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Assuming the following Adjusted Trial Balance, create the Post-Closing Trial Balance that would result, after all closing journal entries were made and posted:

Adjusted Trial Balance\begin{array}{c} \textbf{Adjusted Trial Balance} \end{array}

DebitCreditCash$22,900Prepaid Insurance4,000Fixed Assets44,000Notes Payable$40,000Common Stock25,000Retained Earnings48,350Dividends22,000Sales Revenue150,000Automobile Expense26,500Insurance Expense20,000Salaries Expense122,500Supplies Expense1,450$263,350$263,350\begin{array}{lcc} &\textbf{Debit}&\textbf{Credit}\\[5pt] \text{Cash}&\text{\$\hspace{5pt}22,900}\\ \text{Prepaid Insurance}&\text{\hspace{15pt}4,000}\\ \text{Fixed Assets}&\text{\hspace{10pt}44,000}\\ \text{Notes Payable}&&\text{\$\hspace{5pt}40,000}\\ \text{Common Stock}&&\text{\hspace{10pt}25,000}\\ \text{Retained Earnings}&&\text{\hspace{10pt}48,350}\\ \text{Dividends}&\text{\hspace{10pt}22,000}\\ \text{Sales Revenue}&&\text{\hspace{5pt}150,000}\\ \text{Automobile Expense}&\text{\hspace{10pt}26,500}\\ \text{Insurance Expense}&\text{\hspace{10pt}20,000}\\ \text{Salaries Expense}&\text{\hspace{5pt}122,500}\\ \text{Supplies Expense}&\underline{\text{\hspace{15pt}1,450}}&\underline{\text{\hspace{39pt}}}\\ &\underline{\underline{\text{\$\hspace{1pt}263,350}}}&\underline{\underline{\text{\$\hspace{1pt}263,350}}}\\ \end{array}


Rapid Delivery, Inc. is considering the purchase of an additional delivery vehicle for $38,000\$ 38,000 on January 11, 20102010. The truck is expected to have a five-year life with an expected residual value of $5,000\$ 5,000 at the end of five years. The expected additional revenues from the added delivery capacity are anticipated to be $60,000\$ 60,000 per year for each of the next five years. A driver will cost $43,000\$ 43,000 in 20102010 , with an expected annual salary increase of $2,000\$ 2,000 for each year thereafter. The insurance for the truck is estimated to cost $4,000\$ 4,000 per year.

Is the additional truck a good investment based on your analysis?


Answered 1 year ago
Answered 1 year ago
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In this exercise, we are asked to determine if the additional delivery truck is a good investment based on the evaluation using the net present value method.

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