The Herndons bought a lot several years ago for $\$ 22,000$. On the lot they own, they are now building a home that will cost $\$ 140,000$. The Herndons will pay for the home by taking $\$ 25,000$ from savings and borrowing the rest. First-year expenses are estimated to be: mortgage interest, $\$ 9,100$; depreciation, $2.25 \%$ of the home's cost; property taxes, $\$ 2,890$; insurance, $\$ 645$; lost interest income, $\$ 720$; maintenance, $\$ 1,350$; and utilities, $\$ 1,900$. Income tax savings are estimated to be $\$ 3,025$. a. What will be the Herndon's cost of owning the home in the first year? b. What will be the net cost of home ownership in the first year?

Willard and Betsy Hogan want to buy a home. They will pay mortgage interest in the first year of $\$ 9,200$. Annual property taxes on the home will be $\$ 3,780$, and insurance will cost $\$ 535$ a year. Other annual expenses will be: depreciation, $\$ 1,800$; utilities, $\$ 2,400$; and maintenance, $\$ 1,600$. Lost interest on their investment will be $\$ 975$. Estimated income tax savings are $\$ 3,520$. a. What are the total first-year costs of home ownership? b. What are the net costs in the first year of home ownership?

Eunice Marshall lived in Key Cove Apartments for $12$ months. She paid a monthly rent of $\$ 990$ for her apartment and $\$ 35$ a month to park in an attended lot. Her telephone expenses averaged $\$67$ a month. The total annual cost of other utilities was $\$ 2.160$; the cost of insurance was $\$ 155$. Eunice received a refund of $50 \%$ of her one-month's security deposit at the end of her one-year lease. What total amount did Eunice spend on renting the apartment for a year?

A school district is located in a city that has property with an assessed value of $\$ 105,600,000$. The school budget for the coming year shows that $\$ 3,800,000$ will be needed to operate the schools. Of this amount $\$ 450,200$ will be received from state and federal governments. $\quad$ a. What is the amount to be raised by taxes on local property owners? b. What will be the tax rate, shown as a decimal rounded to three places?

Round the annual insurance premiums to the nearest dollar.

Leon Schumacher insures his home for its full value of $\$ 68,000$. The annual rate for the policy is $\$ 0.67$ per $\$ 100$. Increased coverage on the contents of the home will cost $\$ 45$ more. Special coverage on a trading stamp collection will cost an additional $\$ 53$. What is the total annual premium for all this coverage?

The estimated amount of depreciation on equipment for the current year is $8,200. Journalize the adjusting entry to record the depreciation.

Anna wants to buy a home priced at $\$ 67.000$. She will need to make a down payment of $15 \%$ and estimates closing costs of $2.8 \%$ of the purchase price. a. What amount will Anna need for the down payment? b. What amount will Anna need for the closing costs?

The Ayers are buying a used mobile home for $\$ 32,000$. a. What amount do they need if they want to make a down payment of $30 \%$ of the purchase price? b. What amount are closing costs if they are estimated to be $3.2 \%$ of the purchase price? c. What is the total amount of cash needed by the Ayers to buy the mobile home?

Carole Finney rents an apartment for $640 a month and pays$120 for insurance and $820 for utilities yearly. She can buy a home with about the same space for$52,000. If she buys the home, she must withdraw $10,400 from her savings account and lose$624 interest. Her other home ownership expenses are estimated to be $9,300. She also estimates that owning a home will save her$1,428 in income taxes.

What is her total cost of renting for the year?

Tyrone Northrup pays monthly rent of $1,240 for a one-bedroom apartment in a large city. He pays an extra monthly charge of$160 to the rental company for a parking space in an attended lot. His other costs are: electricity, $90 a month; other utilities,$860 a year; insurance, $170 a year. What is his annual cost of renting?

Patricia McCarthy lives in a subsidized apartment complex for low-income senior citizens. She pays monthly rent of $297 for a unit that could rent for$650 a month elsewhere. The monthly rent provides heat and water, but does not cover the $42 average monthly cost of electricity . She carries no insurance on the contents of the apartment. What are her annual costs of renting the apartment?

Joyce Navarro-Martin wants to buy a home for $73,200. She estimates her first-year expenses to be mortgage interest,$6,810; lost interest of $971; property taxes,$1,585; insurance , $395; depreciation at$1,098; maintenance and repairs , $1,800; utilities ,$1,250. She expects to save $1,847 in taxes. What will be the net cost of owning the home in the first year?

Mort and Jackie Silver own a home. They estimate their expenses to be mortgage interest, $10,180; property taxes,$3,690; insurance, $833; depreciation,$3,800; maintenance and repairs, $900; lost interest income,$2,375; utilities, $2,450. They expect to save$3,700 in income taxes from home expense. What is their net cost of home ownership?

In its first year of operations, Ramirez Company recognized $28,000 in service revenue,$6,000 of which was on account and still outstanding at year-end. The remaining $22,000 was received in cash from customers.

The company incurred operating expenses of$15,800. Of these expenses, $12,000 were paid in cash;$3,800 was still owed on account at year-end. In addition, Ramirez prepaid $2,400 for insurance coverage that would not be used until the second year of operations.

Instructions

(a) Calculate the first year’s net earnings under the cash basis of accounting, and calculate the first year’s net earnings under the accrual basis of accounting.