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Ksju [112]
4 years ago
14

A company issues 5%, 8-year bonds with a face amount of $70,000 for $74,752 on January 1, 2021. The market interest rate for bon

ds of similar risk and maturity is 4%. Interest is paid semiannually on June 30 and December 31. Required: 1. & 2. Record the bond issue and first interest payment on June 30, 2021. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field. Do not round intermediate calculations. Round your answers to the nearest dollar amount.)
Business
1 answer:
Bezzdna [24]4 years ago
4 0

Answer:

January 1, 2021

Dr. Cash                  $74,752

Cr. Bond Payable   $70,000

Cr. Bond Premium $4,752

June 30, 2021

Dr. Interest Expense   $1,495

Dr. Premium on Bond $255

Cr. Cash                       $1,750

Explanation:

The bond is issued on premium when the issuance price of the bond is higher than the face value of the bond. This premium value is recorded and amortized over the the bonds life to maturity.

Premium = Issuance value - Face value = $74,752 - $70,000 = $4,752

Interest Payment = $70,000 x 5% = $3,500

Premium Amortisation = $3,500 - ( $74,752 x 4% ) = $510

Interest Expense = $3,500 - 5510 = $2,990

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True or false: The many legal barriers in place around the world makes it difficult to buy securities from foreign companies.
Margarita [4]

Answer:

false

Explanation:

thanks to expanded communications and the relaxation of many legal barriers, investors can buy securities from companies anywhere in the world.

6 0
2 years ago
Economists assume that individual decisions will be determined by the output or production costs they create. the output or prod
Igoryamba

Answer:

the trade-offs they creates.

Explanation:

Trade-off is the opportunity cost of taking a particular decision

Opportunity cost of the next best option forgone when one alternative is chosen over other alternatives

For example, if there is a worker who values an hour of leisure at $10 and he is paid $20 per hour. If he has to choose between leisure and working. He would choose to work because the opportunity cost of not working (10) is lower when compared to the opportunity cost of leisure ($20)

7 0
3 years ago
Bigham Corporation, an accrual basis calendar year taxpayer, sells its services under 12- and 24-month contracts. The corporatio
Andreas93 [3]

Answer:

12 months

2020 $22,400

2021 $22,400

24 months

2020 $22,400

2021 $44,800

Explanation:

Calculation to Determine the income to be recognized in taxable income in 2020 and 2021.

Length of Contract

12 months

2020 Income=$44,800 * 6/12=$22,400

2021 Income=$44,800 * 6/12=$22,400

24 months

2020 Income=$89,600 *6/24=$22,400

2021 Income =$89,600 *12/24=$44,800

Therefore the income to be recognized in taxable income in 2020 and 2021 will be:

12 months

2020 $22,400

2021 $22,400

24 months

2020 $22,400

2021 $44,800

6 0
3 years ago
Professional Properties is considering remodeling the office building it leases to Heartland Insurance. The remodeling costs are
ratelena [41]

Answer:

$119,666

Explanation:

The benefit of remodelling can be calculated using the net present value.

The net present value is the present value of after tax cash flows minus the cost of an investment.

The net present value can be calculated using a financial calculator.

Cash flow for year 0 =  $-2.8 million

Cash flow each year from year one to year five = $820,000

I = 12.5%

NPV = $119,666

The benefit of the renovation exceeds its cost so the renovation should be carried out.

I hope my answer helps you.

8 0
4 years ago
The likelihood that a decision maker will ever receive a payoff precisely equal to the EMV when making any one decision is: a. L
djyliett [7]

Answer: low (near 0%)

Explanation:

The expected monetary value(EMV) simply refers to the amount of money that an economic agent can expect to make based on a particular decision that's made.

It should be noted that the likelihood that a decision maker will be able to receive a payoff that is exactly as thesame as the EMV when a decision is being made will be near to zero as it's very low that it'll happen.

4 0
3 years ago
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