Haystack, Inc

question 41

Multiple Choice

Haystack, Inc. manufactures machinery used in the mining industry. On January 2, 2015 it leased equipment with a cost of $320,000 to Silver Point Co. The 5-year lease calls for a 10% down payment and equal annual payments at the end of each year. The equipment has an expected useful life of 5 years. If the selling price of the equipment is $520,000, and the rate implicit in the lease is 8%, what are the equal annual payments?

• A) $117,214
• B) $108,530
• C) $121,315
• D) $130,237

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Definitions:

Remittance Advice

A document sent by a customer to a seller, indicating that an invoice has been paid.

Running Cash Balance

The current amount of cash available in an account, changing with each transaction.

Company Check

A check written from a company's account, representing an official payment by the company to another party.

Deposits in Transit

Funds that have been deposited by a company but have not yet been recorded by the bank.