Question 1:
Ogden Self Storage purchased land. paying $140.000 cash as a down payment and signing a $155.000 note payable for the balance. Ogden also had to pay delinquent property tax of $4.500. title insurance costing $4.000. and $6.000 to level the land and remove an unwanted building. The company paid $50.000 to add soil for the foundation and then constructed an office building at a cost of $650.000. It also paid $55.000 for a fence around the property. $19.000 for the company sign near the property entrance. and $3.000 for lighting of the grounds.
Requirement
1. What is the capitalized cost of each of Ogden's land. land improvements. and building?
Question 2:
West Side's Pizza bought a used Toyota delivery van on January 2. 2014. for $19.200. The van was expected to remain in service for four years (71.200 miles). At the end of its useful life. West Side's officials estimated that the van's residual value would be $1.400. The van traveled 28.000 miles the first year. 20.500 miles the second year. 18.500 miles the third year. and 4.200 miles in the fourth year.
Requirements
1. Prepare a schedule of depreciation expense per year for the van under the three depreciation methods.
2. Which method best tracks the wear and tear on the van?
3. Which method would West Side's prefer to use for income tax purposes? Explain in detail why West Side's prefers this method.
Question 3:
Bamwell Corp. purchased 10. $1.000. 3% bonds of Circuit Corporation when the market rate of interest was 10%. Interest is paid semiannually on the bonds. and the bonds will mature in ten years.
Using the PV function in Excel®. compute the price Bamwell paid (the present value) on the bond investment. (Assume that all payments of interest and principal occur at the end of the period. Round your answer to the nearest cent )
Question 4:
Assume that Robarge Electronics completed these selected transactions during March 2014:
a. Sales of $2.050.000 are subject to estimated warranty cost of 7%. The estimated warranty payable at the beginning of the year was $37.000. and warranty payments for the year totaled $56.000.
b. On March 1. Robarge Electronics signed a $55.000 note payable that requires annual payments of $11.000 plus 4% interest on the unpaid balance each March 2.
c. Music For You. Inc.. a chain of music stores. ordered $130.000 worth of CD players. With its order. Music For You. Inc.. sent a check for $130.000 in advance. and Robarge shipped $95.000 of the goods. Robarge will ship the remainder of the goods on April 3. 2014.
d. The March payroll of $240.000 is subject to employee withheld income tax of $30.600 and FICA tax of 7.65%. On March 31. Robarge pays employees their take-home pay and accrues all tax amounts.
Requirement
1. Report these items on Robarge Electronics' balance sheet at March 31. 2014.
Question 5:
Companies that operate in different industries may have very different financial ratio values. These differences may grow even wider when we compare companies located in different countries.
|
(Amounts in millions or billions)
|
Company C
|
Company 0
|
Company Q
|
|
Income data
|
|
|
|
|
Total revenues
|
$ 9,727
|
* 7,305
|
€136,280
|
|
Operating income
|
294
|
225
|
5,630
|
|
Interest expense
|
38
|
23
|
608
|
|
Net income
|
25
|
17
|
441
|
|
Asset and liability data
|
|
|
|
|
(Amounts in millions or billions)
|
|
|
|
|
Total current assets
|
434
|
5,752
|
161,504
|
|
Long-term assets
|
86
|
718
|
56,683
|
|
Total current liabilities
|
197
|
2,187
|
72,100
|
|
Long-term liabilities
|
77
|
2,277
|
111,177
|
|
Stockholders' equity
|
246
|
2,006
|
34,910
|
Requirement
1. Compare three leading companies on their current ratio. debt ratio. leverage ratio. and times-interest-eamed ratio. Compute the ratios for Company C. Company 0. and Company Q. Based on your computed ratio values. which company looks the least risky?