the city for building the town hall and will have to pay the costs of construction from that amount.

Sahtlam Ltd. (Sahtlam) is a small construction company in northern Ontario. Sahtlam recently signed a contract to build a new town hall in one of the region’s larger cities. Sahtlam will receive $26,600,000 from the city for building the town hall and will have to pay the costs of construction from that amount.
 
Construction will begin in September 2017 and is expected to be completed in March 2019. Sahtlam’s year-end is December 31. Sahtlam estimates that construction costs in each year will be:

  2017 2018 2019 Total
Estimated costs $4,000,000 $9,600,000 $5,000,000 $18,600,000


The city paid $8,000,000 when the contract was signed and will pay $6,200,000 on January 1, 2018, 2019, and 2020.

Required:
Calculate the amount of revenue and expense that Sahtlam would recognize in each year of the contract using the percentage-of-completion and zero-profit methods. Assume the actual costs incurred equal the estimated costs. (Do not round intermediate calculations and round final answers to nearest whole dollar amount. Enter your percentage answers to 2 decimal places.)
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Friday, 13 February 2015

Xcite Equipment Co. manufactures and markets a number of rope products. Management is considering the future of Product XT, a special rope for hang gliding, that has not been as profitable as planned. Since Product XT is manufactured and marketed independently of the other products, its total costs can be precisely measured. Next year’s plans call for a $330 selling price per 100 yards of XT rope. Its fixed costs for the year are expected to be $211,200, up to a maximum capacity of 550,000 yards of rope. Forecasted variable costs are $264 per 100 yards of XT rope.

Xcite Equipment Co. manufactures and markets a number of rope products. Management is considering the future of Product XT, a special rope for hang gliding, that has not been as profitable as planned. Since Product XT is manufactured and marketed independently of the other products, its total costs can be precisely measured. Next year’s plans call for a $330 selling price per 100 yards of XT rope. Its fixed costs for the year are expected to be $211,200, up to a maximum capacity of 550,000 yards of rope. Forecasted variable costs are $264 per 100 yards of XT rope.


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On January 1, 2013, a company agrees to pay $22,000 in nine years. If the annual interest rate is 8%, determine how much cash the company can borrow with this agreement.

On January 1, 2013, a company agrees to pay $22,000 in nine years. If the annual interest rate is 8%, determine how much cash the company can borrow with this agreement.
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McAdams Company expects to earn 6% per year on an investment that will pay $601,773 ten years from now. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. Round your answers to nearest whole dollar.) Compute the present value of this investment.

McAdams Company expects to earn 6% per year on an investment that will pay $601,773 ten years from now. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. Round your answers to nearest whole dollar.)
 
Compute the present value of this investment.save image        

Spiller Corp. plans to issue 10%, 6-year, $570,000 par value bonds payable that pay interest semiannually on June 30 and December 31. The bonds are dated December 31, 2013, and are issued on that date. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. Round your answers to nearest whole dollar.) If the market rate of interest for the bonds is 8% on the date of issue, what will be the total cash proceeds from the bond issue?

Spiller Corp. plans to issue 10%, 6-year, $570,000 par value bonds payable that pay interest semiannually on June 30 and December 31. The bonds are dated December 31, 2013, and are issued on that date. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. Round your answers to nearest whole dollar.)
  
If the market rate of interest for the bonds is 8% on the date of issue, what will be the total cash proceeds from the bond issue?

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Sam Weber finances a new automobile by paying $6,700 cash and agreeing to make 40 monthly payments of $480 each, the first payment to be made one month after the purchase. The loan bears interest at an annual rate of 12%. What is the cost of the automobile?

Sam Weber finances a new automobile by paying $6,700 cash and agreeing to make 40 monthly payments of $480 each, the first payment to be made one month after the purchase. The loan bears interest at an annual rate of 12%. What is the cost of the automobile?
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Ed Summers expects to invest $25,000 for 10 years, after which he wants to receive $49,180.00. What rate of interest must Summers earn? (Use table B.2.) (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)


Ed Summers expects to invest $25,000 for 10 years, after which he wants to receive $49,180.00. What rate of interest must Summers earn? (Use table B.2.) (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)

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