Q=Sullivan handbags marks up their bags at 45% of the selling price. Pat Sullivan saw a bag at a trade show that she would sell to her customers for $85. What is the most she could pay for the bag and still retain the 45% markup of the selling price?
P=selling price
C=cost of product
R=percentage markup
P=C(1+r)
85=C(1+45%/100=1.45)
C=85/1.45=58.62
Check back
58.62*45%=26.379=26.38
58.62+26.38=85
Answer: Most she could pay for the bag and still retain markup of 45% is: $58.62
6.
Q=Jeff Jones earns $1,200 per week. He is married and claims four (4) withholding allowances. The FICA rate is as follows: Social Security rate is 6.2% on $97,500; Medicare rate is 1.45%. To date his cumulative wages are $6,000. Each pay check, his employer also deducts $42.50 for the health Insurance. What is his net pay? (Calculate FIT by percentage method).
Gross earnings $1,200 weekly
Total deductions = $42.50 Health insurance
+1.45% of weekly salary=1.45%=0.0145*1,200=17.40
+6.2%=0.062X1200=74.40 Social Security
=42.50+17.40+74.40=$134.30
FIT = $17.40+74.40*2=$183.60
Answer: Net pay = $1,200-$134.30=$1,065.70.
8.
Q=On May 12, Bob Campbell accepted a $5,000 note in granting a time extension of a bill of goods bought by Rick Ween. Terms of the note were 8% for 120 days. On July 8, Bob needed a raise in cash and discounted the note at Rick’s bank at a discount rate of 9%. Calculate Bob’s proceeds. Using exact date table;
May 12 to July 8 =57 days
Note amount = $5,000
Period =120 days
Rate = 9% =0.09
5000*57*0.09
360 = $71.2500
Total proceeds = Investment + total interest
=$ 5000+$71.25=$5,071.25
Answer: Bob’s proceeds=$5,071.25.
10.
Q= Roger Fox made deposits of $900 semiannually to Reel bank, which pays 6% interest compounded semiannually. After seven years, Roger made no more deposits. What would be the balance in the account eight years later from the last deposit? Using rate from compound interest chart @3%.
900(1.03+1.0609+1.0927+1.1255+1.1593+1.1941+1.2299+1.2668+1.3048+1.3439+1.3842+1.4258+1.4685+1.5126) =$15,953.22 total after 14 periods =$15,953.22
total after 8 years or 16 periods = 15,953.22*1.6047=$25,600.132 Answer:$25,600.13.
14.
Q= A truck costing $25,000 with a residual value of $5,000 was purchased by Rim Company. Truck’s estimated life is 10 years. At the end of year 2, what is the book value using the declining – balance method? Assume a depreciation rate of twice the straight – line method. Straight line method
=- (cost-residual value) = 25000-5000.
10 10
Depreciation per year = 2000
Depreciation after year 2 = 2000+2000=$4000
Book value at year 2 = $25,000-4000=$21,000
Answer: $21,000
16.
Q= Pete’s Warehouse has a market value of $5,000,000. The property in Pete’s area is assessed at 40% of the market value. The tax rate is $105.10 per $1,999 of assessed value. What is Pete’s property tax?
$5,000,000*40%=$2,000,000 assessed value
105.10*1.999=210094.90
$2,000,000/1999*105.10=105,152.576
Answer:Property tax =$ 105,152.58.
17.
Q= Jim Smith, who lives in Territory 5 carries 10/20/5 compulsory liability insurance along with optional collision that has a $200 deductible. Jim was at fault in an accident that caused $1,800 damage to the other auto and $600 damage to his own. Also, the courts awarded $13,000 and $8,000 respectively, to the two passengers in the other car for personal injuries. How much does the insurance company pay, and what is Jim’s share of responsibility?
18. –
Q= Jeff Sellers bought 200 shares of Radio Shack stock at $22.35. Eight months later, he sold the stock at $31.76. Assuming a 2% charge, what is the bottom line for Jeff? Shares bought = 200
Unit cost per share = $22.35
Cost = $200*22.35=$4,470
8 months later sale price = 200*$31.76= $6,352
2%charge =$ 6352*2%= $127.040
bottom line = 6,352-$127.04-cash price=$6,352-127.04-4,470=$1,754.96 Answer: $1,754.96
20.
Q= The property at Al’s garage is worth $300,000. Al has fire insurance policy of $180,000 that contains an 80% co-insurance clause. What will the insurance company pay on a fire that causes $210,000 damage? If Al met the co-insurance requirement, how much would the insurance company have to pay?
24.
Q= Mobilee Oil Company accepted a $10,000, 120 day note, dated March 3 at 8.5% to settle a past due accounts receivable. Mobilee Oil discounted the note to raise cash on May 10 at a discounted rate of 9%. What proceeds did Mobilee Oil receive? Note=$10,000.
Rate 8.5%
Period March 3-May 10
Using exact days in year table= 130-62=68 days
Note discounted to raise cash May 10 @ 9%=before the 120 day period 9%=0.09
10,000*0.0900*68 = $170
360
Proceeds received = $10,000+$170
ANSWER: $10,170.