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sashaice [31]
3 years ago
5

In a discount interest loan, you pay the interest payment up front. For example, if a 1-year loan is stated as $20,000 and the i

nterest rate is 10%, the borrower "pays" 0.10 × $20,000 = $2,000 immediately, thereby receiving net funds of $18,000 (=$20,000-$2,000) and repaying $20,000 in a year. "What is the implied rate on this loan?"a. 10%b. 9.5%c. 11.1%d. 20%
Business
1 answer:
Vikki [24]3 years ago
8 0

Answer:

c. 11.1%

Explanation:

The formula to compute the implied rate is shown below:

Future Value  = Present Value ×  (1 + Interest rate)

$20,000 = $18,000 × (1 + Interest rate)

$20,000 = $18,000 ×  (1 + Interest rate)

So,  (1 + Interest rate) = 1.1111

So, the interest rate is

= 1.1111 - 1

= 0.1111 or 11.1%

We simply applied the above formula to determine the implied rate on this loan

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Answer:

the action or process of forming a concept or idea of something in your mind

Explanation:

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3 years ago
Requirements
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Journal entries:

Nov. 1, common stocks issued

Dr Cash 41,000

    Cr Common stock 41,000

Nov. 4, office supplies and furniture purchased

Dr Office supplies 1,200

Dr Furniture 2,300

    Cr Accounts payable 3,500

Nov. 6, service revenue

Dr Cash 2,100

    Cr Service revenue 2,100

Nov. 7, land purchased

Dr Land 27,000

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Nov. 10, service revenue

Dr Accounts receivable 800

    Cr Service revenue 800

Nov. 14, payment of furniture

Dr Accounts payable 2,300

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Nov. 15, wages expense

Dr Wages expense 1,470

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Nov. 17, collection of accounts receivable

Dr Cash 500

    Cr Accounts receivable 500

Nov. 20, service revenue

Dr Accounts receivable 680

    Cr Service revenue 680

Nov. 25, received cash in advance

Dr Cash 1,900

    Cr Unearned revenue 1,900

Nov. 28, service revenue

Dr Cash 3,100

    Cr Service revenue 3,100

Nov. 29, purchase prepaid insurance

Dr Prepaid insurance 840

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Nov. 30, wages expense

Dr Wages expense 1,470

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Nov. 30, rent expense

Dr Rent expense 650

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Nov. 30, utilities expense

Dr Utilities expense 650

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Nov. 30, dividends distributed

Dr Retained earnings 2,800

    Cr Dividends payable 2,800

Dr Dividends payable 2,800

    Cr Cash 2,800

Since there is not enough space here, I prepared an excel spreadsheet with the T-accounts.

In order to prepare a trial balance sheet, I must first prepare an Income Statement:

Service revenue              $6,680

Wages expense             ($2,940)

Rent expense                   ($650)

<u>Utilities expense              ($650)</u>

Net income:                    $2,440

Retained earnings = $2,440 (net income) - $2,800 (dividends) = ($360)

        STEWART CO.

     BALANCE SHEET

       NOV. 30, 2018

Assets:

Cash $12,070

Accounts receivable $980

Prepaid insurance $840

Office supplies $1,200

Furniture $2,300

Land $27,000

Total assets: $44,390

Liabilities and stockholders' Equity:

Accounts payable $1,850

Unearned revenue $1,900

Common stock $41,000

Retained earnings ($360)

Total liabilities and stockholders' equity: $44,390

Download pdf
8 0
3 years ago
A manufacturing company prepays its insurance coverage for a three-year period. The premium for the three years is $2,700 and is
jasenka [17]

Answer:

$720 and $180

Explanation:

According to the scenario, computation of the given data are as follows:

Premium for 3 years = $2,700

So, premium for 1 year = $2,700 ÷ 3 = $900 per year

Manufacturing operation percentage = 80%

Selling and administrative operation percentage = 20%

So, Premium for manufacturing operation = $900 × 80% = $720

And Premium for selling and admin operation = $900 × 20% = $180

6 0
3 years ago
Parents can reduce their taxes by:
shusha [124]

Parents can reduce their taxes by using a child care tax credit. The government gives parents tax credit for each child that they have. Unlike tax deduction and exemption, tax credit can be able to reduce more in the parents’ tax bill. Tax deduction just tries to lower the taxable income and not a reduction in other areas. 

8 0
3 years ago
Read 2 more answers
Given the following account balances at year end, compute the total intangible assets on the balance sheet of Anisha Enterprises
Rina8888 [55]

Answer:

c. $5,500,000

Explanation:

Intangible assets are those assets which does not have any physical existence and therefore it's not possible to touch, it means these assets are not physical in nature such as Trademarks, which is an intellectual property that identifies product or services of a company.

Goodwill, is the value of a company because of the reputation or product it sells, the value of the company it's higher than the total value of its assets.

3 0
3 years ago
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