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rjkz [21]
3 years ago
11

Sand, Inc. has outstanding $5,000,000, 10%, 20-year bonds. The bonds are callable at 104 on any interest date. The bonds were is

sued at par and mature in 10 years. Recently, interest rates have declined to 5% and the market price of the bonds has increased to 107. If the company exercises the call provision, the company will record:
A) A credit to cash of $5,350,000.
B) A loss of $200,000 on its income statement in the year the bonds are called.
C) A loss of $20,000 in the year the bonds are called and a $20,000 loss for the next 9 years.
D) A gain of $50,000 in the year the bonds are called.
Business
1 answer:
Ray Of Light [21]3 years ago
6 0

Answer: B) A loss of $200,000 on its income statement in the year the bonds are called.

Explanation:

The bonds were issued at Par. This means they were issued at 100 of par.

The bonds are now trading at 104 of par.

If Sand Inc calls the bonds then they will make a profit (loss) of,

= 5,000,000 * 104/100

= $5,200,000

Therefore their Profit (loss) will be the bond at par minus the Calling price

= 5,000,000 - 5,200,000

= -$200,000

That means they make a loss of $200,000 in the year the bonds are called.

If you need any clarification do react or comment.

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Answer:

A. a systematic approach to understand the organization

Explanation:

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The diagnostic process is a systematic approach to understand the organization because it involves critically studying all its aspects and areas.

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____ cards contain a chip that can store a large amount of information as well as on a magnetic stripe for backward compatibilit
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Answer:

(B)

Explanation:

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3 years ago
Which do you think creates more of a challenge for marketers, multiculturalism or multigenerationalism? EXPLAIN
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Hope this may help you

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Bonita Industries has estimated that total depreciation expense for the year ending December 31, 2018 will amount to $583000, an
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Answer:

<u><em>Total expenses 936,500</em></u>

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