1) On February 5, Textron Stores purchased a van that cost $35,000. The firm made a
down payment of $5,000 cash and signed a long-term note payable for the balance.
Show the general journal entry to record this transaction.
2) The difference between the actual sales and the flexible budget sales is called the
______________________ variance.
3) The term __________________ refers to a liability that promises a future outflow of
resources.
4) A fixed budget is also called a _____________ budget.
5) A company is considering two alternative investment opportunities, each of which
requires an initial cash outlay of $110,000. The expected net cash flows from the two
projects follow:
Required:
(1) Based on a comparison of their net present values, and assuming the same discount
rate (greater than zero) is required for both projects, which project is the better
investment? (Check one answer.)
________________ Project A
________________ Project Z
________________ The projects are equally desirable
(2) Use the table values below to find the net present value of the cash flows associated
with Project A, discounted at 12%:
6) Alberts and Bartel are partners. On October 1, Alberts’ capital balance is $75,000,
and Bartel’s capital balance is $125,000. With the partnership’s approval, Bartel sells of
his partnership interest to Camero for $70,000. Prepare the journal entry to record this
transaction in the partnership records.