Mandalika has Published 473 Articles

How cost of equity in different countries are calculated?

Mandalika

Mandalika

Updated on 28-Sep-2020 11:10:48

270 Views

SolutionThe solution is as follows −Country 1: No taxesa) Debt to equity ratio is ZeroCost of equity = WACC + (WACC – Cost of debt) * (debt/equity)Cost of equity = 15% + (15% - 5%) * 0 => 10%b) Debt to equity ratio is 1Cost of equity = WACC + ... Read More

How to prepare bank reconciliation statement?

Mandalika

Mandalika

Updated on 28-Sep-2020 11:08:20

214 Views

SolutionThe solution is as follows −Cash bookBank statementDividend (Rs.2200/-)Balance (Rs.25000/-)Interest error(Rs.800/-)Uncashed check (Rs.2000/*)Deposited(Rs.3800/-)Uncredited (Rs.3500/-)Cash short(Rs.1200/*)Dues paid(Rs.1000/-)ABC Ltd BankReconciliation statementas on 30th September, XXXXBank overdraft (Dr)25000(+)Check issued (not enchased)2000Dividends on shares (collected by bank)2200Interest charged (recorded twice)800Check deposited (not entered in cash book)3800880033800(-)Cash short (credit side of bank column)1200Dues paid by ... Read More

Using the below trail balance, prepare income statement for the start-up company ABC as on 31st April XXXX

Mandalika

Mandalika

Updated on 28-Sep-2020 10:54:34

93 Views

Trail balance of ABC Company as on 31st April XXXXDebit ($)Credit ($)Banking equipment10000DebtorsBank5000Capital16000Drawings600Loan1800CreditorsServices18000Salaries9500Telephone expenses7002580025800SolutionThe solution is as follows −While preparing income statement, we consider only expenses and income.Income => services => 18000Expenses => salaries + telephone expenses => 9500 + 700 => 10200Income statement for the company ABC for period ... Read More

Company X has estimated their demand levels of their product A

Mandalika

Mandalika

Updated on 28-Sep-2020 10:51:21

30 Views

Sales volumes of A (units)1500016500182001900020000Probability0.150.180.190.210.22Selling price per unit is Rs. 8/- with marginal cost = Rs. 4.80/- and fixed cost = Rs. 42000/-Calculate probability of company’sa) Break evenb) Makes profit of minimum Rs.20000/-SolutionThe solution is explained below −a) Break evenCalculated contribution costContribution cost= sales cost – marginal costContribution cost= 8 ... Read More

What is annuity method of deprecation?

Mandalika

Mandalika

Updated on 26-Sep-2020 13:54:52

136 Views

In the annuity deprecation, method investment asset is considered as investment which yields fixed interest rate until the book value of asset becomes zero. Based on annuity table amount is calculated. This method is also known as compound interest method. This method is not approved by Generally Accepted Accounting Principles ... Read More

Using below data, calculate depreciation using sinking fund method.Initial cost of an equipment is Rs. 5000000/- , life span of equipment is 15 years,Salvage value = Rs. 250000/-, interest rate = 10%

Mandalika

Mandalika

Updated on 26-Sep-2020 13:53:12

471 Views

SolutionThe solution is given below −Depreciable cost = 5000000 – 250000 => Rs.4750000/- Sinking fund value = [interest/ {(1+interst) ^period -1} => [0.1/{(1+0.1)^15-1} => 0.03147 Annual depreciation = depreciable cost * sinking fund factor => 4750000*0.03147 =>Rs. 149482.5/- Book value (year 1) => 5000000 – 149482.5 => Rs.4850517.45/- Interest earned ... Read More

Give the journal entry for the sinking fund deprecation method.

Mandalika

Mandalika

Updated on 26-Sep-2020 13:51:30

444 Views

                    Journal entryDateParticularsDrCrXX/XX/XXXXDepreciation A/cTo sinking fund A/c(Being depreciation is transferred to sinking fund account)XXXXXXXX/XX/XXXXProfit and Loss A/cTo Depreciation A/c(Being depreciation is charged to profit and loss account)XXXXXXXX/XX/XXXXSinking fund investment A/cTo Bank A/c(Being amount of depreciation invested)XXXXXXXX/XX/XXXXBank A/cTo interest on sinking fund ... Read More

Explain sinking fund depreciation.

Mandalika

Mandalika

Updated on 26-Sep-2020 13:47:30

254 Views

Sinking fund depreciation is also called as depreciation fund account. Amount generated through sinking fund depreciation is used to replace the asset when it needed. In this amount, charge is credited in sinking fund account, which is shown in liability side in balance sheet and asset value has its original ... Read More

Explain modified internal rate of return.

Mandalika

Mandalika

Updated on 26-Sep-2020 13:43:42

92 Views

Modified internal rate of return (MIRR) is the adjusted rate of return to eliminate difference between investment rate and return. MIRR sorted out some issues in internal rate of return (IRR). MIRR tells about viability of the project. If the result is more than expected return, then the projects will ... Read More

Difference between internal rate of return and modified internal rate of return.

Mandalika

Mandalika

Updated on 26-Sep-2020 13:41:14

206 Views

The major differences between internal rate of return (IRR) and modified internal rate of return are as follows −Internal rate of return (IRR)Calculates discount rate based on internal factors.NPV = 0.Cash flows are Reinvested at project’s IRR.Provides two solutions.Less accurate.Higher than MIRR.Low precision.Modified internal rate of returnCost of capital is ... Read More

Advertisements