cash flow received by Lydia Nickels, Inc., Intermediate Accounting homework

Jan 18th, 2016
Price: $5 USD

Question description

1.) Q: A cash flow of $250,000 may be received by Lydia Nickels, Inc. in one year, two years or three years, with probabilities of 25%, 60% and 35% respectively. The rate of interest on default risk-free investments is 6%. What is the expected present value of Lydia Nickel's cash flow (in whole dollars)?

2.) Toro, Inc. paid $8,280 to renew its only insurance policy for three years on March 1, year 1, the effective date of the policy. At March 31, year 1, Toro's unadjusted trial balance showed a balance of $345 for prepaid insurance and $8,280 for insurance expense. What amounts should be reported for prepaid insurance and insurance expense in Toro's financial statements for the three months ended March 31, year 1?

3.) Jones, a consultant, keeps her accounting records on a cash basis. During year 2, Jones collected $140,000 in fees from clients. At December 31, year 1, Jones had account receivable of $24,000. At December 31, year 2 Jones had account receivable of $47,000 and unearned fees of $4,200. On an accrual basis, what was the ward's service revenue for year 2?

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