1. What are interest groups, and what roles (good and bad ) do they play in the political process?
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Answer:
<u>Journal entries:</u>
cash 493,574.88 debit
bonds payable 435,000.00 credit
premium on bp 58,574.88 credit
--to record issuance--
Interest expense 19743
Amortization 6357
cash 26100
--to record Dec 31st, 2020--
Interest expense 19488.72
Amortization 6611.28
cash 26100
--to record June 30th, 2021--
bonds payable 130,500.00 debit
premium on bp 13,681.98 debit
interest expense 17,400.00 debit
gain on redemption 25,081.98 credit
cash 136,500.00 credit
--to record redemption--
premium on BP 4,813.04 debit
interest expense 13,456.96 debit
cash 18,270 credit
-- to record December 31st, 2021--
Explanation:
First, we solve for the proceeds from the bonds payable:
C 26,100 (435,000 x 12% / 2)
time 8 ( 4 years x 2)
yield to maturity 0.04 ( 8% / 2)
PV $175,724.6412
Maturity 435,000.00
time 8.00
rate 0.04
PV 317,850.24
PV c $175,724.6412
PV m $317,850.2392
Total $493,574.8804
We now build the amortization schedule.
We take this value, we multiply by the interest rate and then, solve for amortization and ending carrying value.
<u>To record the redemption:</u>
accrued interest:
435,000 x 0.12 x 4/12 (months from June to oct) = 17,400
premium:
480,606.6 - 435,000 = 45,606.6
proportional of premium:
45,606 / 435,000 x 130,500 = 13.681,98
we now solve for the gain/loss on redemption:
130,500 + 13,681.98 + 17,400 = 161.581,9 value redeem
for cash 136,500
gain on redemption 25.081,98
bonds payable 130,500.00 debit
premium on bp 13,681.98 debit
interest expense 17,400.00 debit
gain on redemption 25,081.98 credit
cash 136,500.00 credit
Now, we solve for Dec 31st, 2021 entry.
bonds payable: 435,000 - 130,500 = 304,500
premium: 45,606 - 13,681.98 = 31.924,02
interest expense:
(304,500 + 31,924.02) x 0.04 = 13,456.96
cash outlay:
304,500 x 0.06 = 18,270
amortization 18,270 - 13,456.96 = 4,813.04
The strategies the companies are following in each case are;
1)Cost leadership strategy
2)Product differentiation strategy
3) Product differentiation strategy
4) Cost leadership strategy
<h3>What Is Cost Leadership Strategy? </h3>Cost leadership is known to be a kind of a business-level methods that is often used by people or by companies who are interested to gain a competitive advantage by acting as the lowest-cost producer of a product, service, production process, or others.
Therefore, The strategies the companies are following in each case are;
1)Cost leadership strategy
2)Product differentiation strategy
3) Product differentiation strategy
4) Cost leadership strategy
Learn more about Cost leadership strategy from
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