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mezya [45]
3 years ago
8

On January 1, a company issues bonds dated January 1 with a par value of $310,000. The bonds mature in 5 years. The contract rat

e is 11%, and interest is paid semiannually on June 30 and December 31. The market rate is 10% and the bonds are sold for $321,964. The journal entry to record the first interest payment using the effective interest method of amortization is:
Business
1 answer:
Elenna [48]3 years ago
3 0

Answer:

The journal entry for the interest payment is shown below:

Explanation:

Interest Expense A/c........................Dr      $16,098

Premium on bonds payable A/c....Dr    $952

                 To Cash A/c............................Cr    $17,050

Working Note:

Interest expense = Bonds sale value × Market rate

                             = $321,964  × 5%

                            = $16,098

The market rate will be:

= 10 / 2

= 5%

Because it is paid semiannually, so rate is divided by 2.

Cash = Par value  × Contract rate

         = $310,000  × 5.5%

        = $17,050

The contract rate will be:

= 11 / 2

= 5.5%

Because it is paid semiannually, so rate is divided by 2.

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Samuelson Electronics has a required payback period of three years for all of its projects. Currently, the firm is analyzing two
WITCHER [35]

Answer:

A.) Project A only

Explanation:

Given that

For project A

Pay back = 2.9 years

Net present value = $4,200

For project B

Pay back = 3.1 years

Net present value = $26,400

Based on the above information and payback decision rule, The project A should be accepted as it it contain less period compared to the project B i.e 2.9 years to 3.1 years

Hence, the correct option is a.

5 0
3 years ago
Neal's home has been foreclosed on and sold at a Sheriff's sale. The sale brought in $500,000 and the total liabilities on the h
julsineya [31]

Neal receives the additional $75,000.

<h3>What are liabilities?</h3>
  • A liability is defined in financial accounting as the future sacrifices of economic benefits that an entity is obligated to make to other entities as a result of past transactions or other past events, the resolution of which may result in the transfer or use of assets, provision of services, or another future yielding of economic benefits.
  • A company's assets are what it owns, while its liabilities are what it owes.
  • Both are included on a firm's balance sheet, which is a financial statement that demonstrates the financial health of the company.
  • Equity, or an owner's net worth, is equal to assets with fewer liabilities

Liability Examples -

  1. Bank indebtedness Debt from a mortgage.
  2. Suppliers owe money (accounts payable) Wages are owing.
  3. Taxes are owing.
  • In the given situation Neal was the owner and so it will have the liability of $425,000 and the additional amount of $75,000.

Therefore, Neal receives the additional $75,000.

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4 0
2 years ago
Ranger Company is constructing a building. Construction began on January 1 and was completed on December 31. Weighted average ac
astra-53 [7]

Answer:

$939,220

Explanation:

6400000 +12000000 = 18400000

we have to calculate the average interest on the general borrowing

= (10% of 6400000/ 18400000) + (11% of 12000000/18400000)

= 10% x 0.3478 + 11% x 0.65217

= 0.03478 + 0.0717

= 0.10648

= 10.65%

avoidable interest = (amount borrowed x percentage) + (expenditure-amount borrowed) x 10.65%

= 3200000*12% + (8,413,333-3200000)x10.65%

= 384000 + 555219.9

= $939,219.9

≈ $939,220

5 0
3 years ago
What is one difference between a firm in a perfectly competitive industry and a firm in a monopolistically competitive industry?
____ [38]

Answer:

Letter b is correct.<em> A monopolistically competitive firm faces competition from firms producing close substitutes.</em>

Explanation:

<u>Monopolistic competition</u> is an economic situation that occurs when companies exhibit imperfect competition, that is, companies market similar but not identical products, which characterize them as substitute but not perfect substitute products.

Products may have different variables, such as quality, price and reputation in the market. The greater the degree of product differentiation, the more price control the company will have.

5 0
3 years ago
The marginal propensity to consume tells us by how much ______ changes when ______ changes. a. consumption expenditure; disposab
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The marginal propensity to consume tells us by how much consumption expenditure changes when disposable income  changes.

<h3>What is marginal propensity?</h3>

In economics, the marginal propensity to consume (MPC) is defined as the proportion of an aggregate raise in pay that a consumer spends on the consumption of goods and services, as opposed to saving it.

<h3>What is the MPC and MPS?</h3>

Key Takeaways. The marginal propensity to save (MPS) is the portion of each extra dollar of a household's income that's saved. MPC is the portion of each extra dollar of a household's income that is consumed or spent.

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3 0
2 years ago
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