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3 years ago

The following information relates to last year's operations at the Legumes Division of Gervani Corporation:

Business

1 answer:

yanalaym [24]3 years ago

7 0

Answer:

The Legume Division's net operating income last year was d. $45,000

Explanation:

Turnover (on operating assets) = Total Sales/ Operating assets

From the formula,

Operating assets = Total Sales/Turnover (on operating assets) = $900,000/3 = $300,000

Return on investment (ROI) is calculated by using following formula:

ROI = Net income/Total investment

Net Income = ROI x Total investment

At the Legumes Division of Gervani Corporation, Total investment = Operating assets = $300,000

Net Income = 15% x $300,000 = $45,000

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Answer:

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Dr Interest expense(bal fig) $7,840

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Dr Interest expense(bal fig) $7,840

Dr Premium on bonds $560

Cr Cash $8400

The June 30 and 31 December Year 2 interest on the bonds are recorded thus:

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Cr Cash $8400

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Dr Premium on bonds $560

Cr Cash $8400

Explanation:

The amount realized from the bond is calculated thus:

$280,000*102%=$285,600

Premium on bond=Bonds proceeds-par value

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