Saturday, September 3, 2011

Contest #11

Adam is an accountant. His client wants him to use this depreciation schedule for a certain asset:

In the first year, the asset is depreciated 20% from its original price. In subsequent years, the asset is depreciated by 8% of its book value.

What is the book value of a $109,000 asset after its fourth year?

Solution to Contest #10

Bill is a sales representative for a farm equipment dealership. He gets paid $3,000 a month plus one half of a percent of tractor sales over $150,000 a month. Last month, Bill sold eight tractors for a total of $702,000. How much did the dealership pay Bill for the month?

Bill's base salary is $3,000 per month, and he earns this amount regardless of how much he sells. On the first $150,000 of sales, Bill earns no commission, but commission starts accumulating after this amount. All this can be translated into this equation:

Bill's monthly pay = $3,000 + ($702,000 - $150,000) x 0.5 / 100 = $5,760.