Week 4 Assignment

Week 4 Assignment

PV Of $1

PV of Annuity of $1

Issue Price

The following terms relate to independent bond issues:

a. 640 bonds; $1,000 face value; 8% stated rate; 5 years; annual interest payments

b. 640 bonds; $1,000 face value; 8% stated rate; 5 years; semiannual interest payments

c. 830 bonds; $1,000 face value; 8% stated rate; 10 years; semiannual interest payments

d. 1,950 bonds; $500 face value; 12% stated rate; 15 years; semiannual interest payments

Use the appropriate present value table:

PV of $1  and  PV of Annuity of $1 (See Above)

Required:

Assuming the market rate of interest is 10%, calculate the selling price for each bond issue. If required, round your intermediate calculations and final answers to the nearest dollar.

Situation	Selling Price of the Bond Issue
a.	$
b.	$
c.	$
d.	$

Koffman and Sons signed a four-year lease for a forklift on January 1, 2017. Annual lease payments of $1,784, based on an interest rate of 12%, are to be made every December 31, beginning with December 31, 2017.

PV of Annuity of $1

c.  Calculate the amount of depreciation expense for the year 2017. Round answer to the nearest whole dollar. $

1. At what amount would the lease obligation be presented on the balance sheet as of December 31, 2017? Round answers to the nearest whole dollar.

Current liability portion	$
Long-term liability portion	$

Deferred Tax Calculations (Appendix)

Wyhowski Inc. reported income from operations, before taxes, for 2015-2017 as follows:

2015	$370,000
2016	423,000
2017	496,000

When calculating income, Wyhowski deducted depreciation on plant equipment. The equipment was purchased January 1, 2015, at a cost of $154,000. The equipment is expected to last three years and have a(n) $13,000 salvage value. Wyhowski uses straight-line depreciation for book purposes. For tax purposes, depreciation on the equipment is $88,000 in 2015, $35,000 in 2016, and $18,000 in 2017. Wyhowski’s tax rate is 35%.

Required:

Enter all amounts as positive numbers.

1. How much did Wyhowski pay in income tax each year? If required, round all calculations to the nearest dollar.

Year	Taxes Paid
2015	$
2016	$
2017	$

2.  How much income tax expense did Wyhowski record each year?

Year	Income Tax Expense
2015	$
2016	$
2017	$

3.  What is the balance in the Deferred Income Tax account at the end of 2015, 2016, and 2017? If your answer is zero, enter “0”. If required, round all calculations to the nearest dollar.

Year	Balance	Debit or Credit
2015	$	Credit
2016	$	Credit
2017	$	No balance

Keurig Green Mountain’s Current Liabilities

Following is the current assets and current liabilities portion of the balance sheet of Keurig Green Mountain for the years ended September 26, 2015, and September 27, 2014:

(Dollars in thousands)	September 26, 2015		September 27, 2014
Current assets:
Cash and cash equivalents	$59,334		$761,214
Restricted cash and cash equivalents	30,460		378
Short-term investment	—		100,000
Receivables, less uncollectible accounts and return          allowances of $35,459 and $66,120 at September 26,          2015 and September 27, 2014, respectively	517,936		621,451
Inventories	691,980		835,167
Income taxes receivable	51,786		—
Other current assets	95,526		69,272
Deferred income taxes, net	70,181		58,038
Total current assets	$1,517,203		$2,445,520
Current liabilities:
Current portion of long-term debt	$      279		$    19,077
Current portion of capital lease and financing obligations	3,271		2,226
Accounts payable	298,609		411,107
Accrued expenses	226,519		305,677
Income tax payable	1,085		53,586
Dividend payable	44,048		40,580
Deferred income taxes, net	264		340
Other current liabilities	28,049		10,395
Total current liabilities	$   602,124		$  842,988

Source: Keurig Green Mountain, Inc Form 10-K for year ended September 26, 2015.

Required:

1. Determine the company’s current ratio for each fiscal year. Round your answers to two decimal places.

	Current Ratio
2014	:  1
2015	:  1