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Ipatiy [6.2K]
3 years ago
9

On November​ 1, 2018, Arch Services issued $ 331 comma 000of eightminusyearbonds with a stated rate of 14​%at par. Interest paym

ents occur each April 30 and October 31. On December​ 31, 2018, Arch made an adjusting entry to accrue interest at yearminusend.What is the amount of Interest Expense that will be recorded on December​ 31, 2018?​ (Do not round any intermediate​ calculations, and round your final answer to the nearest​ dollar.)
Business
1 answer:
adelina 88 [10]3 years ago
5 0

Answer:

<h2>Arch Services</h2>

Interest Expense as at December 31:

Explanation:

a) Computation of Interest Expense:

Interest per annum = $331,000 x 14% = $46,340

Interest per month = $3,861.66667 ($46,340/12)

Interest for two months = $7,723 ($46,340/12) x 2

b) Interest on bonds is usually paid monthly, quarterly, semi-annually, or yearly.  In this example, the interest is payable every six months, on April 30 and October 31.  However, as the year ends on December 31, there is need to accrue interest expense for the period, in line with the accrual concept and matching principle of generally accepted accounting principles.  These require that expenses are accrued for the period for which they are incurred and matched to the revenue that they produced whether payment was made or not for them.

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Anne is a full-time student at UCLA buts works part-time as a waitress at a diner near her dormitory. She earns an hourly wage b
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In California, if the tip is included in the service charge, Anne's employer must pay taxes for them. The employer is required to pay for these taxes in California, not the employee. Even though tips are not part of an employee's wage, they are still taxable. This means that Anne must include the $51 in her AGI.

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3 years ago
A company wishes to raise $27 million by issuing 15-year semi-annual coupon bonds with face value of $1,000 and coupon rate of 6
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We first need to find out the present value of each $1,000 bond and then we can figure out how many of these bonds we require to raise $27 million

The n of payments is 15*2 because semi annual payments for 15 years so our N will be 30

The YTM is 7.70/2 because of semi annual payments = 3.85

The Face value is of 1,000 so FV= 1,000

The payments our 1000*0.066=66 divided by 2 because semi annual payments so PMT= 33

We will put these values in a financial calculator to compute the PV of a $1000 bond.

PV= 903

So now we know that the company can get $903 for each $1,000 bond as the bonds present value is 903.

Now in order to find out how many bonds need to be issued to raise 27 million we will divide 27 million by 903, as 903 is the amount we can raise by issuing a single bond.

27,000,000/903=29,900.3 so 29,901

The company will have to issue 29,901 bonds of face value $1,000 to raise $27 million

Explanation:

3 0
3 years ago
When using the indirect approach to organize your negative news message, you should open with a(n) ________.
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There are five different methods to begin a statement with unfavorable news, but the most appropriate one is to use a buffer statement.

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3 0
2 years ago
1. Suppose that 10 years ago you bought a home for $150,000, paying 10% as a down payment, and financing the rest at 8% interest
Ierofanga [76]

Answer:

1. Down payment = $15,000

2. The existing mortgage (loan) was for $135,000

3. The current monthly payment on the existing mortgage is $990.58

4. The total interest over the life of the existing loan = $221,609.58

6. The amount of the original loan paid off is $22,319.

7. Total amount paid to the loan company over the last 10 years is $258,928.58 ($243,928.58 + $15,000)

8. Total interest paid over the last 10 years is $221,609.58

9. The equity in the home is $67,319 ($180,000 - $112,681)

10. The new monthly payments will be $675.58

11. Saving each month because of the lower monthly payment is $315 ($990.58 - $675.58)

12. Total Interest = $352,137.21 ($221,609.58 + $130,527.63)

13. It does not make sense to refinance because what is saved per month cannot compare with the additional interest expense to be incurred for prolonging the payments.

Explanation:

a) Data and Calculations:

1. Cost of a home = $150,000

10% down payment = $15,000

Existing Mortgage = $135,000 ($150,000 - $15,000)

Home Price  150000

 Down Payment  10 %

Loan Term  30  years

Interest Rate  8%

House Price $150,000.00

Loan Amount $135,000.00

Down Payment $15,000.00

Total of 360 (30 years * 12)

Mortgage Payments $356,609.58

Total Interest $221,609.58

Ten years after, the loan balance has been reduced by $22,319 ($135,000 - $112,682)

Refinancing calculations:

Home Price  112681

 Down Payment  0 %

Loan Term  30  years

Interest Rate  6

   

Monthly Pay:   $675.58 Monthly

Total Mortgage Payment $243,208.63

Total Out-of-Pocket $243,208.63

Total of 360 Mortgage Payments $243,208.63

Total Interest $130,527.63

 

4 0
3 years ago
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