Explain the situation, if a business spent the cash it received in advance for services to perform at a later date.

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Answer 1

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Chapter 11, Problem 5A

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Explain the situation, if a business spent the cash it received in advance for services to perform at a later date.

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KIARA LIMITED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER: ASSETS Property, plant and equipment (cost) Accumulated depreciation Long-term investments Inventory Accounts receivable Company tax paid in advance Bank EQUITY AND LIABILITIES 2024 2023 R R 2 490 000 1 620 000 (630 000) 660 000 1 050 000 1 230 000 30 000 (480 000) 450 000 1 290 000 900 000 0 750 000 660 000 5 580 000 4 440 000 Ordinary share capital 2 700 000 2 000 000 Retained income 1 500 000 1 158 000 Long-term loan from Kip Bank (15%) 900 000 1 000 000 Accounts payable 480 000 228 000 Company tax payable 0 54 000 5 580 000 4 440 000 ADDITIONAL INFORMATION All purchases and sales are on credit. Interim dividends paid during the year amounted to R150 750. Credit terms of 3/10 net 60 days are granted by creditors.

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REQUIRED Study the information given below and answer the following questions. Where discount factors are required use only the four decimals present value tables that appear after the formula sheet or in the module guide. Ignore taxes. 5.1 Calculate the Accounting Rate of Return on average investment of the second alternative (expressed to two decimal places). 5.2 Determine which of the two investment opportunities the company should choose by calculating the Net Present Value of each alternative. Your answer must include the calculation of the present values and NPV. 5.3 Calculate the Internal Rate of Return of the first alterative (expressed to two decimal places). Your answer must include two net present value calculations (using consecutive rates/percentages) and interpolation. INFORMATION The management of Bentall Incorporated is considering two investment opportunities: (5 marks) (9 marks) (6 marks) The first alternative involves the purchase of a new machine for R900 000 which…

Answer 2

Question

Chapter 11, Problem 5A

To determine

Explain the situation, if a business spent the cash it received in advance for services to perform at a later date.

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Answer 3

Question

Chapter 11, Problem 5A

To determine

Explain the situation, if a business spent the cash it received in advance for services to perform at a later date.

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Answer 4

Question

Chapter 11, Problem 5A

To determine

Explain the situation, if a business spent the cash it received in advance for services to perform at a later date.

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Answer 5

Chapter 11, Problem 5A

To determine

Explain the situation, if a business spent the cash it received in advance for services to perform at a later date.

Answer 6

Chapter 11, Problem 5A

To determine

Explain the situation, if a business spent the cash it received in advance for services to perform at a later date.

Answer 7

Chapter 11, Problem 5A

To determine

Explain the situation, if a business spent the cash it received in advance for services to perform at a later date.

Answer 8

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Answer 9

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Answer 10

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Answer 11

Ch. 11 - Which of the following is the adjusting entry for...Ch. 11 - The adjusting entry for unearned revenue pertains...Ch. 11 - An account that has unearned in its name is...Ch. 11 - This type of inventory system does not require an...Ch. 11 - The Supplies account has a 1,400 balance. A...Ch. 11 - Prob. 6QY Ch. 11 - Prob. 7QY Ch. 11 - What is a physical inventory? What does the word...Ch. 11 - Prob. 2DQ Ch. 11 - Using the perpetual inventory system, what account...

Explain the situation, if a business spent the cash it received in advance for services to perform at a later date.

Solution Summary: The author explains that cash is readily available in the form of currency and can be easily converted into other types of assets. When services are due, the business has necessary funds to perform the services as promised.

Explain the situation, if a business spent the cash it received in advance for services to perform at a later date.

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Chapter 11 Solutions