Answer:
Option A is correct.
The required rate of return for the bond that PUMP managers are considering is <u>1.46%</u>
Explanation:
Required rate of return for the bond that PUMP managers are considering is 1.46%. Because, currently, the yield on a U.S. Treasury bond with about 10 years to maturity is 1.46%. same type of bond yielding is 1.46%.
Answer:
If compounded weekly =
No of weeks in a year=52
N= 52
EAR= (1+I/N)^N -1
=(1+0.12/52)^52 -1
=0.127=12.7% EAR
If compounded semiannually
N= 2
EAR= (1+0.13/2)^2 -1
=13.42%
It is better to borrow at 12% compounded weekly as the EAR is lower than 13% compounded semi annually.
Explanation:
Public Sector: the part of an economy that is controlled by the government.
( The government controls the income, and everything part of a business)
Private Sector: the part of the national economy that is not under direct government control.
( Sometimes referred to as " a citizen run business" in which a citizen makes all the choices and decisions for what is best for their business)
Answer:
<u>January 1, 2017</u>
Debit: Accounts Receivable $2800
Credit: Deferred Revenue[Wiring Base] - $1120
Credit: Deferred Revenue[Shelving Unit] - $1680
Narration: Contract Detail and invoicing of the client.
<u>February 5, 2017</u>
Debit Deferred Revenue[Wiring Base] - $1120
Credit Revenue Account - [Wiring Base] - $1120
Narration: Revenue recognition of Wiring Base delivered to customer
<u>February 25, 2017</u>
Debit Deferred Revenue[Shelving Unit]- $1680
Credit Revenue Account - [Shelving Unit] - $1680
Narration: Revenue recognition of Shelf delivered to customer
<u>February 25, 2017</u>
Debit: Bank - $2800
Credit: Accounts Receivable - $2800
Narration: Payment received in settlement of contract fully delivered
Explanation:
The question is an example of a Performance Contract.
A Performance Contract is an agreement with a customer by a vendor to discharge a service or provide goods that are distinct from each other. The accounting for this obligations will therefore be recorded and recognized separately.
It is also important to note that the services or goods must be separately identifiable and the customer must be able to derive from each goods on individually or jointly.
The rule is to
- Recognize the contract and invoice amount with the customer as Deferred Income.
- Identify the distinct obligations and services to be provided.
- Identify the transaction amount for each service or good.
- As each obligation is met, the revenue is finally recognized and transferred from Deferred income.
