Accounting Midterm

Question 1

Joice has saved $5,000 that will be a down payment on a new car that can be purchased for $38,000.

The loan to finance this will have a rate of 7.125% APR compounded monthly. What will the monthly payments on the car be if the loan is for 4 years??

How long would it take to pay off the loan if she would pay $1,000 monthly?

Joice has been offered a lease for this car with payments of $600 a month for 5 years. There would not be any down payment. As happens with leases, she would essentially receive the full value of the car today and she would return the car to the dealer at the end of the lease (essentially paying out the value of the car at that time). The value of this car in 5 years, with no damage or excessive mileage, is expected to be $12,000. What APR with monthly compounding would she be paying?

Question 4				Score
Jackson is considering whether to invest monthly, quarterly or annually in a fund that earns 7% APR with monthly compounding. How much will Jackson accumulate in 30 years for each of the three investment alternatives shown below? Assume that months are equal in length and that there is no initial deposit in year 0.
	Years	30
	APR	7.00%	Monthly Compounding

	Alternative	Payments
	a	Monthly	$500
	b	Quarterly	$1,500
	c	Annually	$6,000

Question 8					Score
The Marketing, Inc. has collected the following data for the past year. Prepare a formal income statement that contains the relevant subtotals. Show values in whole dollars (no cents). Assume that no taxes are due on asset purchases or sales.
Data Block		Beginning of year	During Year	End of year
	Cash On Hand	$330,500
	Quantity Sold		45,200
	Quantity Produced		38,000
	Sales Price		$54.00
	Cost per unit to produce		$24.50
	Staff Expenses		$424,600
	Facility Expenses		$387,200
	Asset Sale		$1,575,300
	Asset Purchase		$2,204,000
	Tax rate		20%
	Inventory	$57,000		$24,000
	Accounts Receivable	$74,000		$38,000
	Accounts Payable	$68,000		$62,000
	Depreciation		$48,000
	Interest Paid on Loan		$46,000
	Loan Principle payment		$125,000
	Dividends		$128,000

Question 9					Score
Prepare a cash flow statement using the following data. Assume that no taxes are due on asset purchases or sales. Prepare a formal cash flow statement that contains the relevant subtotals. Show values in whole dollars (no cents).
Data Block		Beginning of year	During Year	End of year
	Cash	$630,600
	Net Income	$1,200,000
	Staff Expenses		$724,600
	Facility Expenses		$887,200
	Asset Sale		$156,530
	Asset Purchase		$1,240,400
	Tax rate		22.5%
	Inventory	$87,000		$84,000
	Accounts Receivable	$73,000		$78,000
	Accounts Payable	$78,000		$75,000
	Depreciation		$89,500
	Interest Paid on Loan		$76,000
	Loan Principle payment		$50,000
	Dividends Paid		$200,000

Question 10
	Nina and Noah have started a small business that seems to be thriving. Friends have suggested that they should consider legally organizing as something other than the present proprietorship. They are asking for your advice via email (you do not know them). Compose up to five questions and state the purpose of each question that could be used to collect information about Nina and Noah and their business that is relevant to making a recommendation on how they should legally organize their business.
	Answer below using approximately 50 words per question)

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