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ra1l [238]
2 years ago
8

On January 1 of this year, Avaya Corporation issued bonds with a face value of $ 2,000,000 and a coupon rate of 6 percent. The b

onds mature in five years and pay interest annually on December 31. When the bonds were sold, the annual market rate of interest was 7 percent. Avaya uses the effective-interest amortization method.
Required:
(b) What amount of interest expense should be recorded on December 31 of this year? December 31 of next year?
Business
1 answer:
ra1l [238]2 years ago
6 0

Bonds Payable amount reflected in balance sheet = $2192890

Face Value = $2000000

Coupon Rate = 10%

Maturity Period = 10 years

Number of compounding = 2

Interest = $2000000 * 10% * 6/12 = $100000

Period = 2 * 10 = 20

Maturity Value = Face Value = $2000000

Market Interest Rate semiannually = 0.085 / 2 = 0.0425

Market Value = Present Value of Future Cash Flows

= PV of Interest + PV of maturity value

= (Interest * PVAF (4.25%, 20)) + (Maturity Value * PVIF (4.25%, 20))

= (100000 * 13.29437) + (2000000 * 0.434989)

= $1329437 + $869978

= $2199415

Since market value is greater than face value, we can say that bonds are issued at a premium.

Premium = $2199415 - $2000000 = $199415

Journal Entry to record the issuance of bonds:

Cash a/c                                               Dr          $2199415

     To Bonds Payable a/c                                 $2000000                            

     To Premium on the issue of bonds            $199415

Bonds Payable amount is a liability account that carries the quantity owed to bondholders by way of the company. This account usually seems in the lengthy-term liabilities section of the stability sheet, on account that bonds usually mature in more than one year.

Learn more about Bonds Payable amount here: brainly.com/question/7158291

#SPJ4

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Marla made a spreadsheet in Excel showing the projected costs for a concert she was putting on. What can Marla enter into cell A
aliina [53]

Marla will use the formula to find the updated cost.

=A2-A4-A6-A8-A10

Because A2 is budget and A4, A6, A8 and A10 all are expenses. So she has to budget-all expenses.

So option A=A2-A4-A6-A8-A10 is true.

<h3>What is a spreadsheet?</h3>

A spreadsheet is a computer program that can capture, display and manipulate data arranged in rows and columns. Spreadsheets are one of the most popular tools available with personal computers.

A single spreadsheet can be used as a worksheet to compile data for a purpose, or multiple sheets can be combined to create an entire workbook.

Learn more about spreadsheet here,

brainly.com/question/10509036

#SPJ1

4 0
2 years ago
The CEO and his top managers have asked themselves two important​ questions: a. do customers value what the company is​ providin
Doss [256]

Answer:

The correct answer is (D) business model

good luck

3 0
3 years ago
Sheffield Company reports the following operating results for the month of August: sales $315,000 (units 5,000); variable costs
frosja888 [35]

Answer:

1. the net income if selling price increased by 10% would be = $59,700

Net income increased by $31,500.

Explanation:

Given,

Sales = $315,000

Variable costs = $216,000

Fixed costs = $70,800

No. of units = 5,000

                                   Sheffield Company

             Income Statement (Contribution Margin Format)

Particulars                                                $

Sales                                                    315,000

Less: Variable expenses                  <u> (216,000)</u>

Contribution Margin                             99,000

Less: Fixed costs                         <u>        (70,800)</u>

Net Income                                          28,200

Since the selling price increased by 10% and no change in variable costs and volume, therefore, we can get -

<em>Sales = $315,000 x (1 + 0.10) = $346,500</em>

In this case, the net income will be as follows:

Sales                          = $346,500

<u>Less: Variable Costs =  (216,000)</u>

Contribution Margin  =   130,500

<u>Less: Fixed Costs      =   (70,800)</u>

Net Income                =   59,700

5 0
3 years ago
Stock R has a beta of 2.5, Stock S has a beta of 0.55, the required return on an average stock is 13%, and the risk-free rate of
avanturin [10]

Answer:

19.50%

Explanation:

In this question, we apply the Capital Asset Pricing Model (CAPM) formula which is shown below

Expected rate of return = Risk-free rate of return + Beta × (Market rate of return - Risk-free rate of return)

For Stock R

= 3% + 2.5 × (13% - 3%)

= 3% + 2.5 × 10%

= 3% + 25%

= 28.00%

For Stock S

= 3% + 0.55 × (13% - 3%)

= 3% + 0.55 × 10%

= 3% + 5.5%

= 8.50%

The difference would be

= 28% - 8.5%

= 19.50%

3 0
3 years ago
A builder only has a few properties available in a development. He feels that it is no longer necessary to have his onsite sales
USPshnik [31]

Answer:

An open listing

Explanation:

In real estate an open listing is one in which the owner of a property contracts more than one agent to sell the property. The agent with the winning bid will eventually sell the property.

The opposite of this is the exclusive listing where the property owner only engages one agent to sell the property.

In the given scenario the builder feels that it is no longer necessary to have his onsite sales agent market these properties and decides to list the properties with a local brokerage firm. Thereby allowing all of the local firms to market these properties.

This is an open listing

5 0
3 years ago
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