Sales Cost of Sales Net Selling profit Interest income Net investment, end 1,776,558.00 2,215,063.00 1,500,000.00 65,063.00 161,505.00 Sales Cost of Sales Net Selling profit Interest income Net inestment, end 1,776,558.00 2.215,063.00 1,500,.000.00 715,063.00 161,505.00 Sales Cost of Sales Net Selling profit Interest income Net investment, end 1,776,558.00 2,092,111.00 1,500,000.00 592111.00 161,505.00 Sales Cost of Sales Net Selling profit Interest income Net investment, end 1,776,55800 2,092,111.00 1,377,058.00 592,111.00 161,505.00

Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 8MC: Grummet Company is acquiring a new wood lathe with a cash purchase price of $80,000. The Wood Master...
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20. Pizzicato Co. a dealer, leases a brand-new machineto Prestissimo, Inc. The machine is classified as
inventory in Pizzicato's books and has a carrying amount of P1,500,000. The usefullife of themachine is
5 years. The leaseterm is 4 years and the annual rent, due at the beginning of each year, is P600,000.
Pizzicato Co. incurred direct cost O P20,000 in negotiatingthe lease. The market rate of interest is 10%.
The machine reverts back to Pizzicato at the end of the leaseterm, at which timethe machine is
expectedto have aresidual value of P180,000. Pizzicato accounts forthe lease sale typelease.
Transcribed Image Text:20. Pizzicato Co. a dealer, leases a brand-new machineto Prestissimo, Inc. The machine is classified as inventory in Pizzicato's books and has a carrying amount of P1,500,000. The usefullife of themachine is 5 years. The leaseterm is 4 years and the annual rent, due at the beginning of each year, is P600,000. Pizzicato Co. incurred direct cost O P20,000 in negotiatingthe lease. The market rate of interest is 10%. The machine reverts back to Pizzicato at the end of the leaseterm, at which timethe machine is expectedto have aresidual value of P180,000. Pizzicato accounts forthe lease sale typelease.
Sales
Cost of Sales Net Selling profit Interest income Net investment, end
2,215,063.00 1,500,000.00
695,063.00
161,505.00
1,776,55&00
Sales
Cost of Sales Net Selling profit Interest income Net investment, end
1,776,558.00
715,063.00
2,215,063.00 1,500,000.00
161,505.00
Sales
Cost of Sales Net Selling profit Interest income Net investment, end
1,776,55800
2,092,111.00 1,500,000.00
592,111.00
161,505.00
d.
Sales
Cost of Sales Net Selling profit Interest income Net investment, end
1,776,55800
2,092,111.00 1,377,068.00
592,111.00
161,5C5.00
Transcribed Image Text:Sales Cost of Sales Net Selling profit Interest income Net investment, end 2,215,063.00 1,500,000.00 695,063.00 161,505.00 1,776,55&00 Sales Cost of Sales Net Selling profit Interest income Net investment, end 1,776,558.00 715,063.00 2,215,063.00 1,500,000.00 161,505.00 Sales Cost of Sales Net Selling profit Interest income Net investment, end 1,776,55800 2,092,111.00 1,500,000.00 592,111.00 161,505.00 d. Sales Cost of Sales Net Selling profit Interest income Net investment, end 1,776,55800 2,092,111.00 1,377,068.00 592,111.00 161,5C5.00
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ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College