EngEcon Worded Problems.pdf

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Worded Problems on Engineering Economics with Basic Accounting

Instructions:

A) Copy the Assigned Worded Problems, then write the Givens, Required, Diagram, Formulation,

and Assumptions needed then write your Solutions and Double-line the answer/s.

B) To have mastery on the subject, you are required to practice solving problems related on the

subject only. This submission is to monitor and record that activity.

C) The standard requirement is 15 worded problems for every unit of the subject. This subject,

being a 3 unit subject, will require you to submit at least 45 worded problems whose topics

are to be equally distributed to those 45 worded problems.

Worded Problems:

1) A man planned to build a house. The cost of property and construction is Php 2,000,000 with the salvage value of Php 400,000 after the life of 10 years. The cost of maintenance is Php 50,000 per year. If the interest rate is 6%, what is the capitalized cost of the house?

2) A man is considering investing Php 500,000 to open a semi-automatic auto-washing business in a city of 400,000 populations. The equipment can wash, on the average, 12 cars per hour, using two men to operate it and to do small amount of handwork. The man plans to hire to men, in addition to him, and operate the station on an 8-hour basis, 6 days per week, and 50 weeks per year. He will pay his employees Php 25.00 per 8-hour. He expects to charge Php 25.00 for a car wash. Out-of-pocket miscellaneous cost would be Php 8,500 per month.

He would pay his employees for 2 week for vacation each year. Because of the length of his lease, he must write off his investment within 5 years. His capital now is earning 15%, and he is employed at a steady job that pays Php 25,000 per month. He desires a rate of return of at least 20% on his investment.

Using rate of return and annual worth methods, is the investment recommended?

4) A proposed project will require the immediate investment of Php 50,000 and is estimated to have year-end revenues and cost as follows:

Year Revenue Costs

1 Php 75,000 Php 60,000

2 90,000 77,500

3 100,000 75,000

4 95,000 80,000

5 60,000 47,500

An additional investment of Php 20,000 will be required at the end of the second year. The project would terminate at the end of the 5th_{year, and the assets are estimated to have a salvage value of Php 25,000 at the} time. Is this investment economically feasible?

6) Choose from the two machines, which is more economical, if money is worth at least 16%.

Specifics Machine A Machine B

First Cost Php 8,000 Php 14,000

Salvage value 0 2,000

Annual Operation 3,000 2,400

Annual Maintenance 1,200 1,000

Taxes and insurance 3% 3%

Life (years) 10 15

7) A company is going to buy a new machine for manufacturing its product. Four different machines are available. Cost, operating and other expenses are as follows:

Specifics Machine A Machine B Machine C Machine D First Cost Php 24,000 Php 30,000 Php 49,600 Php 52,000

Power per year 1,300 1,360 2,400 2,020

Labor per year 11,600 9,320 4,200 2,000

Maintenance per year 2,800 1,900 1,300 700

Taxes and insurance 3% 3% 3% 3%

Life (year) 5 5 5 5

Money is worth 17% before taxes to the company. Which machine should be chosen?

8) An untreated electric wooden pole that will last 10 years under certain soil condition cost Php 20,000. If a treated pole will last for 20 years, which is the maximum justifiable amount that can be paid for the treated pole, if the maximum return on investment is 20%. Consider annual taxes and insurance amount to be 1% of first cost.

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****PRESENT ECONOMY****

9) A building contractor is faced with the problem of possibly paying liquidated damages of Php2,000 per day for the delay in the completion of his work in accordance with a contract. The facts are as follows:

a) Number of days left on the contract time = 30 days;

b) At present the working force is: 40 skilled workers with a daily wage of Php40.00 each, 20 unskilled workers with a daily wage of Php32.00 each;

c) The daily wage is based on an 8-hour day’s work;

d) If he maintains the present number of men he will finish the work in 50 days; e) Overtime rate is 25% more than regular rate.

If he allows the present working force to work overtime of 2 hours a day, in how many days will he finish the work? How much are his savings or loss?

10) The monthly demand for ice cans being manufactured by Mr. Cruz is 3,200 pieces. With a manually operated guillotine the unit cutting cost is Php25.00. An electrically operated hydraulic guillotine was offered to him at a price of Php275,000 and which reduced by 30% the unit cutting cost. Disregarding the cost of money, how many months will Mr. Cruz be able to recover the cost of the machine if he decides to buy now?

11) A contractor has 50 men of the same capacity at work on a job. They can complete the work in 30 days, the working day being 8 hours, but the contract expires in 20 days. He decides to put 20 additional men. If all the men get Php3.00 per day for a full or part time day, and if the liquidated damages are Php100.00 for every full or part day he requires over his contract time, will he complete the work on time, and if not, would he save money by putting enough men to complete it on time?

If the contractor puts additional men maintaining the ratio of two skilled workers to one unskilled worker in order to finish the work on time, how many will he add? Consider no overtime work.

13) A man would like to invest Php50,000 in government bonds and stocks that will give an overall annual return of 5%. The money to be invested in government bonds will give an annual return of 4½% and the stocks of about 6% annual return. The investments are in units of Php100.00 each. If he desires to keep his stock investment to a minimum in order to reduce his risk, determine how many government bonds and how many stocks should he purchase?

14) A building contractor has a contract which will expire in 30 days. He has 80 men on the job and can finish the job in 50 days. The wage per day of 40 men is Php6.00 each and that of the other 40 men is Php4.00 each for 8 hours work per day. The fine or liquidated damages for delay in the work is Php100.00. per day. How many more men should the contractor add in order to enable him to complete the work on time? Assuming that the additional men to be added will be paid Php6.00 per day, will the contractor save money by employing enough men for him to complete the work on time or by not adding more men and paying the fine? How much is the savings, if any? No overtime work is permitted.

Should the contractor allow overtime work of two hours a day, how many men will he add in order to finish the work on time? How much will he save or lose?

16) A contract is let for Php10,000. It is to be completed in four weeks time, subject to a penalty of Php240 per day if that time is exceeded. At the end of 3 weeks the work is 60% complete. Cost of labor was initially estimated at Php4,000 when working 40 hours per week. If overtime labor must be compensated at double time and work is 8 hours per day straight time, on the revised work schedule determine:

a) Would it be cheaper to take the penalty or to complete the job by working overtime? b) By what percent would the estimated labor cost be increased by the cheaper plan?

17) In a gold mining area in Davao the ore contains, on the average, one ounce of gold per ton. One method of processing “A” costs Php1,500 per ton and recovers 90% of the gold. Another method “B” costs only Php1,200 per ton and recovers 80% of the gold. If gold can be sold for Php4,000 per ounce, which method is better and by how much?

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18) A cement kiln with production capacity of 130 tons per 24-hour day of clinker has its burning zone about 45 tons of magnesite chrome bricks being replaced periodically depending on some operational factors and the life of the bricks. If locally produced bricks cost Php25,000 per ton and have a life of 4 months, while certain imported bricks costing Php30,000 per ton and have a life of 6 months, determine the more economical bricks and by how much? 19) An equipment installation job in the completion stage can be completed in 40 days of 8 hours work per day with 40

men working. With the contract expiring in 30 days, the mechanical engineer contractor decided to add 10 more men on the job, overtime not being permitted. If the liquidated damages is Php2,000 per day of delay, and the men are paid Php80.00 a day, will the engineer be able to complete the job on time? Would he save money by adding more men?

20) A jewelry craftsman needs 100 grams of gold alloy containing 75% pure gold for his products. Only two alloys of gold are available from a Davao supplier, the first 80% pure gold and the other 60% pure gold. How many grams of each gold alloy must he buy to suit his requirements?

21) The quarrying cost of marble and granite blocks plus delivery cost to the processing plant for each is Php2,400 per cu.m. Processing cost of marble into tiles is Php200 per sq.m., and that of granite into tiles is Php600 per sq.m.

If marble has a net yield of 40 sq.m. of tiles per cu.m. of block and sells at Php400 per sq.m, and granite gives a net yield of 50 sq.m. of tile per cu.m. of block, and sells at Php1,000 per sq.m., determine the more profitable material considering all other costs to be the same, and by how much?

****INTEREST AND DISCOUNT****

22) Five years ago a house was purchased for Php34,000. If it is sold today for Php50,000, what is the rate of appreciation of its value?

23) Annie buys a television set from a merchant who asks for Php1,250 if paid at the end of 60 days. However, Annie wishes to pay immediately and the merchant offers to compute the cash price now. What is the cash price today if money is worth 8% simple interest?

24) Juan dela Cruz borrowed money from a bank. He received Php1,340 and promised to pay Php1,500 at the end of 9 months. Determine the following:

a) The rate of simple interest; b) The corresponding discount rate.

25) A man borrows money from a bank which uses a simple discount rate of 14%. He signs a promissory note promising to pay Php500 per month at the end of the 4th_{, 6}th_{, and 7}th_{months, respectively. Determine the amount} he received from the back.

26) An amount of Php3,000 is invested for 9 years at 6% compounded quarterly. Determine the amount of interest earned by the investment.

27) If Php10,000 is invested at 12% interest compounded annually, determine how many years it will take to double. 28) Which is better for an investor, to invest at 5½% compounded semi-annually or 5% compounded monthly?

29) Mr. W borrowed Php2,000 from Mr. Y. on June 1, 1928 and Php500 on June 1, 1930. Mr. W. paid Php500 on June 1, 1931, Php400 on June 1, 1932, and Php700 on June 1, 1993. If money is worth 5% compounded annually, what additional payment should Mr. W pay on June 1, 1936 to discharge all remaining liability?

30) How long will it take Php500 to be four times in value if invested at the rate of 7% compounded semi-annually? What is the effective rate of interest?

31) It is the practice of almost all banks in the Philippines that when they grant a loan that the interest for one year is automatically deducted from the principal amount upon release of money to the borrower. Let us therefore assume that you applied for a loan with a bank and amount of Php80,000 was approved at an interest rate of 14% of which Php11,200 was deducted and you were given a check for Php68,000. Since you have to pay Php80,000 one year after, what then will be the effective interest rate?

32) The sum of Php26,000 was deposited in a fund earning interest at 8% interest per annum compounded quarterly. What was the amount in the fund at the end of 3 years?

33) The Philippine Society of Mechanical Engineers is planning to construct its own building. Two proposals are being considered:

a) The construction of the building now to cost Php400,000;

b) The construction of a smaller building now, to cost Php300,000 and at the end of 5 years, an extension to be added to cost Php200,000.

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34) If the sum of Php15,000 is deposited in an account earning 4% per annum compounded quarterly, what will be the amount of the deposit at the end of 5 years?

35) A man who won Php300,000 in a lottery decided to place 50% of his winnings in a trust fund fro the college education of his son. If the money will earn 14% a year compounded quarterly, how much will the man have at the end of 10 years, when his son will be starting his college education?

36) A man borrowed Php25,000 from a bank for which he signed a promissory note to repay the loan at the end of one year. He only received the amount of Php21,915 after the bank collected the advance interest and an additional amount of Php85.00 for legal fees. What is the rate of interest that the bank charged?

37) One plan to raise money for Texas schools involves an “enrichment tax” that could collect Php56 for every student in a certain school district and the cash flow begins 2 years from now, what is the present worth of the enrichment plan over a 5-year planning period at an interest rate of 8% per year?

38) Bacnotan Iron and Steel purchased a new machine for ram cambering large I-beams. The company expects to bend 80 beams at Php2,000 per beam in each of the first 3 years, after which the company expects to 100 beams per year at Php2,500 per beam through year 8. If the company’s minimum attractive rate of return is 18% per year, what is the present worth of the expected income?

39) Rubbermaid Plastics plans to purchase a rectilinear robot for pulling parts from an injection molding machine. Because of the robot’s speed, the company expects production costs to decrease by Php100,000 per year in each of the first 3 years and by Php200,000 per year in the next 2 years. What is the present worth of the cost savings if the company uses an interest rate of 15% per year on such investment?

40) Toyco Watercraft has a contract with a parts supplier that involves purchases amounting to Php150,000 per year, with the first purchase to be made now, followed by similar purchases over the next 5 years. Determine the present worth of the contract at an interest rate of 10% per year.

****ANNUITIES AND CAPITALIZED COST****

41) A house and lot was offered for Php87,000 with a 10% down payment and a monthly payment of Php500 per month for 25 years. What is the monthly interest rate and effective rate?

42) The average annual cost of damages caused by floods to a certain subdivision located along the Pasig River is estimated at Php700,000. To build a gravity dam to protect the area from flood would cost Php2,500,000 and would involve an annual maintenance cost of Php20,000. With interest at 8% compounded annually, how many years will it take for the dam to pay for itself?

43) A man wishes to have Php350,000 when he retires 15 years from now. If he can expect to receive 4% annual interest, how much must he set aside beginning at the end of each of the 15 years?

44) An investor deposits Php10,000 per year in a bank which offers an interest of 18% per annum for time deposits of over 5 years. Compute how much the investor can collect at the end of 13 years, assuming that he never withdraws any amount before the 13th_year.

45) A man wishes to prepare the future of his ten-year old son. Determine the monthly savings that he should make with interest at 5.41% per annum to amount to Php1,200,000 at the time his son will be 18 years old.

46) A building and loan association requires that loans be repaid by uniform monthly payments which include monthly interest calculated on the basis of nominal interest of 5.4% per annum. If Php50,000 is borrowed to be repaid in 10 years, what must the monthly payment be?

47) You want to start saving for your ten-year old son’s college education. If you are guaranteed 6% interest compounded quarterly, how much would you have to save each month to amount to Php1,200,000 by the time he is 18 years old?

48) A man bought a house and lot worth Php300,000 in a subdivision in Metro-Manila. The annual amortization for the house and lot is Php34,000. Determine the rate of interest he was charged by the subdivision owners.

49) Find the annual payments to extinguish a debt of Php60,000 payable in 5 years at 12% compounded annually. 50) A man purchases a computer worth Php15,000 with interest at 5% payable semi-annually. He signed a contract to

pay Php5,000 and the balance, principal and interest included, by equal payments at the end of each 6 months for 10 years. At the end of 4 years this computer was sold to yield the investor 7% payable semi-annually. Find the price he was paid.

51) A man owes Php50,000 with interest at 6% payable semi-annually. What equal payments at the beginning of each 6 months for 8 years will discharge his debt?

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52) The Php100,000 cost of an equipment was made available through a loan which earns 12% per annum. If the loan will be paid in 10 equal annual payments, how much is the annual installments?

53) A mechanical engineer designed a mechanical device costing Php200,000. Maintenance will cost Php10,000 each year. The device will generate revenues of Php50,000 each year for 5 years, after which the salvage value is expected to be Php70,000. Draw the cash flow diagram. What is the difference of the Present worth on cash-out from cash-in?

54) A father wishes to provide Php400,000 for his son’s 21st_{birthday. How much should he deposit every 6 months in} a savings bank which pays 3% compounded semi-annually, if first deposit is made when the son is 3½ years old? 55) If money is worth 12% compounded quarterly and n=5, compute the present value of the following:

a) Php100.00 received monthly in year n; b) Php100.00 received monthly for n years.

56) A shirt factory has just installed a boiler. It is expected that there will be no maintenance expenses until the end of the 11th_{year, when Php400 will be spent on the boiler. The same amount will be spent at the end of each} successive year until the boiler is scrapped at the end of 35 years. What sum of money set aside at this time will take care of all maintenance expenses?

57) A Filipino contractor in the Middle East plans to purchase a new office building costing Php10,000,000. He agrees to pay Php1,500,000 annually for 20 years. At the end of this time he estimates that he can resell the building for at least Php6,000,000. Instead of buying the building he can lease it for Php1,040,000 a year. All payments are to be made at the beginning of each year and the rate of interest is 10%. Should the contractor purchases or lease the building?

58) XYZ Inc. plans to construct an additional building at the end of 10 years at an estimated cost of Php5,000,000. To accumulate this amount it will deposit equal year-end amounts in a fund earning 13%. However, at the end of the 5th_{year it decided to have a larger building estimated to cost Php8,000,000. What should be the annual deposit} for the last 5 years?

59) A computer cost Php105,000. It can be leased for an annual rent of Php30,000 payable at the beginning of each year throughout it s economic life of 5 years. No salvage value is expected at the end of 5 years. Cost of capital is 10% and the applicable income tax rate is 40%. Should the computer be purchased or leased?

60) A refrigeration equipment fabricator sold an ice drop making machine which the condition that is case the machine will not be able to produce the guaranteed capacity, he will deduct from the agreed price of the machine the loss of revenue that the buyer will incur during the economic life of the machine which is 5 years, plus 12% cost of money. One month after the machine was delivered the buyer complained to the fabricator that he was not getting the guaranteed production. After a series of tests, it was determined that the buyer would be losing Php4,000 worth of unrealized sales per year. Assuming no increase in operation cost if guaranteed production is attained, how much must the buyer deduct from the agreed price of the machine?

61) A company manufacturing acids, upon inspection of the plant, found out that it is badly corroded from the acid fumes and would need to be replaced. To try to get some more life out of the roofing, the company consulted a roofing coating contractor who presented the company with two options. The first option is a coating that will cost Php20,000 which would extend the life of the roofing for 3 years from the date of application, and the second option will cost Php30,000 and which would extend the life of the roofing for 5 years fro the date of application. At what rate of return are the investment equal?

62) A fully secured loan of Php30,000 was to be amortized by 10 equal semi-annual payments, the first payment to be made 6 months after the loan is approved. After the 6th_{payment was made the debtor was in a position to settle} the entire balance remaining by a single payment on that date. If the interest on the loan is 12% compounded semi-annually, what would be the amount of the single payment?

63) A machine has just been purchased for Php1.2 million. It is anticipated that the machine will be held 5 years, that it will have a salvage value of Php80,000 based on current prices, and that the annual rate of inflation during the next 5 years will be 7%. The machine will be replaced by a duplicate and the firm will accumulate the necessary capital by making equal year-end deposits in a reserve fund that earns 6% per annum. Determine the amount of the annual deposit.

64) A man agreed to pay the loan he is borrowing from a bank in six equal year-end payments of Php71,477.70. Interest is 18% per annum, compounded annually, and is included in the yearly amount he will be paying the bank. How much money is the man borrowing from the bank?

65) A woman wishes to purchase a set of appliances with a total cost of Php20,000. She made a down payment of Php5,000 and the balance payable in 24 equal monthly installments. If financing charge is 12% each year computed on the total balance to be paid by installment and interest is 12%,

a) How much would each installment payment be? b) What will be the actual cost of money?

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66) A new company developed a program in which employees will be allowed to purchase shares of stock of the company at the end of its fifth year of operation, when the company is thought to have gained stability, at par value of Php100 per share. Believing in the good potential of the company, an employee decided to save in a bank the amount of Php8,000 at the end of every year which will earn 9% interest, compounded annually. How many shares will he be able to purchase at the end of the fifth year?

67) A company has approved a car plan for its six senior officers in which the company will shoulder 25% of the cost and the difference payable by each officer to a financing company in 48 equal end-of-the-month installments at an interest rate of 1.5% per month. If the cost of each car is Php350,00, determine the Total amount each owner will have to shoulder.

68) If Php10,000 is deposited each year for 9 years, how much annuity can a person get annually from a bank every year fro 8 years starting one year after the ninth deposit is made? Money is worth 14%.

69) An employee earning Php12,000 a month can only afford to buy a car requiring a down payment of Php10,000 and a monthly amortization of not more than 30% of his monthly salary. What would be the maximum cash value of a car he can purchase if the seller will agree to a down payment of Php10,000 and the balance payable in 4 years at 18% per year payable on a monthly basis? The first payment will be due at the end of the first months.

70) A company has approved a car plan for its six senior officers in which the company will shoulder 25% of the cost and the difference payable by each officer to a financing company in 48 equal end-of-the-month installments at an interest rate of 1.5% per month. If the cost of each car is Php350,000, determine the amount each officer has to pay the finance company each month.

71) A machinery supplier is offering a certain machine on a 10% down payment and the balance payable in equal year-end payments without interest for 2 years. Under this arrangement the price is pegged at Php250,000. However, for cash purchase the machine would only cost Php195,000. What is the equivalent interest rate that is charged on the two-year payment plan if interest is compounded quarterly?

72) Determine the amount needed now to purchase a machine for Php100,000, provide an annual fund of Php15,000 for operation and maintenance, and to replace it at the same cost at the end of every ten-year period. Money is worth 7½% compounded annually.

73) A new storage tank can be purchased and installed for Php50,000, and is expected to last for 10 years. However, an existing tank of equivalent capacity may be continued to be used if it is repaired. If this tank were repaired its estimated useful life is 3 years, then the same type of repairs will have to be done again. Assume that future costs will remain the same and that the tanks will have no scrap value. Money is worth 10% compounded annually. How much can be spent for repairing the existing tank if the capitalized cost of the two tanks are the same?

74) A chemical reactor, which will contain corrosive liquids, has been designed. The reactor may be made of mild steel or stainless steel. The initial cost, including installation, of a mild steel reactor is expected to be Php72,000 and would last 5 years. Stainless steel is more resistant to the corrosive action of the liquids, but is more expensive at the cost of Php120,000. Assuming that both types of reactors will have no salvage or scrap value at the end of their useful lives and could be replaced at the same cost as before, and if money is worth 12% compounded annually, what should the useful life of the stainless reactor be so that the capitalized cost are equal?

75) Compute the values of the Present and Future worth from the data below where interest rate is 10%:

Period Value Cash Flow

0 Present Worth Php 0 1 Php 0 2 Php 80 3 Php 160 4 Php 240 5 Php 320 6 Future Worth Php 400

76) Compute the values of the Present and Future worth from the data below where interest rate is 10%:

0 Present Worth Php 50 1 Php 50 2 Php 130 3 Php 210 4 Php 290 5 Php 370 6 Future Worth Php 450

77) Compute the values of the Present Worth and “X” from the data below where interest rate is 10%:

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1 X 2 2X 3 3X 4 4X 5 5X 6 Future Worth = Php10,000 6X

78) For the gradient series shown where interest rate is 10%, compute the values of Present and Future Worth, and value of Annuity for the equivalent uniform series:

0 Present Worth Php 0 1 Php 1,000 2 Php 900 3 Php 800 4 Php 700 5 Php 600 6 Future Worth Php 500

79) Compute the value of “X” so that the two cash flows will be equivalent where interest rate for both is 12%. Hint: The present or accumulated values for the cash flows should be equal.

Period First Cash Flow Second Cash Flow

0 Php 0 0 1 Php 0 5X 2 Php 700 4X 3 Php 1,400 3X 4 Php 2,100 2X 5 Php 2,800 X

80) Suppose an engineer receives an initial annual salary of Php24,000 increasing at the rate of Php1,200 a year. If money is worth 12%, determine his equivalent annual salary for a period of 10 years.

81) The year-end operating and maintenance cost of a certain machine are estimated to be Php4,800 the first year and to increase by Php800 each year thereafter during its eight-year life. If capital is worth 15%, determine the equivalent uniform year-end costs.

82) An inventor was offered the following alternatives as royalties for his invention:

a) A single lump sum payment of Php350,000 for the right to manufacture the invention for the next 5 years; b) An initial payment of Php100,000 and year-end payments as follows:

End of Year Royalty Payments

1 Php 0

2 Php 50,000

3 Php 100,000

4 Php 150,000

5 Php 200,000

If money is worth 15% to the inventor, which alternative is better for him? Disregard income tax considerations. 83) For the following arithmetic gradient series, with interest at 10%, find the Present worth.

1 Php 0 2 Php 800 3 Php 1,600 4 Php 2,400 5 Php 3,200 6 Php 4,000

84) For the following arithmetic gradient series, with interest at 10%, find the value at the end of year 6. End of Year Royalty Payments

85) For the following arithmetic gradient series, with interest at 10%, find the value at the end of year 10, assuming no further deposits after the sixth year.

1 Php 0

2 Php 800

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4 Php 2,400

5 Php 3,200

6 Php 4,000

86) For the following arithmetic gradient series, with interest at 10%, find the equivalent uniform series for 6 years. End of Year Royalty Payments

87) A machine in a factory has the following end-of-year maintenance costs: End of Year Royalty Payments

1 Php 720 2 Php 800 3 Php 880 4 Php 960 5 Php 1,040 6 Php 1,120 7 Php 1,200

In interest is 14.8% compounded annually, determine the present worth of this series.

88) A company owes Php80,000, which includes the interest, to be paid one year from now. To provide for the repayment of this debt, the company deposits Php2,000 at the beginning of the first month, Php4,000 at the beginning of the second month, increasing the deposits in each succeeding month by Php2,000 until the beginning of the eight month. These amounts earn interest at the rate of 9% compounded monthly. Will the total amount in the fund at the end of 12 months be sufficient to repay the debt? If not, how much more is needed?

89) For the cash flow shown, find Present Worth (P) and Future Worth (F) if Interest (i) = 18% per year and incremental increase (r) = 12%:

0 Present Worth Php 0 1 Php 500 2 Php 560 3 Php 627.20 4 Php 702.46 5 Php 786.76 6 Future Worth Php 881.17

90) For the cash flow shown, find Present Worth (P) and Future Worth (F) is Interest (i) = 18% per year and incremental increase (r) = 10%:

0 Present Worth Php 0 1 Php 600 2 Php 660 3 Php 726 4 Php 798.60 5 Php 787.46 6 Php 966.31 7 Php 0 8 Future Worth Php 0

91) For the cash flow shown, find Present Worth (P) and Future Worth (F) is Interest (i) = 15% and incremental rate (r) = -20%:

0 Present Worth Php 0 1 Php 5,000 2 Php 4,000 3 Php 3,200 4 Php 2,560 5 Php 2,048 6 Future Worth Php 1,638.40

92) A man makes a series of ten annual deposits starting at Php2,000 at the end of the first year and increasing the amount deposited by 10% every year thereafter. Find the total amount at the end of ten years if the rate of interest on all sums on deposit is 8%.

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93) Find the value of “X” in the arithmetic gradient as shown, so that the two cash flows will be equivalent if i = 15% per year:

Period First Cash Flow w/ r = 10% Second Cash Flow

0 Php 0 0 1 Php 1,000 5X 2 Php 1,100 4X 3 Php 1,210 3X 4 Php 1,331 2X 5 Php 1,464.10 X

95) A parcel of land in a downtown area, suitable for a parking lot, can be leased for a period of 10 years. Initial development costs for clearing, paving, and constructing a small office shed on the lot is estimated to be Php150,000. If the net annual revenue for the first year is Php22,000 and increases by 10% per year thereafter until the tenth year, and the improvements revert to the owner of the land at the end of 10 years, what is the rate of return on the investment?

97) Cisco’s gross revenue (the percentage of revenue left after subtracting the cost of goods sold) was 70.1% of total revenue over a certain 4-year period. If the total revenue was Php5.4 billion for the first 2 years and Php6.1 billion for the last 2 years, what was the equivalent annual worth of the gross revenue over that 4-period period at an interest rate of 20% per year?

98) A Professional Mechanical Engineer decides to set aside money for his newborn daughter’s college education. He estimates that her needs will be Php20,000 on her 17th_{, 18}th_{, 19}th_{, and 20}th_{birthdays. If he plans to make uniform} deposits starting 3 years from now and continue through year 16, what should be the size of each deposit, if the account earns interest at a rate of 8% per year?

99) How much money would you have to pay each year in 8 equal payments, starting 2 years from today, to repay a Php20,000 load received from a relative today, if the interest rate is 8% per year?

100) An Industrial Engineer is planning for his early retirement 25 years from now. He believes he can comfortably set aside Php10,000 each year starting now. If he plans to start withdrawing money 1 year after he makes his last deposit (i.e. year 26), what uniform amount could he withdraw each year for 30 years, if the account earns interest at a rate of 8% per year?

101) Veco provides standby power to pumping stations using diesel-powered generators. An alternative has arisen whereby the utilities could use natural gas to power the generators, but it will be a few years before the gas is available at remote sites. The utility company estimates that by switching to gas, it will save Php15,000 per year starting 2 years from now. At an interest rate of 8% per year, determine the equivalent annual worth (years 1 through 10) of the projected savings.

102) The operating cost of a pulverized coal cyclone furnace is expected to be Php80,000 per year. If the steam produced will be needed on for 5 years beginning now (i.e. years 0 through 5), what is the equivalent annual worth in years 1 through 5 of the operating cost at an interest rate of 10% per year?

103) Life Savings Accounts (LSA) would allow people to invest after-tax money without being taxed on any of the gains. If an engineer invest Php10,000 now and Php10,000 each year for the next 20 years, how much will be the account immediately after the last deposit if the account grows by 15% per year?

104) How much money was deposited each year for 5 years if the account is now worth Php100,000 and the last deposit was made 10 years ago? Assume the account earned interest at 7% per year.

105) By spending Php10,000 now and Php25,000 three years from now, a plating company can increase its income in years 4 through 10. At an interest rate of 12% per year, how much extra income per year would be needed in years 4 through 10 to recover the investment?

106) Sierra Electric Company is considering the purchase of a hillside ranch for possible use as a windmill farm sometime in the future. The owner of the 500-acre ranch will sell for Php3,000 per acre if the company will pay her in two payments – one payment now and another that is twice as large 3 years from now. If transaction interest rate is 8% per year, what is the amount of the first payment?

107) Two equal deposit made 20 and 21 years ago, respectively, will allow a retiree to withdraw Php10,000 now and Php10,000 per year for 14 more years. If the account earned interest at 10%, how large was each deposit?

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****FINANCING ANY ENTERPRISE****

108) A debt of Php1,000,000 with interest at the rate of 8%, payable semi-annually, is to be amortized by equal payments at the end of each 6 months for 4 years. Find the semi-annual payment and construct an amortization schedule.

109) Construct the amortization schedule for a debt of Php100,000 with interest at the rate of 19%, payable semi-annually, which is paid for, principal and interest included, by payments of Php20,000 at the end of each 6 months for as long as necessary.

110) A man borrowed Php1,000,000 from a bank for home improvement, to be repaid by month-end payments for 12 months. The current rate of interest charged by banks is 19% compounded monthly. Based on this rate, prepare an amortization schedule.

111) A corporation floats Php20,000,000 worth of ten-year callable bonds in 10,000 denominations. The bond rte is 7% compounded annually. Prepare an amortization schedule.

112) You purchased a Php5,000 bond for Php5,100. The pays Php200 per year. It is redeemable for Php5,050 after 10 years. What is the net rate of interest on your investment?

113) A Php1,000 6% bond pays dividends semi-annually and will be redeemed at 110% on July 1, 1975. It is bought on July 1, 1972 to yield (4%, m = 2). Find the price when it was bought.

114) A Php1,000,000 debt, in the form of Php1,000 bonds, bears 4% interest payable annually. Construct an amortization schedule for this issue by ten annual payments as nearly equal as possible.

115) A Php1,000 bond which will mature in 10 years and with a bond rate of 8% payable annually is to be redeemed at par at the end of this period. It is sold for Php1,030. Determine the yield at this price.

116) A man was offered a Land Bank Certificate with a face value of Php100,000 which bears interest of 8% per year payable semi-annually and due in 6 years. If the man wants to earn 6% semi-annually, how much must he pay for the certificate?

****DEPRECIATION AND DEPLETION****

117) Your are planning to sell your electronic manufacturing plant originally costing Php250,000 when it was put up 15 years ago. Some equipment originally costing Php10,000 was replaced 10 years ago with new equipment costing Php15,000. The equipment installed 10 years ago has now depreciated by Php7,500. The depreciation of the remaining portion of the plant originally installed 15 years ago is now Php40,000. Determine the present book value of your plant.

118) A broadcasting corporation purchased equipment worth Php53,000 and paid Php1,500 for freight and delivery charges to the site. The equipment has a normal life of 10 years with a trade-in value of Php5,000 against the purchase of new equipment at the end of life. Determine the annual depreciation cost by the straight-line method. 119) A machine which cost Php10,000 was sold as scrap after being used for 10 years. If the scrap value was Php500,

determine the total depreciation at the end of the fifth year.

120) A broadcasting corporation purchased equipment worth Php53,000 and paid Php1,500 for freight and delivery charges to the site. The equipment has a normal life of 10 years with a trade-in value of Php5,000 against the purchase of new equipment at the end of life. Determine the annual depreciation cost by the sinking fund method. Assume interest is 6% compounded annually.

121) A telephone company purchased a microwave radio equipment for Php6,000,000. Freight and installation charges amounted to 3% of the purchase price. If the equipment is depreciated over an eight-year period with salvage value of 5%, determine the annual depreciation charge using the straight-line method.

122) The cost of a certain asset is Php3,000; its life is 6 years and scrap value is Php500. Find the annual rate of depreciation under constant percentage method, and construct a depreciation table.

123) A dump truck was bought for Php300,000 six years ago. It will have a salvage value of Php30,000 four years from now. It is sold now for Php80,000. What is the suck cost if the depreciation method used is the Straight-line method?

124) A television company purchased machinery for Php100,000 on July 1, 1979. It is estimated that it will have a useful life of ten years, scrap value of Php4,000, production of 400,000 units and working hours of 120,000. The company uses the machinery for 14,000 hours in 1979 and 18,000 hours in 1980. The machinery produces 36,000 units in 1979 and 44,000 units in 1980. Compute the depreciation for 1980 using the Straight-line method.

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125) A telephone company purchased a microwave radio equipment for Php8,000,000. Freight and installation charges amounted to 3% of the purchase price. If the equipment is depreciated over an eight-year period with salvage value of 5%, determine the depreciation charge during the fifth year using the SYD method.

126) A television company purchased machinery for Php100,000 on July 1, 1979. It is estimated that it will have a useful life of ten years, scrap value of Php4,000, production of 400,000 units and working hours of 120,000. The company uses the machinery for 14,000 hours in 1979 and 18,000 hours in 1980. The machinery produces 36,000 units in 1979 and 44,000 units in 1980. Compute the depreciation for 1980 using the Working hours method.

127) A dump truck was bought for Php300,000 six years ago. It will have a salvage value of Php30,000 four years from now. It is sold now for Php80,000. What is the suck cost if the depreciation method used is the Sinking fund method at 6%?

128) A tax and duty free importation of a 30-horsepower sand mill for paint manufacturing costs Php360,000. Bank charges, arrastre and brokerage cost Php5,000. Foundation and installation costs were Php25,000. Other incidental expenses amount to Php20,000. Salvage value of the mill is expected to be Php60,000 after 20 years. Find the appraisal value of the mill using straight-line depreciation at the end of 5 year.

129) A television company purchased machinery for Php100,000 on July 1, 1979. It is estimated that it will have a useful life of ten years, scrap value of Php4,000, production of 400,000 units and working hours of 120,000. The company uses the machinery for 14,000 hours in 1979 and 18,000 hours in 1980. The machinery produces 36,000 units in 1979 and 44,000 units in 1980. Compute the depreciation for 1980 using the Output method. 130) A tax and duty free importation of a 30-horsepower sand mill for paint manufacturing costs Php360,000. Bank

charges, arrastre and brokerage cost Php5,000. Foundation and installation costs were Php25,000. Other incidental expenses amount to Php20,000. Salvage value of the mill is expected to be Php60,000 after 20 years. Find the appraisal value of the mill using straight-line depreciation at the end of 10 year.

131) On January 1, 1978 the purchasing manager of a cement company bought a new machine costing Php140,000. Depreciation has been computed by the straight-line method, based on an estimated useful life of 5 years and residual scrap value of Php12,800.

On January 2, 1981 extraordinary repairs (almost equivalent to a rebuilding of the machinery) were performed at a cost of Php30,400. Because of the thorough going nature of these repairs, the normal life of the machinery was extended materially, the revised estimate of useful life was 4 years from 1981.

Determine the annual provision for depreciation for the years 1978 to 1980 and the adjusted provision for depreciation on December 31, 1981. Assume payment in cash for the machine and the repairs.

133) A machine shop purchased 10 years ago a milling machine for Php60,000. A straight-line depreciation reserve had been provided based on a 20-year life of the machine. The owner of the machine shop desires to replace the old milling machine with a modern unit having many advantages costing Php100,000. It can sell the old unit for Php20,000. How much new capital will be required for the purchase?

135) A trenching machine may be used to dig irrigation ditches or pipeline trenches. A contractor purchases one for Php400,000 and he estimates that it will be able 500,000 meters during its life and he expects to receive Php5,000 as scrap value when he sells it. During a certain year he used the machine to dig 90,000 meters of trench. Determine the depreciation cost for that year.

136) A mining company invested Php25,000,000 to develop an oil well which is estimated to contain 1,000,000 barrels of oil. During a certain year, 200,000 barrels were produced from this well. Compute the depletion charge during the year.

137) A mining company invested Php25,000,000 to develop an oil well which is estimated to contain 1,000,000 barrels of oil. During a certain year, 200,000 barrels were produced from this well which earned a total gross income of Php30,000,000. The taxable income after deducting all expenses excluding depletion is Php11,800,000. Determine the allowable depletion allowance for the year.

138) During a certain month, a mining company has a gross income of Php6,500,000 from the production of gold. The expense for this month excluding depletion is Php4,000,000. If the fixed depletion rate for gold is 15%, what is depletion allowance for this month?

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139) The Carryall Trucking Company uses three delivery trucks that cost Php100,000; Php120,000; and Php150,000. The estimated salvage values are Php20,000; Php25,000; and Php35,000. All trucks have an expected service life of 10 years. Determine the group depreciation rate.

140) A coal mining company has owned a mine for the past five years. During this time the following tonnage of ore has been removed each year: 25,000; 32,000; 36,000; 30,000; and 28,000 tons. The mine is estimated to contain a total of 500,000 tons of coal. The initial cost of the mine is Php12,000,000. If the company had a gross income for this coal of Php220 per ton for the first two years, and Php300 per ton for the last three years, determine the depletion charge for each year using the larger values for the two methods.

141) The Rainbow Electric Company uses three production machines. Determine the composite life of stated machines: Machine Type of Machine First Cost Salvage Value Life

No. 1 Cutting machine Php30,000 Php5,000 8

No. 2 Drill press Php22,000 Php4,000 6

No. 3 Sanding machine Php15,000 Php1,500 5

142) A coal mining company has owned a mine for the past five years. During this time the following tonnage of ore has been removed each year: 25,000; 32,000; 36,000; 30,000; and 28,000 tons. The mine is estimated to contain a total of 500,000 tons of coal. The initial cost of the mine is Php12,000,000. If the company had a gross income for this coal of Php220 per ton for the first two years, and Php300 per ton for the last three years, compute the percent of the initial cost that has been written off in the five years.

143) The Rainbow Electric Company uses three production machines. Determine the composite depreciation rate of the machines described below:

Machine Type of Machine First Cost Salvage Value Life No. 1 Cutting machine Php30,000 Php5,000 8

144) The Carryall Trucking Company uses three delivery trucks that cost Php100,000; Php120,000; and Php150,000. The estimated salvage values are Php20,000; Php25,000; and Php35,000. All trucks have an expected service life of 10 years. Determine the group annual depreciation.

145) The San Fernando Manufacturing Company owns four different production machines with data tabulated below: Machine Number Number Owned First Cost Salvage Value Expected Life

No. 1 8 Php40,000 Php12,000 12

No. 2 6 Php32,000 Php8,000 10

No. 3 4 Php18,000 Php4,000 10

No. 4 4 Php24,000 Php6,000 8

One-half of the machines of each kind will be replaced after 8 years and the rest will be sold after 12 years. Compute the total annual straight-line depreciation charges by the group depreciation method.

146) The Rainbow Electric Co. uses three production machines. Determine the annual depreciation of stated machines: Machine Type of Machine First Cost Salvage Value Life

No. 1 Cutting machine Php30,000 Php5,000 8

147) A tax and duty free importation of a 30-horsepower sand mill for paint manufacturing costs Php360,000. Bank charges, arrastre and brokerage cost Php5,000. Foundation and installation costs were Php25,000. Other incidental expenses amount to Php20,000. Salvage value of the mill is expected to be Php60,000 after 20 years. However, calculate the actual annual depreciation by assuming that the company uses a service life of 8 years for all models and one-half of the salvage values.

148) The San Fernando Manufacturing Company owns four different production machines with data tabulated below: Machine Number Number Owned First Cost Salvage Value Expected Life

No. 1 8 Php40,000 Php12,000 12

No. 2 6 Php32,000 Php8,000 10

No. 3 4 Php18,000 Php4,000 10

No. 4 4 Php24,000 Php6,000 8

One-half of the machines of each kind will be replaced after 8 years and the rest will be sold after 12 years. Compute the total annual straight-line depreciation charges by the composite depreciation method.

****VALUATION OF PROPERTIES****

149) An 8-story building was built in Manila 10 years ago costing Php5,000,000 on a 1,000 sq.m. lot purchased for Php1,000 a sq.m. It is expected that after 50 years a taller building will be constructed on the site due to the need for more office and store space in that area. To be conservative, the owners of the property expect its scrap value at the end of 50 years to be Php250,000. Sinking fund depreciation at 6% is used. However, due to inflation the

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price of properties are expected to escalate at the rate of 4.6% a year for each of the 10 years. Determine the value of the property now by the Historical-cost less depreciation method.

150) A factory was built in Laguna 12 years ago at an original cost of Php800,000 on a 4,000 sq.m. parcel of land costing Php120 a sq.m. The plant will be fully depreciated in 25 years with no salvage or scrap value. The machinery and equipment installed 12 years ago cost Php600,000 and are expected to last 15 years before being replaced with a scrap value of Php50,000. Five years ago, new equipment were purchased costing Php360,000 due to increased demand for the product being manufactured. These will also last for 15 years with value at the time of Php25,000. Disregarding inflation, determine the valuation of the property now if depreciation is by the straight-line formula for the building, and by the Matheson formula for the equipment.

151) An 8-story building was built in Manila 10 years ago costing Php5,000,000 on a 1,000 sq.m. lot purchased for Php1,000 a sq.m. It is expected that after 50 years a taller building will be constructed on the site due to the need for more office and store space in that area. To be conservative, the owners of the property expect its scrap value at the end of 50 years to be Php250,000. Sinking fund depreciation at 6% is used. However, due to inflation the price of properties are expected to escalate at the rate of 4.6% a year for each of the 10 years. Determine the value of the property now by the Reproduction-cost-new less depreciation method.

152) A farmer in Guiguinto, Bulacan planted 50 mango trees on his property which are now fruit bearing. For the mangoes produced for the next 5 years, the farmer was offered the following by two wholesale buyers:

Buyer A offered a down payment of Php50,000 and Php1,000 for the produce from each tree each year to be paid at the end of each of the 5 years.

Buyer B will not pay any down payment, but will pay Php1,200 for the produce from each tree each year to be paid at the beginning of each year for 5 years.

If money is worth 12% effective, which of the offers should the farmer accept?

153) An 8-story building was built in Manila 10 years ago costing Php5,000,000 on a 1,000 sq.m. lot purchased for Php1,000 a sq.m. It is expected that after 50 years a taller building will be constructed on the site due to the need for more office and store space in that area. To be conservative, the owners of the property expect its scrap value at the end of 50 years to be Php250,000. Sinking fund depreciation at 6% is used. However, due to inflation the price of properties are expected to escalate at the rate of 4.6% a year for each of the 10 years. If the property is appraised now for taxation purposes at the rate of 3.5% of the appraised value, compute the annual real estate tax to be paid by the owners.

154) An author of a best-selling novel in the United States was offered two alternatives by a publisher for the right to publish her book:

The first alternative was a single lump sum payment of $2,000,000 with no further royalties in the future; or As the second alternative, a royalty of 15% on the gross selling price of each book sold. The publisher expects to sell 500,000 copies of the hard-bound edition for the first year costing $22.50 each, and 500,000 copies of the paperback edition each year for the next 3 years which sells for $5.95 each. Payments to the author are made at the end of each of the 4 years. Assume that no further royalty payments will be paid after 4 years.

If money is worth 8.5% to the author, which alternative should she accept? Disregard income tax consideration. 155) A copper mine is Davao expects to have a net annual income of Php2,500,000 annually for 10 years. Determine its

value if the annual dividend rate is to be 15%, payable annually, and the sinking fund is to accumulate at the rate of 8% annually.

156) The annual output of a gold mine is 25,000 tons of ore. It is expected that the ore body will be exhausted within 20 years. The management cost annually is Php750,000, and the operating cost of the mine and the smelter plant is Php120 per ton. The processed ore produces and income of Php450 per ton. If the annual dividend rate is 12%, payable annually, and the sinking fund rate is 9% annually, determine the valuation of the property now. 157) Timber land in Palawan was purchased for Php8,000,000 and earned an average annual profit of Php1,400,000 for

14 years, at the end of which time the land was sold for Php200,000. Assuming that a sinking fund earning 7% was established to provide for depletion, determine the investment rate.

****PRINCIPLES OF ACCOUNTING****

158) Prepare a Balance Sheet and determine the ownership on the following data:

Cash Php41,012 Notes payable 2,500 Accrued taxes 2,950 Accounts receivable 30,300 Prepaid insurance 2,150 Accounts payable 11,150

Furniture and fixtures 53,125

Reserve for depreciation 21,000

159) As of December 30, 20xx the balance of the ledger accounts of the Davao Manufacturing Company are below stated. Determine the amount for “Inventories of goods and materials on hand”, and prepare a balance sheet:

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Mortgages payable Php350,000

Cash on Hand and in Banks 220,000

Common Shares 552,000

Reserve for depreciation on buildings and plant 53,670 Prepaid expenses (for taxes, rental, etc.) 32,640

Equipment and machinery 450,000

Undivided surplus 180,000

Advance payment on orders from the company 37,590

Franchises 60,000

Notes and accounts payable 92,340

Inventories of goods and materials on hand Php???,???

Land (original Cost) 320,000

Declared and unpaid dividends 92,500

Notes and accounts receivable 56,700

Reserve for expansion 150,000

Reserve for depreciation on equipment 85,200 Building and plant (original cost) 529,000 Preferred shares (45% of Common Shares) Php???,??? Accrued expenses (taxes, wages, etc.) 45,800 160) Prepare a Balance Sheet and determine the Debt Ratio on the following data:

161) As of December 31, 1976, the financial data for the Visayan Manufacturing Company are below stated. Prepare a balance sheet and determine the ownership from the following data:

Cash on hand Php300,000

Cash in Bank 1,200,000

Building and plant 3,000,000

Cast of Land 1,200,000

Notes and accounts receivable 1,500,000 Advance payment for taxes and insurance 700,000

Notes and accounts payable 1,200,000

Mortgage allowance 1,500,000

Allowance for depreciation 300,000

Declared and approved dividends 300,000

Inventory 2,000,000

Supplies and materials 1,800,000

Capital stocks 7,500,000

162) Prepare a Balance Sheet and determine the Acid-Test Ratio on the following data:

163) As of December 30, 20xx the balance of the ledger accounts of the Davao Manufacturing Company are below stated. Determine the amount for “Inventories of goods and materials on hand”, and Calculate the Current Ratio and Inventory turnover from the following data:

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Undivided surplus 180,000 Advance payment on orders from the company 37,590

Franchises 60,000

Reserve for depreciation on equipment 85,200 Building and plant (original cost) 529,000 Preferred shares (45% of Common Shares) Php???,??? Accrued expenses (taxes, wages, etc.) 45,800

164) On December 31, the balance sheet of the F. Santos Corporation includes the following classifications: Assets Liabilities and Stockholders’ Equity

Current Assets Current Liabilities Fixed Assets Fixed Liabilities Prepaid Expenses Prepaid Income Intangible Assets Capital Stock

Retained Earnings

Indicate the proper balance sheet classification for each of the following items and prepare the completed balance sheet:

a) Equipment purchased for Php100,000; b) Bonds payable in 10 years, Php50,000; c) A petty cash fund, Php500;

d) Common stock, 1,000 shares at Php100 par; e) Cash in the Union Bank, Php46,000;

f) Inventory of goods on hand, Php32,000; g) Net income, Php67,000;

h) Income taxes payable, Php23,500;

i) Amount in fund for expansion, Php22,800; j) Ownership of patents, Php20,000;

k) Franchise from foreign companies, Php50,000; l) Dividend payable on common shares, Php12,000; m) Amount paid for rental in advance, Php6,000;

n) Advance payment received from customers, Php10,800.

165) The condensed balance sheet of the Luzon Manufacturing Company for a certain year is given below. Assets Liabilities and Stockholders’ Equity

Cash Php80,000 Current Liabilities Php55,000

Account Receivable 45,000 Long-term Liabilities 85,000 Inventory 75,000 Capital stock, Php100 par 350,000

Prepaid Expenses 35,000 Retained Earnings 25,000

Plant Assets (net) 220,000 Total Liabilities and Stockholders’ Equity: Php515,000 Other Assets 60,000

Total Assets: Php515,000

During this year, the company made a gross profit of Php280,000 on total sales of Php920,000. Assuming that accounts receivable, inventory, and plant assets were relatively constant during the year, determine the Current Ratio and Book Value per share of Capital stock.

166) As of December 30, 20xx the balance of the ledger accounts of the Davao Manufacturing Company are below stated. Determine the amount for “Inventories of goods and materials on hand”, and Calculate the Quick Ratio and Asset turnover from the following data:

Franchises 60,000

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Reserve for expansion 150,000 Reserve for depreciation on equipment 85,200 Building and plant (original cost) 529,000 Preferred shares (45% of Common Shares) Php???,??? Accrued expenses (taxes, wages, etc.) 45,800

Retained Earnings

Indicate the proper balance sheet classification for each of the following items, prepare the completed balance sheet, and compute the Current Ratio:

a) Equipment purchased for Php100,000; b) Bonds payable in 10 years, Php50,000; c) A petty cash fund, Php500;

During this year, the company made a gross profit of Php280,000 on total sales of Php920,000. Assuming that accounts receivable, inventory, and plant assets were relatively constant during the year, determine the Acid-test Ratio and Asset Turnover.

Retained Earnings

Prepare the completed balance sheet and Compute for the Book value per share of common stock: a) Equipment purchased for Php100,000;

b) Bonds payable in 10 years, Php50,000; c) A petty cash fund, Php500;

170) As of December 30, 20xx the balance of the ledger accounts of the Davao Manufacturing Company are below stated. Determine the amount for “Inventories of goods and materials on hand”, and Calculate the Equity Ratio and Debt Ratio from the following data:

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Franchises 60,000

Reserve for depreciation on equipment 85,200 Building and plant (original cost) 529,000 Preferred shares (45% of Common Shares) Php???,??? Accrued expenses (taxes, wages, etc.) 45,800

During this year, the company made a gross profit of Php280,000 on total sales of Php920,000. Assuming that accounts receivable, inventory, and plant assets were relatively constant during the year, determine the Equity Ration and Accounts Receivable Turnover (assume all sales are on credit).

During this year, the company made a gross profit of Php280,000 on total sales of Php920,000. Assuming that accounts receivable, inventory, and plant assets were relatively constant during the year, determine the Debt Ratio and Inventory Turnover.

173) During a certain quarter, the balances of the ledger accounts of the A & M Trading Company were as follows:

Gross Sales Php245,620

Salaries and wages 92,800

Depreciation of Equipment 21,050

Rental of building for 3 months 12,000

Bad debts 4,200

Interest earned and other income 8,450

Supplies and postage 3,670

Taxes and insurance 9,580

Advertising and social representation 4,120

Repairs of equipment 7,490

Fuel oil and lubricants for delivery equipment 6,320

Power and water bills 1,680

Prepare the Profit and Loss Statement for the quarter, and determine the Operating Expense Ratio.

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Prepare the Profit and Loss Statement for the quarter, and calculate the Gross Margin.

Bad debts 4,200

Prepare the Profit and Loss Statement for the quarter, and calculate the Return on Sales. 176) Journalize the following transactions of the Perez Plumbing Company for the month of June:

June 1 Paid rent for June, Php3,000.

4 Purchased supplies for Php12,000, paying Php5,000 cash, and giving a note payable for the balance of Php7,000.

9 Complete a household contract worth Php9,850.

Received payment of Php7,500; the balance of Php2,350 is payable within 30 days by the client.

11 Received Php3,500 for past services from another client. 14 Paid bi-weekly wages to his workers, Php1,200.

17 Paid electric bill for May, Php280. 19 Paid creditors on account, Php4,000.

24 Completed another contract worth Php16,500; was paid in full. 25 Owner withdrew Php2,500 for personal use.

28 Paid bi-weekly wages to his workers, Php1,950. 30 Recorded other cash sales fro June, Php3,200.

177) Listed below are the ending account balances arranged in alphabetical sequence for the calendar year 2002 of a single proprietorship (M.A. Buti Ent.). Prepare the detailed Balance Sheet, and determine the Current Ratio and the Quick (Acid-Test) Ratio:

Accounts Payable Php10

Accounts Receivalbe 10

Cash in Bank 30

Cash in Hand 10

Customers’ Deposits 10

Deposits with Suppliers 10

Furnitures and Fixtures 30

Goodwill 10

Investment 20

M.A. Buti Proprietor 100%

Marketable Securities 10

Merchandise Inventory 30

Mortgage Payable (5 years) 50

Notes Payable (1 year) 10

Notes Receivable 10

Other Current Assets 10

Other Current Liabilities 10

Patent 10

Petty Cash Fund 10

Prepaid Insurance 10