## Saturday, 21 September 2013

### Fran Powers created the following budget and reported the actual spending listed. Calculate the variance for each of these categories, and indicate whether it was a deficit or a surplus. (Input all amounts as positive values.) Item Budgeted Actual Variance Deficit/Surplus Food \$ 360 \$ 298 \$ 62 correct surplus correct Transportation \$ 320 \$ 334 \$ 14 correct deficit correct Housing \$ 950 \$ 982 \$ 32 correct deficit correct Clothing \$ 110 \$ 134 \$ 24 correct deficit correct Personal \$ 275 \$ 231 \$ 44 correct surplus correct

Fran Powers created the following budget and reported the actual spending listed. Calculate the variance for each of these categories, and indicate whether it was a deficit or a surplus. (Input all amounts as positive values.)

 Item Budgeted Actual Variance Deficit/Surplus Food \$ 360 \$ 298 \$ 62 surplus Transportation \$ 320 \$ 334 \$ 14 deficit Housing \$ 950 \$ 982 \$ 32 deficit Clothing \$ 110 \$ 134 \$ 24 deficit Personal \$ 275 \$ 231 \$ 44 surplus

### For the following situations, calculate the cash surplus or deficit: (Input all amounts as positive values.) Cash Inflows Cash Outflows Difference Surplus/Deficit \$ 3,540 \$ 3,238 \$ 302 correct surplus correct \$ 4,788 \$ 4,855 \$ 67 correct deficit correct \$ 4,387 \$ 4,198 \$ 189 correct surplus correct

For the following situations, calculate the cash surplus or deficit: (Input all amounts as positive values.)

 Cash Inflows Cash Outflows Difference Surplus/Deficit \$ 3,540 \$ 3,238 \$ 302 surplus \$ 4,788 \$ 4,855 \$ 67 deficit \$ 4,387 \$ 4,198 \$ 189 surplus

### Based on this financial data, calculate the ratios requested: (Round your answers to 4 decimal places.) Liabilities \$ 9,400 Net worth \$ 65,500 Liquid assets \$ 7,800 Current liabilities \$ 1,700 Monthly credit payments \$ 800 Take-home pay \$ 2,775 Monthly savings \$ 290 Gross income \$ 3,250 a. Debt ratio 0.1435 correct b. Current ratio 4.5882 correct c. Debt-payments ratio 0.2883 correct d. Savings ratio 0.0892 correct

Based on this financial data, calculate the ratios requested: (Round your answers to 4 decimal places.)

 Liabilities \$ 9,400 Net worth \$ 65,500 Liquid assets \$ 7,800 Current liabilities \$ 1,700 Monthly credit payments \$ 800 Take-home pay \$ 2,775 Monthly savings \$ 290 Gross income \$ 3,250

 a. Debt ratio 0.1435 b. Current ratio 4.5882 c. Debt-payments ratio 0.2883 d. Savings ratio 0.0892

### Based on the following data, determine the amount of total assets, total liabilities, and net worth. Liquid assets \$ 4,520 Investment assets \$ 8,990 Current liabilities \$ 2,320 Household assets \$ 94,390 Long-term liabilities \$ 82,730 a. Total assets \$ 107,900 correct b. Total liabilities \$ 85,050 correct c. Net worth \$ 22,850 correct

Based on the following data, determine the amount of total assets, total liabilities, and net worth.

 Liquid assets \$ 4,520 Investment assets \$ 8,990 Current liabilities \$ 2,320 Household assets \$ 94,390 Long-term liabilities \$ 82,730

 a. Total assets \$ 107,900 b. Total liabilities \$ 85,050 c. Net worth \$ 22,850

### If you borrow \$15,500 with a 5 percent interest rate to be repaid in seven equal payments at the end of the next 7 years, what would be the amount of each payment? (Note: Use the present value of an annuity table in the Exhibit 1-3.) (Round your PV factor to 3 decimal places and final answer to the nearest dollar amount.) Amount per payment \$ rev: 07_16_2013_QC_32729, 07_29_2013_QC_33022 Explanation: \$15,500/5.786 = \$2,679

If you borrow \$15,500 with a 5 percent interest rate to be repaid in seven equal payments at the end of the next 7 years, what would be the amount of each payment? (Note: Use the present value of an annuity table in the Exhibit 1-3.) (Round your PV factor to 3 decimal places and final answer to the nearest dollar amount.)

 Amount per payment \$
rev: 07_16_2013_QC_32729, 07_29_2013_QC_33022

Explanation: \$15,500/5.786 = \$2,679

### If a person spends \$10 a week on coffee (assume \$500 a year), what would be the future value of that amount over 5 years if the funds were deposited in an account earning 5 percent? Use Exhibit 1-B. (Round your FV factor to 3 decimal places and final answer to the nearest dollar amount.) Future value \$ Explanation: \$500 × 5.526 = \$2,763 (Exhibit 1-B)

If a person spends \$10 a week on coffee (assume \$500 a year), what would be the future value of that amount over 5 years if the funds were deposited in an account earning 5 percent? Use Exhibit 1-B. (Round your FV factor to 3 decimal places and final answer to the nearest dollar amount.)

 Future value \$

Explanation:

### If you desire to have \$23,000 for a down payment for a house in six years, what amount would you need to deposit today? Assume that your money will earn 3 percent. Use Exhibit 1-C. (Round your PV factor to 3 decimal places and final answer to the nearest dollar amount.) Deposit \$ Explanation: \$23,000 × 0.837 = \$19,251 (Exhibit 1-C)

If you desire to have \$23,000 for a down payment for a house in six years, what amount would you need to deposit today? Assume that your money will earn 3 percent. Use Exhibit 1-C. (Round your PV factor to 3 decimal places and final answer to the nearest dollar amount.)

 Deposit \$

Explanation: \$23,000 × 0.837 = \$19,251 (Exhibit 1-C)

### Ben Collins plans to buy a house for \$160,000. If the real estate in his area is expected to increase in value by 2 percent each year, what will its approximate value be six years from now? Use Exhibit 1-A. (Round your FV factor to 3 decimal places and final answer to the nearest dollar amount.) Value of the house \$ Explanation: Using Exhibit 1-A: \$160,000 × 1.126 = \$180,160

Ben Collins plans to buy a house for \$160,000. If the real estate in his area is expected to increase in value by 2 percent each year, what will its approximate value be six years from now? Use Exhibit 1-A. (Round your FV factor to 3 decimal places and final answer to the nearest dollar amount.)

 Value of the house \$

Explanation:

Using the rule of 72, approximate the following amounts.
 a. If the value of land in an area is increasing 7.5 percent a year, how long will it take for property values to double? (Round your answer to 1 decimal place.)

 Time period years

 b. If you earn 9 percent on your investments, how long will it take for your money to double? (Round your answer to 1 decimal place.)

 Time period years

 c. At an annual interest rate of 4.5 percent, how long will it take for your savings to double? (Round your answer to 1 decimal place.)

 Time period years

Explanation:

### Account Title Debit Credit Cash \$ 7,100 Accounts receivable 29,000 Office supplies 6,270 Trucks 176,000 Accumulated depreciation—Trucks \$ 36,256 Land 45,000 Accounts payable 11,100 Interest payable 19,000 Long-term notes payable 45,000 Common stock 17,000 Retained earnings 158,669 Dividends 46,000 Trucking fees earned 123,000 Depreciation expense—Trucks 23,385 Salaries expense 53,466 Office supplies expense 14,000 Repairs expense—Trucks 9,804 Totals \$ 410,025 \$ 410,025 Use the above adjusted trial balance to prepare Webb Trucking Company’s classified balance sheet as of December 31, 2011.

 Account Title Debit Credit Cash \$ 7,100 Accounts receivable 29,000 Office supplies 6,270 Trucks 176,000 Accumulated depreciation—Trucks \$ 36,256 Land 45,000 Accounts payable 11,100 Interest payable 19,000 Long-term notes payable 45,000 Common stock 17,000 Retained earnings 158,669 Dividends 46,000 Trucking fees earned 123,000 Depreciation expense—Trucks 23,385 Salaries expense 53,466 Office supplies expense 14,000 Repairs expense—Trucks 9,804 Totals \$ 410,025 \$ 410,025

Use the above adjusted trial balance to prepare Webb Trucking Company’s classified balance sheet as of December 31, 2011.

Explanation:
 Retained earnings  is computed as: Beginning balance \$ 175,669 Plus: Net income (\$123,000 – \$23,385 – \$53,466 – \$14,000 – \$9,804) 22,345 Less: Dividends (46,000 ) Ending balance \$ 152,014

### Following are two income statements for Kendall Co. for the year ended December 31. The left column is prepared before any adjusting entries are recorded, and the right column includes the effects of adjusting entries. The company records cash receipts and payments related to unearned and prepaid items in balance sheet accounts. KENDALL CO. Income Statements For Year Ended December 31 Unadjusted Adjusted Revenues Fees earned \$ 24,000 \$ 31,200 Commissions earned 42,500 42,500 Total revenues 66,500 73,700 Expenses Depreciation expense—Computers 0 1,800 Depreciation expense—Office furniture 0 2,100 Salaries expense 12,500 15,440 Insurance expense 0 1,560 Rent expense 4,500 4,500 Office supplies expense 0 576 Advertising expense 3,000 3,000 Utilities expense 1,250 1,334 Total expenses 21,250 30,310 Net income \$ 45,250 \$ 43,390 Analyze the statements and prepare the eight adjusting entries that likely were recorded. (Note: 30% of the \$7,200 adjustment for Fees Earned has been earned but not billed, and the other 70% has been earned by performing services that were paid for in advance.)

Following are two income statements for Kendall Co. for the year ended December 31. The left column is prepared before any adjusting entries are recorded, and the right column includes the effects of adjusting entries. The company records cash receipts and payments related to unearned and prepaid items in balance sheet accounts.

 KENDALL CO. Income Statements For Year Ended December 31 Unadjusted Adjusted Revenues Fees earned \$ 24,000 \$ 31,200 Commissions earned 42,500 42,500 Total revenues 66,500 73,700 Expenses Depreciation expense—Computers 0 1,800 Depreciation expense—Office furniture 0 2,100 Salaries expense 12,500 15,440 Insurance expense 0 1,560 Rent expense 4,500 4,500 Office supplies expense 0 576 Advertising expense 3,000 3,000 Utilities expense 1,250 1,334 Total expenses 21,250 30,310 Net income \$ 45,250 \$ 43,390

Analyze the statements and prepare the eight adjusting entries that likely were recorded. (Note: 30% of the \$7,200 adjustment for Fees Earned has been earned but not billed, and the other 70% has been earned by performing services that were paid for in advance.)
Explanation:
 Dec. 31 To record earned but unbilled fees. Fees Earned = (30% × \$7,200) = \$2,160 To record earned fees collected in advance. Fees Earned = (70% × \$7,200) = \$5,040