Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Questions are in the documents. If you could put everything into an Excel to make it easier to read/understand that woild be great. Please be

Questions are in the documents. If you could put everything into an Excel to make it easier to read/understand that woild be great. Please be as detailed as possible
image text in transcribed
image text in transcribed
LM 12 Lease vs Buy Extra Problems Problem 1: You are the CFO of a business and have three different options for purchasing a piece of equipment to expand your current production capacity. Show your calculations and pick the best deal Buy Lease Option 1 Lease Option 2 Cost/Down payment $ 800,000 $ 50,000 $ 10.000 Interest Rate 10% Term (years) 3 Annual Payment $ 300,000 $ 200,000 Purchase amount at end of lease $ 25,000 75,000 5 $ Problem 2: You are the CFO of a business and have three different options for purchasing a building to expand your corporate headquarters. Show your calculations and pick the best deal. Buy Lease Option 1 Lease Option 2 Cost/Down payment $1,600,000 $ 150,000 $ 100.000 Interest Rate Term (years) Annual Payment $ 340,000 $ 250,000 Purchase amount at end of lease $ $ 125,000 $ 175,000 7% 5 7 You have decided to start a business. You form a corporation, The Company You (the shareholder) paid $100 per share for 5,000 shares of stock on January 1, 2019 The Company will finance an acquisition by selling a bond. On January 1, 2019, The Company sold a ten-year, $500,000 bond with a 5% coupon rate. At the time of the sale current interest rates were 6%. The bond makes the annual payment on December 31 of each year. The Company purchased Megan's Company. The following information is available for Megan's Company on the day of the purchase: Accounts Receivable 290.000 Accounts Payable 50,000 Inventory 200.000 Note Payable 100,000 Building 150,000 Common Stock 200,000 Accum. Der (50,000) Retained Earnings 240,000 The Company estimates that the Accounts Receivable are worth $275,000, the inventory is worth $250,000 (100 things at $2,500 each), and the building is worth $300,000. Everything else is worth its book value. The Company will pay $700,000 for Megan's Company. Collected $200,000 on accounts receivable. Paid $25,000 on accounts payable. Purchased 100 things at $3,000 each with cash. Sold 150 things for $5,000 each, 90% down. Paid wages of $75,000 The building is expected to last 20 years with a $50,000 salvage value. The Company wrote off $12,000 due to a customer bankruptcy. Made the $10,000 principal payment on the note plus 4% interest. Made the annual payment on the bond. The Company uses FIFO. The Company expects 3% of receivables to be uncollectable. The tax rate is 30% and the current year taxes will be paid next year. Prepare journal entries, T accounts, and a balance sheet only

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Human Resource Planning Audit

Authors: Peter Reilly

1st Edition

1907766111, 978-1907766114

More Books

Students also viewed these Accounting questions

Question

8. Explain the relationship between communication and context.

Answered: 1 week ago

Question

d. How were you expected to contribute to family life?

Answered: 1 week ago