Spent the last few days on the pols1017 assignment and econ1202′s equiz (but 9/10 is sugoi xD) but now i’m so sleepy tired and there’s so much homework this week!
POLS1017 Homework
□ This Week’s Readings: Textbook – 65-178, 201-230 – Reader
□ Next Week’s Readings:
â–¡ Tutorial Questions:
• Why did the League of Nations and other efforts at peace fail to prevent World War II?
• What led to the outbreak of war in the Pacific?
• What World War II factors and events led to the Cold War?
â–¡ Perhaps look up for minor essay
ECON1202 Homework
â–¡ EQUIZ ATTEMPT 2!
□ This week’s readings: HPW p235-236, 5.4, KZB 6.1-6.3, 7.8, KZB 3.5-3.7, 5.1-5.4
□ NEXT WEEK’S READINGS : KZB – 8.4, HPW 8.1-8.2
â–¡ TUTORIAL QUESTIONS:
1. HPW 5.3 PROBLEM 32, P. 237
Sinking fund. In 10 years, a $40000 machine will have a salvage value of $4000. A new machine at that time is expected to sell for $52000. In order to provide funds for the difference between the replacement cost and the salvage value, a sinking fund is set up into which equal payments are placed at the end of each year. If the fund earns 7% compounded annually, how much should each payment be?
2. (From mid-session exam September 2000. Attempt this problem using your calculator first, and then check the result using Excel.)
Twelve residents of an apartment block each pay a $50 levy at the end of each month into a sinking fund to provide funds for refurbishment. The fund attracts interest at a rate of 6.2% p.a. compounded daily. After three years what is the amount in the sinking fund?
3. HPW 5.4 Problem 13, p.242
A debt of $16000 is being repaid by 15 equal semiannual payments, with the first payment to be made six months from now. Interest is at the rate of 6% compounded semiannually. However, after two years, the interest rate increases to 8% compounded semiannually. If the debt must be paid of to the original date agreed upon, find the new semiannual payment. Give your answer to the nearest dollar.
4. (Adapted from QMA final exam November 2000)
a) Amada used $63744.05 as a partial payment for a new convertible $150000 car for her 25th birthday. The remainder was borrowed, with equal loan repayments to be made at the end of each month for 5 years. The interest rate was 9.2% p.a. compounded daily. How much were Amanda’s monthly payments?
b) Unfortunately, the car was too powerful. On the way to a resort to celebrate her 26th birthday Amanda was travelling at 140 kph. The car left the road, hit a tree and she was injured. She subsequently decided never to drive again. The insurance company paid out the $120000 market value of the destroyed car exactly one month after Amanda’s accident. She repaid the outstanding loan the next day. If you can assume the all payments due up till then had been made automatically from her bank account, how much did she repay?
c) Amanda decided to use the insurance money that remained after the loan was repaid to help others. She set up a scholarship for needy students at her old school. This money was invested at 8% p.a. compounded monthly. The first scholarship was awarded 15 months later. Thereafter the scholarship was to be awarded every 12 months perpetually. How much were the equal scholarship amounts?
SELF STUDY QUESTIONS
1. An apartment is purchased by the Lee family through borrowing $150000 at an interest rate of 8.2% p.a. with the interest compounded monthly and payments made at the end of each month. The period of the loan is 20 years, but exactly 3 years after the apartment is purchased the Lees move their loan to a different financial institution. How much is still owed on the original mortgage at this date?
2. The parents of a 10-year old girl believe their daughter will be able to study at university when she leaves high school at the age of 18 years. They estimate that if they accumulate a sum of $45,000 over the next 8 years they will be able to cover the costs of their daughter’s university studies. To achieve this savings goal of having $45,000 available in 8 years’ time, they decide to make equal deposits into a bank account at the end of each of the next 8 years. Initially the bank account pays interest of 5% per annum compounded annually, however after 5 years the interest rate increases unexpectedly to 6% per annum compounded annually. If after 5 years the couple reduce their annual deposit to take account of the higher interest rate, what will be the new annual deposit for the last 3 years?
3. Tania Jones participated in a university students’ loan scheme. Over the course of her 3-year degree Tania accumulated a debt of $7,200.00. Now, having completed of her degree, she is asked to pay back her accumulated debt immediately. Since Tania has not saved enough from her part-time job to do this, she decides to take out a personal loan from a bank to be repaid in equal monthly payments over five years with the first repayment to be made at the end of the first month. The interest rate is 9% per annum compounded daily. In answering the following, assume 365 days per year, and use the effective rate of interest you calculate correct to 5 decimal places.
(i) What is the monthly repayment?
(ii) What will be the principal outstanding at the end of 24 months?
(iii) What will be the interest component of the 25th payment?
(iv) What is the total finance charge?
4. An individual buys a new computer on credit (i.e. by borrowing the money needed) and agrees to pay for it by making 15 equal monthly instalments of $200, with the first instalment to be made 3 months after the day of purchase. If interest is charged on the loan at a rate of 9% p.a. compounded monthly, what is the purchase price of the computer?
5. A wealthy couple decide to buy a penthouse overlooking Sydney harbour. Although they have a large deposit, they still need to borrow $200,000 to conclude the purchase. The loan is to be paid off over 8 years by making equal semi-annual repayments with the first repayment made at the end of 6 months. Initially the interest rate on the loan is 9% per annum compounded semi-annually, however after 6 years (12 repayments) the interest rate falls to 8% per annum compounded semiannually. If the semi-annual repayment is reduced after the interest rate reduction so that the loan is still repaid over 8 years, what will be the semi-annual repayment for the last 4 repayments?
6. (From June 1998 exam)
The owners of a large motel in northern New South Wales have decided that they should undertake refurbishment of the rooms every 8 years. In order to pay for this they set up a special investment account which will earn interest of 7.2% per annum, compounded on a monthly basis. They estimate that the cost of the refurbishment in 8 years time will be $2,000,000.
(a) How much should they deposit into the account at the end of each month to achieve this goal, if each deposit is to be an equal amount?
(b) After making deposits for 3 years and 4 months there is a change in the interest rate. If the new rate is 6.5 % per annum, compounded daily, what will the new monthly deposit be if they are to achieve their $2,000,000 target at the original time? (Assume 365 days in each year.)
7. A racehorse trainer wants to set up a perpetual prize for a racing event in his name. The first race will be run two years from now when he retires. If the fund is established immediately and earns an effective annual interest rate of 5% p.a. and the annual prize is to be $100,000, how much should he deposit into the fund?
8. A company is running a competition in which the first prize is an amount of $1000, paid each month, forever, to the winner and his or her heirs. Supposing an interest rate of 6% per annum compounded monthly, how much money will the company need to fund the prize now if the first payment is made
(i) in one month’s time?
(ii) immediately?
(iii) a year from now?
â–¡ Start on QMA assignment draft!!
ECON1101 Homework
□ This week’s readings: Chp 4
□ Next Week’s Readings: Chp 5,6 ,7 esp pp158-165
Tutorial Questions:
Discussion Question 5.
The Urban Transit Authority receives the following two pieces of expert advice:
“You should cut rail fares in order to encourage greater use. Raising fares will mean fewer customers and lower revenue.â€
“You cannot afford to cut fares as this will reduce your revenuesâ€
(a) What do each of these pieces of advice assume about the elasticity of demand for rail use?
(b) How might an economist seek to resolve the conflict of opinion?
(c) What factors determine the elasticity of demand for rail use?
Discussion Question 6 (Chapter 6 pp 134-137 is relevant reading here)
Use the competitive market model with a downward sloping demand for labour curve and an upward sloping supply of labour curve, to show that a legislated minimum wage set above the market equilibrium level results in unemployment. Show that the amount of unemployment is greater, the greater is the elasticity of demand for labour.
What determines the elasticity of demand for a particular category of labour. What categories of labour have the highest elasticity of demand and therefore suffer the highest loss of employment from Minimum Wage Legislation?
Review Questions
1. Explain the following concepts:
(a) price elasticity of demand
(b) cross price elasticity of demand
(c) income elasticity of demand
2. Text Ch 4 Q1, Q8
3. The quantity of beef demanded falls from 10.3 to 9.7 tonnes per week in response to a 10% increase in its price. Assuming that other things remain unchanged, calculate the price elasticity of demand for beef. Is the demand for beef price elastic or inelastic? Will total revenue to beef suppliers increase or decrease as the result of the price rise?
□ Read up on DQ14’s content
ACCT1501 Homework
□ This week’s readings: Chp 1: p15-16, 9: 410-418, 427-437, 4: 154-168
□ Next week’s readings: Chp4: 168-87, 4 AND Hogget, Edwards Medlin…pg200-5 (section 4)
â–¡ Tutorial Questions:
Preparation Questions:
- 9.1
Identify some accounting concepts and principles
Identify the accounting concepts or principles that relate to each of the following sentences and explain what effect the concepts or principles have on financial statements:
1. Users of financial statements should be able to believe that the numbers represent real events.
2. Financial statements should avoid undue optimism about the future.
3. It is hard to say absolutely if a company is performing well or badly, but you can evaluate its relative performance.
4. Financial accounting should be helpful both in understanding the past and looking ahead to the future.
5. The content of financial statements should not depend on who prepares them.
- 4.5
Identify accounting transactions
The following things happened to Bartlett Ltd last month. Decide if each is an accounting transaction and explain briefly why it is or isn’t.
1. A customer ordered $6000 of products to be shipped next month.
2. Another customer paid $528 for some marketing advice from the company.
3. Bartlett’s share price wen tup by $0.50. As there are 100000 shares outstanding, this was a value increase of $50000.
4. Bartlett ran an advertisement on TV, and promised to pay the TV station the $2000 cost next month.
5. One of the company’s employees worked overtime, earning $120 that would be paid next pay period.
6. The company paid a teenage $50 to compensate for a ripped shirt which occurred when the teenager tried to run away after being accused of shoplifting.
7. Bartlett received a shipment of new goods for sale, paying $1000 cash and agreeing to pay the other $12250 in a few days.
8. Bartlett paid the other $12250.
9. The company made a donation to a political party of $500. (The donation turned out later to have been against the election law, to the company’s embarrassment.)
10. Grand Bank made the company a $20000 short-term loan.
- 4.8
Chart of accounts and source documents
The Great Outdoors Ltd has been established to retail bushwalking and mountaineering equipment. It is proposed to open a shop in a suburban shopping centre which is at present under construction. To attract customers, a notice board will be provided for bushwalking clubs to post details of walks and other activities. The shop assistants will be experienced walkers, able to advise customers on equipment and routes for walking trips. An agency for the Youth Hostel Association will be established in the shop.
1. Indicate the information you would need to enable you to design a suitable accounting system.
2. Describe the source documents that would be employed in the system.
3. Prepare a suitable chart of accounts.
- 4.13, parts 1-3
Accounting Cycle and Chart of Accounts
Carlson Pty Ltd is a business selling freezers to the public. This is its first year of operations. The chart of accounts for the business is as follows:
Chart of accounts
1-9 Owners’ Equity 30-39 Assets
1 Share capital 30 Bank of NZ
2 Retained profits 31 Sundry debtors
9 Profit and loss summary 32 Inventories
35 Delivery truck
10-19 Liabilities 40-49 Expenses
10 Sundry creditors 40 Cost of goods sold
15 Loan from Finance co. 42 Salary – shop assistants
45 Delivery truck expenses
47 Office expenses
49 Interest expense
20-29 Revenue
20 Sales
Transactions for April 2006 were as follows:
2006
Apr. 1 Owners introduced $150000 in share capital, deposited in Bank of New Zealand.
2 Delivery truck bought from finance company for $80000 to become long-term loan.
4 Goods purchased on credit for resale for $200000
7 Paid delivery truck expenses, $4800.
10 Sales made for cash, totally $50000 invoice value – original cost $30000.
15 Sales made to credit customers $120000 invoice value -original cost $70000
25 Shop assistants’ salary for month paid, totally $8000.
27 Paid office expenses, $26000.
29 Received $90000 from credit customers.
29 Paid sundry creditors, $100000
29 Paid interest on loan, $800.
1. Enter the transactions in a general journal
2. Post to the ledger.
3. Extract a trial balance.
4. Prepare and post closing entries.
5. Prepare an income statement for April 2006.
6. Extract a post-closing trial balance and prepare a balance sheet at 30 April 2006.
Tutorial Questions:
- Chapter 4, DQ 8,9
8. Financial statements are highly summarised documents, representing thousands of transactions. Financial newspapers and commentators produce information about companies that is even more summarised. Why would users accept, or even prefer, summarised information to detailed data? How important is it for the user to understand the procedures and assumptions behind such summaries?
9. At a recent Student Accounting Club wine and cheese party, local business people mixed with students. One small business entrepreneur was heard to say, ‘All that financial accounting information you students learn about is not relevant to me. I just started up my business. I only have five employees: four people in the shop building the product and one person in shipping/receiving. I’m out on calls, drumming up business so I have my finger on the real pulse of the firm – that’s sales. My brother pays the bills and does up the payroll every two weeks. Once in a while I write cheques too. It’s all simple and smooth, so why add a lot of time-consuming, costly record-keeping to it all? All those books and financial statements are fine for the big public companies; I can do without the complications.’ Prepare an appropriate response to his comments.
- P 4.9, except part 4
Accounting cycle
The following transactions relate to the business of Romulus Pty Ltd, an importer and dealer in exclusive continental cars. Cost of sales is recorded at the time of sale.
2006
Dec. 1 Romulus commenced operations with $1 million cash.
2 Paid one month’s rental of showroom, $29000.
3 Purchased 10 Distincto vehicles for $200000 each on 60-day credit terms.
4 Retained one Distincto vehicle for demonstration purposes.
8 Sold, for cash, three vehicles at $250000 each
9 Paid account for advertising in motoring journals, $600.
21 Purchased computer for $4000 cash
24 Sold one vehicle on the following terms: deposit $40000, balance of $210000 payable in six months.
29 Sold one vehicle to old family friend for $249000
31 Paid office salaries $900 and salespeople’s commission $45000
1. Enter the transactions in a journal.
2. Post to the ledger.
3. Prepare a trial balance.
4. Prepare closing entries.
5. Prepare an income statement for the month of December 2006 and a balance sheet as at 31 December 2006.
- 9.5
Accounting assumptions
Accounting practice is influenced by a series of assumptions. Consider the following journal entries:
$ $
A Dr Prepaid rent 500
Cr Cash 500
B Dr Accounts receivable 9000
Cr Sales 9000
C Dr Inventory write-down expense 300
Cr Inventory 300
D Dr Cash at bank 2000
Cr Share capital 2000
E Dr Bad debts expense 240
Cr Provision for doubtful debts 240
F Dr Cost of goods sold 310
Cr Inventory 310
G Dr Wages expense 620
Cr Cash 620
H Dr Income tax payable 1000
Cr Cash 1000
For each of the following assumptions or principles of accounting practice, identify one journal entry from the list above that demonstrates the adoption of that assumption or principle. You may only use each journal entry once. Briefly explain how it demonstrates that assumption or principle.
a) Prudence principle
b) Accounting entity assumption
c) Matching principle.
â–¡ Accounting ledger part
