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Desert Company consulting services for Beach Corporation

Instructions

This quiz covers concepts from Chapter 6. You will have 2 attempts to complete this quiz. Each attempt must be completed within 75 minutes. Your recorded grade will be the highest of the 2 attempts. This quiz is due Sunday, March 1st at 11:59pm. No late quizzes are accepted.

*Quizzes are individual effort assessments. You may use your book and notes but no outside help.*

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Attempt History

Attempt                           Time                                  Score

LATEST                           Attempt 1                             25 minutes                               4 out of 10

    ! Correct answers are hidden.                                                                                               "   Score for this attempt: 4 out of 10   Submitted Feb 28 at 6:38pm This attempt took 25 minutes.
     
Partial             Question 1                                                               2 / 3 pts
   
      The following information will be used to answer all questions on this quiz...   On January 2, 2020, Desert Company performed consulting services

for Beach Corporation and agreed to allow Beach to pay over time. Desert is considering several different options as detailed in the scenarios below. For each option, you will determine (1) the Service Revenue Desert can record at January 2, 2020 (2) the Interest Revenue Desert will record at December 31, 2021, and (3) the Carrying Value of the Note on the December 31, 2021, Balance Sheet (after interest has been accrued).

*Due to Canvas' sensitivities in grading, please do not round any answer until your final answer. Round your final answer to the nearest whole dollar. Do not use commas or $ in your answer.*

Scenario 1:

Desert will require Beach to make an initial cash down payment of

$30,000 on January 2, 2020 (note: this is NOT a PVAD, just a cash down payment so that Beach will not finance 100% of the services). The remainder will be financed with a $250,000, 6% note, due December 31, 2023. Interest is to be remitted each June 30th and December 31st, with principal due at maturity.

What is the Service Revenue Desert, Co. will record at January 2,

2020?   280000

What is the Interest Revenue Desert, Co. will record on December

31, 2020?   15000

What is the Carrying Value of the note on Desert, Co.'s December

31, 2020, Balance Sheet?   250000

PV$1(6%, 3) 0.83962
PV$1(6%, 4) 0.79209
PV$1(3%, 6) 0.83748
PV$1(3%, 8) 0.78941

Answer 1:

280000

Answer 2:

15000

Answer 3:

250000

Incorrect

Question 2

0 / 3 pts

Continued from Question 1...

Scenario 2:

Desert will provide the consulting services in exchange for a non- interest-bearing note with a face value of $285,000. Terms of the note require payments of Principal and Interest to be made each June 30th and December 31st for the next 4 years. Beach's normal cost of borrowing is 8%.

What is the Service Revenue Desert, Co. will record at January 2,

2020?   285000

What is the Interest Revenue Desert, Co. will record on December

31, 2020?   71250

What is the Carrying Value of the note on Desert, Co.'s December

31, 2020, Balance Sheet?   213750

PV$1(8%,4)           0.73503

PV$1(4%, 8) 0.73069
PVOA(8%, 4) 3.31213
PVOA(4%, 8) 6.73274

Answer 1:

285000

Answer 2:

71250

Answer 3:

213750

Partial

Question 3

1 / 3 pts

Continued from Question 1...

Scenario 3:

Desert will provide the consulting services in exchange for a 4-year,

$252,140, 8% note with payments of principal and interest due each June 30th and December 31st. The first payment will be received June 30th, 2020.

What is the Service Revenue Desert, Co. will record at January 2,

2020?   252140

What is the Interest Revenue Desert, Co. will record at December 31,

2021?   18911

What is the Carrying Value of the note on Desert, Co.'s December

    31, 2021, Balance Sheet?   189075             PV$1(8%, 4)                                   0.73503   PV$1(4%, 8)                                   0.73069   PVOA(8%, 4)                                  3.31213   PVOA(4%, 8)                                  6.73274       Answer 1:     252140     Answer 2:     18911     Answer 3:     189075  
 
    Question 4                                                               1 / 1 pts  
      Jaques leases a ski chalet to his best friend, Gilles. The lease term is five years with $30,000 annual payments due at the beginning of each year. What is the present value of the payments discounted at 8% per annum?     PVOA(8%, 5) 3.99271   PVAD(8%, 5) 4.31213   PVA$1(8%, 0.68058 5)         $129, 364
                   
               
https://asu.instructure.com/courses/38380/quizzes/305942

? 5 ??? 6 ??

$119, 782

$114, 519

$108, 732

Quiz Score: 4 out of 10

https://asu.instructure.com/courses/38380/quizzes/305942

? 6 ??? 6 ??

Desert Company consulting services for Beach Corporation

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