Answer:
1. Debit Interest Expense $7,000; debit Notes Payable $7,238; credit Cash $14,238.
Explanation:
The journal entry is shown below:
Note payable A/c Dr $7,238
Interest expense A/c Dr $7,000
To Cash A/c $14,238
(Being the first payment on the note is recorded)
The computation of the interest expense is shown below:
= Borrowed amount × rate of interest
= $100,000 × 7%
= $7,000
And, the remaining balance left is reported in the note payable account
Answer:
True
Explanation:
<em>Absorption costing is a method of costing where production units and inventories are value at the full cost per unit. Here, fixed overheads are charged to all units produced using an overhead absorption rat</em>
<em>Under the traditional absorption costing system, overhead is assigned to units produced using different bases ranging from labour hours, machine hours, e.t.c</em>
Overhead absorption rate = Estimated overhead/Estimated Activity level
Answer : True
Answer:
C) $1,455.08
Explanation:
Formula = M = [P (1 + r)^n * r] / [(1 + r)^n - 1]
Putting the figures in the formula =
$70 = P [(1 + 0.142/12)^24 * 0.142/12 ] / [(1 + 0.142/12)^24 - 1]
=> $70 = P (1.326209535) * 0.142/12 / 0.326209535
=> $70 = P * 0.0156934795 / 0.326209535
=> P = $1455.08
So, the maximum initial purchase that Carla can buy on credit = $1455.08
Answer:
a. U.S. Company should use a short forward contract to hedge currency risk.
b. $0.5931
c. A gain of $0.0456 is recognized by the company
Explanation:
a. As the company will receive settlement in Swiss francs in three months time, the currency risk is at the time of settlement receipt, Swiss francs will not be worth as much as it is expected against US dollar (or depreciated against USD). Thus, the company has to take the short position in forward contract to sell Swiss francs in three months time at predetermined rate.
b. We have F = S0 x ( 1+ USD rfr ) ^(90/365) / (1+ Swiss franc rfr) ^(90/365) = 0.5974 x 1.02^(90/365) / 1.05^(90/365) = $0.5931.
c. Value of the gain in the short position will be calculated at the time of 60-day-remaining to maturity as followed:
F at the beginning/ ( 1+ USD rfr) ^ (60/365) - Spot rate at the 60-day-remaining to maturity/ (1+ Swiss franc rfr) ^(90/365) = 0.5931/1.02^(60/365) - 0.55/1.05^(60/365) = $0.0456.
