# ACCT 504 Week 5 Homework (E7-15A, E7-19A, E8-20A, E9-23A, E9-29A)

This Tutorial contains Excel Files which can be used to solve for any values (your Question may have different company name or values, but that can be solved using Excel file)

E 7-15A

Potvin Self Storage purchased land, paying \$175,000 cash as a down payment and signing a \$185,000 note payable for the balance. Potvin also had to pay delinquent property tax of \$5,500, title insurance costing \$3,000, and \$2,000 to level the land and remove an unwanted building. The company paid
\$55,000 to add soil for the foundation and then constructed an office building at a cost of
\$1100,000. It also paid \$47,000 for a fence around the property, \$16,000 for the company sign near the property entrance, and \$10,000 for lighting of the grounds. Requirement

1. What is the capitalized cost of each of Potvin’s land, land improvements, and building?
2. cost of land improvement
3. Cost of building

E 7-19A
Tasteful’s Pizza bought a used Toyota delivery van on January 2, 2014, for \$18,000. The van was expected to remain in service for four years left parenthesis (41,750 miles). At the end of its useful life, Tasteful’s officials estimated that the van’s residual value would be \$1,300. The van traveled
13,000 miles the first year, 11,250 miles the second year, 10,250 miles the third year, and 7,250 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 Tasteful’s prefer to use for income tax purposes? Explain in detail why
Tasteful’s prefers this method.

Prepare a schedule of depreciation expense per year for the van under the three depreciation methods
Requirement 2. Which method best tracks the wear and tear on the van?
The  units-of-production method tracks the wear and tear on the van most closely.

Requirement 3. Which method would Tasteful’s prefer to use for income tax purposes? Explain in detail why Tasteful’s prefers this method. For income tax purposes, Tasteful’s
would prefer the double-declining-balance method because it provides the
most depreciation, and thus, the  largest tax deductions in the early life of the asset.

E8-20A

Corp. purchased 10, \$1,000, 77%
bonds of Power Source Corporation when the market rate of interest was 12%. Interest is paid semiannually on the bonds, and the bonds will mature in ten years. Using the PV function in
Excel Superscript ®Excel®, compute the price Haygood 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.)
E9-23A
Assume that Jasper Electronics completed these selected transactions during March 2014:
a. Sales of \$2,100,000 are subject to estimated warranty cost of 2%. The estimated warranty payable at the beginning of the year was \$34,000, and warranty payments for the year totaled \$57,000.
b. On March 1, Jasper Electronics signed a 45,000 note payable that requires annual payments of \$9,000 plus 4% interest on the unpaid balance each March 2.
c. Music For You, Inc., a chain of music stores, ordered \$135,000 worth of CD players. With its order, Music For You, Inc., sent a check for \$135,000 in advance, and Jasper shipped \$80,000 of the goods. Jasper will ship the remainder of the goods on April 3, 2014.
d. The March Payroll of \$260,000 is subject to employee withheld income tax of 30,000
and FICA tax of 7.65%. On March 31, Jasper pays employees their take-home pay and accrues all tax amounts.

1. Report these items on Jasper Electronics’ balance sheet at March 31, 2014.

E9-29A
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.
(Click the icon to view the financial statements.)
Requirement

1 Compare three leading companies on their current ratio, debt ratio, leverage ratio, and times-interest-earned ratio. Compute the ratios for Company  BB, Company  NN, and Company  QQ. Based on your computed ratio values, which company looks the least risky?
Begin by computing the ratios. Start by selecting the formula for the current ratio. Then calculate the current ratios for Company  BB,  NN, and  QQ

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