PLEASE EXPLAIN HOW THE ANSWERS CAME TO BE..! 20. During the current year, Jacob,

Question

PLEASE EXPLAIN HOW THE ANSWERS CAME TO BE..!

20. During the current year, Jacob, Alicia and Shawn, who are partners in the JAS Company, had average capital balances of $57,000, $49,000 and $64,000, respectively. The partners share profits and losses by allowing a 12% return on average capital, with any remaining income or loss divided in a ratio of 5:3:2. If the company's income for the current year was $73,800, Shawn's capital account would increase by:
a. $14,760
b. $18,360
c. $22,440
d. $27,784

21. Kidron Corporation has $5,000,000 in debt and $15,000,000 in total assets. If the debt carries an interest rate of 12% and the stockholders are require an 18% rate of return, Kidron

Explanation / Answer

20)b)$18,360

The profit for the firm after paying return on capital=$73600-[12%of($57,000+ $49,000+ $64,000)

=$(73600-20400)

=$53400

Hence shawn Share of profit=$53400*2/10

=$10640

And his return of capital=$64000*12%

=$7680

Hence total increase=$7680+10680

=$18360

21)c)16%

WACC=[($5000000*12%+)($10000000*18%)]/15000000

=16%

22)b. Owes on lump sum notes signed in prior years

Since this is the most appropriate answer.
The fact cannot be ascertained whether the accounts are falsyfied

if the bonds were issued at premiuim than also it would not increase the liability

There would have been a mention if preferred stock was issued

And we cannot comment on any additional financing

Hence this is the most appropriate answer

23)d. $914,286

$64000 represents 7% return on the investment made

Hence 7% of Investment=$64000

Hence Investment=64000/7%

or Investment=$914285.7 or $914286

24)c. $82,100

The following should be included in the cost of machine=Purchase price+Freight+Installation charges

=$(75000+2250+4850)

=$82100

Note:Since the insurance charges are annual in nature hence should not be included.Only one time insurance are to be included.
Repair are in the nature of revenue expense hence not be included

Installation are assumed to be necessary for the initialization of machine hence included

25)a. Amount cannot be determined without additional information

It is due to the fact that in the question it is mentioned that the land would be sold after a period of 20 years,
If this line was not given we have assumed that the land has no salvage value and hence depreciation would have been $1500000/20=$75000.
hence additional information is required

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