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a. If N250,000 is invested in an account that earns 4% per year compound interest, what is the:
i. value of the investment after 5 years? (3 Marks)
ii. total interest earned? (2 Marks)
b. When it was apparent that your parents could not afford to finance your university education, you sought and obtained a 4-year loan of N250,000.00 from Education Bank Limited. The bank imposed a simple interest rate of 7½%.
i. How much do you need to pay off the bank now
(4 years after) that you are through with your study?
(7 Marks)
ii. If you decide to be paying N25,000 every month from now and the bank agreed to reduce the interest rate to 1% per month on the unpaid balance at the beginning of the month, how much additional total interest will be paid? (8 Marks)
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Find Related Questions by Tags, levels, etc.
ABGL that the loan will be paid within the period specified.
Required:
i) In reference to the IFAC suggested model for dealing with ethical conflicts and using your judgement, explain how you will undertake this assignment with integrity. (5 marks)
ii) Assess the impact of transaction risk on the ability of GGOH to repay its loan, with relevant calculations. (5 marks)
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Find Related Questions by Tags, levels, etc.
Breakable Limited is preparing for the last half of the year and you, as the cost accountant, have been requested to prepare the cash budget for the third quarter of the year. The following information were available:
| Month | Sales | Net Salaries | Expenses | Salary Deductions |
|---|---|---|---|---|
| April | 850,000 | 430,000 | 210,700 | 39,400 |
| May | 900,000 | 500,000 | 221,500 | 48,400 |
| June | 1,250,000 | 650,000 | 297,500 | 49,480 |
| July | 1,520,000 | 720,000 | 277,200 | 58,700 |
| August | 1,650,000 | 740,000 | 287,500 | 52,750 |
| September | 1,800,000 | 770,000 | 292,700 | 57,650 |
| October | 1,400,000 | 770,000 | 292,700 | 57,650 |
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Maame TorTor borrows GH¢3,000.00 and agrees to pay interest quarterly at an annual rate of 8%. At the same time, she sets up a sinking fund in order to repay the loan at the end of 5 years. The sinking fund earns interest at the rate of 6% compounded semi-annually.
Required:
Determine the size of each semi-annual sinking fund deposit. (5 marks)
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One of the most important applications of annuities is the repayment of interest-bearing debts. These debts can be paid by making periodic deposits into a sinking fund, which is used at a future date to pay the principal of the debt, or by making periodic payments that cover the outstanding interest and the principal. This second method is called amortization.
Required:
i) Explain the term annuities as used in the statement above. (2 marks)
ii) What is a sinking fund? (2 marks)
iii) When is a loan with a fixed rate of interest said to be amortized? (1 mark)
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Morontuo Plc deals in electrical and other household appliances. It has a fleet of vehicles used in the distribution of these goods. The company is preparing its financial statements for the year ended 31 December 2021. Below is the trial balance for the period:
Additional Information:
i) The company repairs goods returned by customers for minor or major defects. It estimates that 25% of goods sold would have minor defects and 15% would have major defects. Estimated repairs cost for minor and major defects is GH¢8 million and GH¢2 million respectively. This effect has not been incorporated in the trial balance.
ii) Morontuo rents some of its vehicles and routinely sells them after some time. Vehicles X and Y (GH¢3.5 million and GH¢2 million respectively) used for rental services were acquired on 1 January 2021. Vehicle Y was sold on 1 December 2021 for GH¢1.88 million, which remains unpaid. The effects of the decision to sell the vehicles have not been incorporated.
iii) Suspense account represents interest and principal payments on a loan from Alpha Bank contracted on 1 July 2021. The loan is repayable in monthly instalments of GH¢1 million over 3 years, with 24% annual interest.
iv) Inventory includes slow-moving finished goods costing GH¢15 million. These were sold at 98% of their carrying amounts in January 2022.
v) Current tax for the year is estimated at GH¢15.8 million.
Required:
Prepare the Statement of Profit or Loss and Other Comprehensive Income for the year ended 31 December 2021 and the Statement of Financial Position as at that date in accordance with IFRS. Include all relevant workings.
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a. Dinpa Supermarket is considering acquiring a loan of GH₵300,000 from Abrempong Bank Ltd. The loan is payable in five equal annual installments at an interest rate of 25%. Dinpa Ltd has consulted you to determine their annual repayment amount and the interest thereon.
Required:
i. Prepare a repayment schedule for Dinpa indicating clearly the interest payment and the principal repayment. (8 marks)
ii. State THREE (3) advantages of a term loan over an overdraft facility. (3 marks)
Find Related Questions by Tags, levels, etc.
Find Related Questions by Tags, levels, etc.
a. If N250,000 is invested in an account that earns 4% per year compound interest, what is the:
i. value of the investment after 5 years? (3 Marks)
ii. total interest earned? (2 Marks)
b. When it was apparent that your parents could not afford to finance your university education, you sought and obtained a 4-year loan of N250,000.00 from Education Bank Limited. The bank imposed a simple interest rate of 7½%.
i. How much do you need to pay off the bank now
(4 years after) that you are through with your study?
(7 Marks)
ii. If you decide to be paying N25,000 every month from now and the bank agreed to reduce the interest rate to 1% per month on the unpaid balance at the beginning of the month, how much additional total interest will be paid? (8 Marks)
Find Related Questions by Tags, levels, etc.
Find Related Questions by Tags, levels, etc.
ABGL that the loan will be paid within the period specified.
Required:
i) In reference to the IFAC suggested model for dealing with ethical conflicts and using your judgement, explain how you will undertake this assignment with integrity. (5 marks)
ii) Assess the impact of transaction risk on the ability of GGOH to repay its loan, with relevant calculations. (5 marks)
Find Related Questions by Tags, levels, etc.
Find Related Questions by Tags, levels, etc.
Breakable Limited is preparing for the last half of the year and you, as the cost accountant, have been requested to prepare the cash budget for the third quarter of the year. The following information were available:
| Month | Sales | Net Salaries | Expenses | Salary Deductions |
|---|---|---|---|---|
| April | 850,000 | 430,000 | 210,700 | 39,400 |
| May | 900,000 | 500,000 | 221,500 | 48,400 |
| June | 1,250,000 | 650,000 | 297,500 | 49,480 |
| July | 1,520,000 | 720,000 | 277,200 | 58,700 |
| August | 1,650,000 | 740,000 | 287,500 | 52,750 |
| September | 1,800,000 | 770,000 | 292,700 | 57,650 |
| October | 1,400,000 | 770,000 | 292,700 | 57,650 |
Find Related Questions by Tags, levels, etc.
Maame TorTor borrows GH¢3,000.00 and agrees to pay interest quarterly at an annual rate of 8%. At the same time, she sets up a sinking fund in order to repay the loan at the end of 5 years. The sinking fund earns interest at the rate of 6% compounded semi-annually.
Required:
Determine the size of each semi-annual sinking fund deposit. (5 marks)
Find Related Questions by Tags, levels, etc.
One of the most important applications of annuities is the repayment of interest-bearing debts. These debts can be paid by making periodic deposits into a sinking fund, which is used at a future date to pay the principal of the debt, or by making periodic payments that cover the outstanding interest and the principal. This second method is called amortization.
Required:
i) Explain the term annuities as used in the statement above. (2 marks)
ii) What is a sinking fund? (2 marks)
iii) When is a loan with a fixed rate of interest said to be amortized? (1 mark)
Find Related Questions by Tags, levels, etc.
Morontuo Plc deals in electrical and other household appliances. It has a fleet of vehicles used in the distribution of these goods. The company is preparing its financial statements for the year ended 31 December 2021. Below is the trial balance for the period:
Additional Information:
i) The company repairs goods returned by customers for minor or major defects. It estimates that 25% of goods sold would have minor defects and 15% would have major defects. Estimated repairs cost for minor and major defects is GH¢8 million and GH¢2 million respectively. This effect has not been incorporated in the trial balance.
ii) Morontuo rents some of its vehicles and routinely sells them after some time. Vehicles X and Y (GH¢3.5 million and GH¢2 million respectively) used for rental services were acquired on 1 January 2021. Vehicle Y was sold on 1 December 2021 for GH¢1.88 million, which remains unpaid. The effects of the decision to sell the vehicles have not been incorporated.
iii) Suspense account represents interest and principal payments on a loan from Alpha Bank contracted on 1 July 2021. The loan is repayable in monthly instalments of GH¢1 million over 3 years, with 24% annual interest.
iv) Inventory includes slow-moving finished goods costing GH¢15 million. These were sold at 98% of their carrying amounts in January 2022.
v) Current tax for the year is estimated at GH¢15.8 million.
Required:
Prepare the Statement of Profit or Loss and Other Comprehensive Income for the year ended 31 December 2021 and the Statement of Financial Position as at that date in accordance with IFRS. Include all relevant workings.
Find Related Questions by Tags, levels, etc.
a. Dinpa Supermarket is considering acquiring a loan of GH₵300,000 from Abrempong Bank Ltd. The loan is payable in five equal annual installments at an interest rate of 25%. Dinpa Ltd has consulted you to determine their annual repayment amount and the interest thereon.
Required:
i. Prepare a repayment schedule for Dinpa indicating clearly the interest payment and the principal repayment. (8 marks)
ii. State THREE (3) advantages of a term loan over an overdraft facility. (3 marks)
Find Related Questions by Tags, levels, etc.
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