part 2 & 3 2. Johnstone needs to accumulate sufficient funds to pay a $450,000 debt that comes due on December 31, 2026. The company will accumulate the funds by making five equal annual deposits to an account paying 5% interest compounded annually. Determine the required annual deposit if the first deposit is made on December 31, 2021. 3. On January 1, 2021, Johnstone leased an office building. Terms of the lease require Johnstone to make 20 annual lease payments of $125,000 beginning on January 1, 2021. A 12% interest rate is implicit in the lease agreement. At what amount should Johnstone record the lease liability on January 1, 2021, before any lease payments are made?
part 2 & 3 2. Johnstone needs to accumulate sufficient funds to pay a $450,000 debt that comes due on December 31, 2026. The company will accumulate the funds by making five equal annual deposits to an account paying 5% interest compounded annually. Determine the required annual deposit if the first deposit is made on December 31, 2021. 3. On January 1, 2021, Johnstone leased an office building. Terms of the lease require Johnstone to make 20 annual lease payments of $125,000 beginning on January 1, 2021. A 12% interest rate is implicit in the lease agreement. At what amount should Johnstone record the lease liability on January 1, 2021, before any lease payments are made?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
part 2 & 3
2. Johnstone needs to accumulate sufficient funds to pay a $450,000 debt that comes due on December 31, 2026. The company will accumulate the funds by making five equal annual deposits to an account paying 5% interest compounded annually. Determine the required annual deposit if the first deposit is made on December 31, 2021.
3. On January 1, 2021, Johnstone leased an office building. Terms of the lease require Johnstone to make 20 annual lease payments of $125,000 beginning on January 1, 2021. A 12% interest rate is implicit in the lease agreement. At what amount should Johnstone record the lease liability on January 1, 2021, before any lease payments are made?
Transcribed Image Text:Johnstone Company is facing several decisions regarding investing and financing activities. Address each decision independently. (FV
of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)
1. On June 30, 2021, the Johnstone Company purchased equipment from Genovese Corp. Johnstone agreed to pay Genovese
$15,000 on the purchase date and the balance in six annual installments of $7,000 on each June 30 beginning June 30, 2022.
Assuming that an interest rate of 12% properly reflects the time value of money in this situation, at what amount should Johnstone
value the equipment?
2. Johnstone needs
to accumulate sufficient funds to pay a $450,000 debt that comes due on December 31, 2026. The company will
accumulate the funds by making five equal annual deposits to an account paying 5% interest compounded annually. Determine the
required annual deposit if the first deposit is made on December 31, 2021.
3. On January 1, 2021, Johnstone leased an office building. Terms of the lease require Johnstone to make 20 annual lease payments
of $125,000 beginning on January 1, 2021. A 12% interest rate is implicit in the lease agreement. At what amount should Johnstone
record the lease liability on January 1, 2021, before any lease payments are made?
Complete this question by entering your answers in the tabs below.
Required 1
Required 2
Required 3
On June 30, 2021, the Johnstone Company purchased equipment from Genovese Corp. Johnstone agreed to pay Genovese
$15,000 on the purchase date and the balance in six annual installments of $7,000 on each June 30 beginning June 30, 2022.
Assuming that an interest rate of 12% properly reflects the time value of money in this situation, at what amount should
Johnstone value the equipment? (Round your final answers to nearest whole dollar amount.)
Show lessA
Table values are based on:
n =
Cash Flow
Amount
Present Value
Installments
Down Payment
Value of the equipment
< Required 1
Required 2 >
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