Assignment Answers

1) A
2) A and C
3) A
4) D
5) C
6) E
7) D
8) E
9) D
10) D
11) C
12) F
13) A
14) c
15) E
16) B
17) B
18)C

Assignment 4
Budgeting for program managers
Ans 1. Addition to the retained earnings = Net Income for the year-Divided paid
= $187,500-$60,000= $127,500

2. The retained earnings for the end of the last fiscal year were $348,400.

3. Allowance for Bad Debt is =Allowance for bad debt/ Account receivables

= $1600 /$320,000=0.05
4. Net Dollar value= Equipment- Accumulated Depreciation= $1,500,000- $450,000
=$1,050,000
5. Total dollar value of net current assets= Cash and cash equivalents+ Net account
receivables + Inventory
=$1,143,400
6. Total dollar value of Net long term assets = Net value of plant and equipment (Value
of long term plant and equipment – depreciation) + Goodwill =$1,390,000
7. Net value of total assets = Net Current assets + Net long term assets
=$1,143,400+ $1,390,000= $2,533,400
8. The liabilities could be= Account Payables Long term Notes Payables+ Accruals +long
term debt Bonds =$ 1,585,000
9. The total value of the owner’s equity will be = Common Stock+ Additional paid in
capital+ Retained Earnings= $34,840+ $200,000+$ 400,000 =$ 634,840
Subtracting the total liabilities from the total assets would give us the same value.
10. n=17 , Goodwill =$17, 000 of company purchased
Goodwill of the entire company= $320,000
The amount to be amortized for the next year will be =$320,000/17=$18,823.52
For the single company purchased, the amortization will be $10,000 ( As Goodwill of
company/life=$170,000/17= $10,000)

Extra Credit
a) It will take Jennet around 35.77 years to get the amount reach $1,000,000.
This can be seen from the formula of F.V=A/I [ (1+i)^n-1] +P.V (1+i)^n]
1,000,000= 7,500/0.06[(1.06)^n-1] +15,000(1+i)^n]
n=35.77
b) For the other girl, Denise, the number of years taken will be=?
F.V=A /I [(1+i)^n -1]+ P.V [(1+i)^n]
1,000,000 =7,500/0.07 [(1.07)^n-1] +15,000[ (1.07)^n]
N= 32.6 years.
c) For Denise to make the $1,000,000 in 35.77 years, the amount of money that she will
have to set down is
F.V=A/i [ (1+i)^n-1] +Par[ (1+i)^n]
$1,000,000= A/0.07[(1.07)^35.77-1] +15,000[(1.07)^35.77]
$1,000,000= A/0.07 (10.247) +168713.170
$70,000 = A (10.247)+ 168713.170
A=$5682.624
Home assignment #4
Budgeting for program managers
1) B
Addition to the retained earnings = Net Income for the year-Divided paid= $127,500-
$25,000= $ 102,500
2) D
The retained earnings for the end of the last fiscal year were $ 810,000
3) A
Allowance for Bad Debt is =Allowance for bad debt/ Account receivables
= $2500/ $217, 500 = 15%
4) B
Net Dollar value= Equipment- Accumulated Depreciation= $1,190,000- $20,000
5) C
Total dollar value of net current assets= Cash and cash equivalents+ Net account
receivables + Inventory
=$840,000
6) C
Total dollar value of Net long term assets = Net value of plant and equipment (Value of
long term plant and equipment – depreciation) + Goodwill =$1, 1600,000
7) E
Net value of total assets = Net Current assets- Net long term assets
=$1,160,000+ $840,000= $2, 000, 00
8) C
The liabilities could be= Account Payables Long term Notes Payables+ Accruals +long
term debt Bonds =$1,060,000.
9) B
The total value of the owner’s equity will be = Common Stock+ Additional paid in
capital+ Retained Earnings= $30,000+ $200,000+$ 400,000 =$940,000
Subtracting the total liabilities from the total assets would give us the same value
10) A
n=17 for amortization.
Goodwill of the company=$170,000.
The amount to be amortized for the next year will be =$170,000/17=$10,000

Extra Credit
a) It will take Jennet around 35.77 years to get the amount reach $1,000,000.
This can be seen from the formula of F.V=A/I [ (1+i)^n-1] +P.V (1+i)^n]
1,000,000= 7,500/0.06[(1.06)^n-1] +15,000(1+i)^n]
n=35.77
b) For the other girl, Denise, the number of years taken will be=?
F.V=A /I [(1+i)^n -1]+ P.V [(1+i)^n]
1,000,000 =7,500/0.07 [(1.07)^n-1] +15,000[ (1.07)^n]
N= 32.6 years.

c) For Denise to make the $1,000,000 in 35.77 years, the amount of money that she will
have to set down is
F.V=A/i [ (1+i)^n-1] +Par[ (1+i)^n]
$1,000,000= A/0.07[(1.07)^35.77-1] +15,000[(1.07)^35.77]
$1,000,000= A/0.07 (10.247) +168713.170
$70,000 = A (10.247)+ 168713.170
A=$5682.624