Intermediate Accounting (2nd Edition)
2nd Edition
ISBN: 9780134730370
Author: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella
Publisher: PEARSON
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Chapter 7, Problem 7.14P
Expected Cash Flows. Hiteck Electronics sells a diagnostic machine to a hospital with a four-year payment plan. The company would like to estimate the
| Year | Projected Cash Flow Loss from Uncollected Notes | Probability of Loss Occurring |
| 2019 | $ 8,000 18,000 |
90% 10% |
| 2020 | $10,000 22,000 45,000 |
15% 70% 15% |
| 2021 | $ 6,000 14,000 |
85% 15% |
| 2022 | $26,000 35,000 |
50% 50% |
What is the estimated bad debt allowance at December 31, 2018?
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Pace Electronics sells a diagnostic machine to a hospital with a four-year payment plan. The company would like to estimate the bad debt allowance needed to cover the notes outstanding over the next four years. Estimated lost cash flows and the probability of occurrence for each of the next four years are summarized in the following schedule. The risk-free rate is 3% .
Begin by computing the estimated cash flow loss each year. (Enter all amounts as positive amounts.)
Projected Cash Flow
Expected
Loss from Uncollected
Probability of
Cash Flow
Year
Notes
Loss Occurring
Loss
2023
$9,000
65
%
20,000
35
%
Total expected cash flow loss in 2023
2024
$15,000
20
%
26,000
45
%
65,000
35
%
Total expected cash flow loss in 2024
2025
$5,000
85
%
19,000
15
%
Total expected cash flow loss in 2025…
A bank that provides overdraft protection charges 12 percent for each $100 (or portion of $100) borrowed when an overdraft occurs.
a. What amount of interest would the customer pay for a $188 overdraft? (Assume the interest is for the full amount borrowed for whole year.)
b. How much would be saved by using the overdraft protection loan if a customer has three overdraft charges of $30 each during the year?
Pool-N-Patio World needs to borrow $55,000 to increase its inventory for the upcoming summer season. The owner is confident that he will sell most, if not all, of the new inventory during the summer, so he wishes to borrow the money for only four months. His bank has offered him a simple interest amortized loan at 7.75% interest. (Round your answers to the nearest cent.)
(a) Find the size of the monthly bank payment.$ (b) Prepare an amortization schedule for all four months of the loan.
PaymentNumber
PrincipalPortion
InterestPortion
TotalPayment
BalanceDue
0
$
1
$
$
$
$
2
$
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Chapter 7 Solutions
Intermediate Accounting (2nd Edition)
Ch. 7 - Prob. 7.1QCh. 7 - Prob. 7.2QCh. 7 - If interest is compounded more than once a year,...Ch. 7 - Prob. 7.4QCh. 7 - Can an ordinary annuity table be used to determine...Ch. 7 - Prob. 7.6QCh. 7 - Is the present value of an ordinary annuity more...Ch. 7 - Prob. 7.8QCh. 7 - Simple Interest. Assume Shafer Corporation...Ch. 7 - Compound Interest. Assume Shafer Corporation...
Ch. 7 - Prob. 7.3BECh. 7 - Prob. 7.4BECh. 7 - Prob. 7.5BECh. 7 - Present Value of a Single Sum, Compound Interest....Ch. 7 - Future Value of a Single Sum, Compound Interest....Ch. 7 - Prob. 7.8BECh. 7 - Present Value of a Single Sum, Compounded Interest...Ch. 7 - Prob. 7.10BECh. 7 - Present Value of a Single Sum, Calculating Time...Ch. 7 - Future Value of an Ordinary Annuity. An...Ch. 7 - Future Value of an Annuity Due. Mariah Carey...Ch. 7 - Future Value of an Ordinary Annuity: Calculating...Ch. 7 - Present Value of an Ordinary Annuity. CB...Ch. 7 - Present Value of an Annuity Due, Semiannual...Ch. 7 - Prob. 7.17BECh. 7 - Ordinary Annuity, Annuity Due, Using Interest...Ch. 7 - Prob. 7.2ECh. 7 - Prob. 7.3ECh. 7 - Prob. 7.4ECh. 7 - Prob. 7.5ECh. 7 - Prob. 7.6ECh. 7 - Prob. 7.7ECh. 7 - Future Value of an Ordinary Annuity, Future Value...Ch. 7 - Single Sum, Solving for Other Variables. Two...Ch. 7 - Ordinary Annuity, Solve for Interest Rate,...Ch. 7 - Present Value, Note Payable Prices. Wiz Khalifa...Ch. 7 - Future Value of a Deterred Annuity. Lenny Shafer...Ch. 7 - Prob. 7.13ECh. 7 - Present Value of an Ordinary Annuity, Present...Ch. 7 - Prob. 7.15ECh. 7 - Prob. 7.16ECh. 7 - Future Value of an Annuity Due, Decision Making....Ch. 7 - Prob. 7.18ECh. 7 - Prob. 7.19ECh. 7 - Prob. 7.20ECh. 7 - Prob. 7.21ECh. 7 - Prob. 7.22ECh. 7 - Present Value of an Ordinary Annuity, Future Value...Ch. 7 - Present Value, Present Value of an Ordinary...Ch. 7 - Present Value, Present Value of an Annuity Due,...Ch. 7 - Prob. 7.4PCh. 7 - Prob. 7.5PCh. 7 - Prob. 7.6PCh. 7 - Prob. 7.7PCh. 7 - Present Value of an Annuity Due, Deferred...Ch. 7 - Present Value of an Ordinary Annuity, Present...Ch. 7 - Future Value of an Ordinary Annuity, Deferred...Ch. 7 - Present Value, Present Value of an Ordinary...Ch. 7 - Prob. 7.12PCh. 7 - Prob. 7.13PCh. 7 - Expected Cash Flows. Hiteck Electronics sells a...Ch. 7 - Prob. 7.15P
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