Other sets by this creator
Albert Einstein said that compound interest was “. . .the most powerful thing I have ever witnessed.” Work through the exercise to discover a pattern Einstein discovered which is now known as the Rule of 72. Suppose that you invest $2,000 at a 1% annual interest rate. Use your calculator to input different values for t in the compound interest formula. What whole number value of t will yield an amount closest to twice the initial deposit?
A land grant university has upgraded its course management system (CMS), integrating the system throughout all of its main campus and branch campuses around the state. It has purchased a set of 15 servers and peripherals for needs associated with the CMS. The total cost basis is $120,000 and expected use will be 5 years, after which they will have no projected value. Calculate the depreciation deduction and book value for each year.
a. Use straight-line depreciation (9.3)
b. Use declining balance depreciation, with a rate that ensures the book value equals the salvage value (9.4)
c. Use double declining balance depreciation (9.4)
d. Use double declining balance, switching to straight-line depreciation (9.5)
e. Use sum-of-years’-digits depreciation (9.A)
Reviewing insurance policies revealed that a single policy was purchased on August 1, for one year’s coverage, in the amount of $6,000. There was no previous balance in the Prepaid Insurance account at that time. Based on the information provided:
A. Make the December 31 adjusting journal entry to bring the balances to correct.