# Acct 550 Week 4 Assignment Essay

Submitted By Blaine-Bekis
Words: 404
Pages: 2

Acct 550 Week 4 Assisgnment

E6-5
(a) \$30,000 X 4.96764 = \$149,029.20.
(b) \$30,000 X 8.31256 = \$249,376.80.
(c) (\$30,000 X 3.03735 X .50663 = \$46,164.38. E6-12
Building (A)—PV = \$600,000.
Building (B)— Rent X (PV of annuity due of 25 periods at 12%) = PV \$69,000 X 8.78432 = PV \$606,118.08 = PV
Building (C)— Rent X (PV of ordinary annuity of 25 periods at 12%) = PV \$7,000 X 7.84314 = PV \$54,901.98 = PV
Cash purchase price \$650,000.00 PV of rental income – 54,901.98 Net present value \$595,098.02
Answer: I would lease Building C since the present value of its net cost is the smallest.

E7-2
1. Cash balance of \$925,000. Only the checking account balance should be reported as cash. The certificates of deposit of \$1,400,000 should be reported as a temporary investment, the cash advance to subsidiary of \$980,000 should be reported as a receivable, and the utility deposit of \$180 should be identified as a receivable from the gas company.

2. Cash balance is \$584,650 computed as follows:
Checking account balance \$600,000
Overdraft (17,000)
Petty cash 300
Coin and currency 1,350
Total: \$584,650
Cash held in a bond sinking fund is restricted. This is assuming that the bonds are noncurrent, the restricted cash is also reported as noncurrent.

3. Cash balance is \$599,800 computed as follows:
Checking account balance \$590,000
Certified check from customer 9,800
Total \$599,800
The postdated check of \$11,000 should be reported as a receivable. Cash restricted due to compensating balance should be described in a note indicating the type of arrangement and amount. Postage stamps…