Answer:
given statement is False
Explanation:
solution
As given bond sold at the discount
maturity value less than present value
but maturity value can not be less than present value of principal and interest
because bond sold at the discount
if bond sold at the discount than maturity value will be greater than the resent value of future cash flow
so we can say that given statement is False
Answer:
D) Original cost.
Explanation:
When the company uses the lower of cost or market method, it should assign value to its inventory by calculating the middle figure between replacement cost or net realizable value, and net realizable value - normal profit.
In this case, the market value must be either the replacement cost or the net realizable value, but both values are the highest. Since the original cost is below the market value, but above the net realizable value - normal profit, the inventory must be valued at the original cost.
Answer:
a. Savers who lend money are willing to accept a lower minimum interest rate than potential savers who do not lend money.
b. Investment projects that are financed by savers have larger rates of return than projects that do not receive financing.
Explanation:
Loanable funds refer to the aggregate amount of money that all sectors, entities and individuals within an economy have decided to keep as an investment, instead of spending on personal consumption, by saving and giving them out as loans to borrowers.
The market for loanable funds is in equilibrium when the supply of loanable funds by the saver is equal to demand for loanable funds by the borrowers at a given interest rate.
When the market for loanable funds is in equilibrium, efficiency is maximized because projects that have higher rates of return are given priority to be funded first before the projects with lower rates of return are funded. The reason is that savers that have lowest costs of lending provides funds for the projects that have highest return rates in equilibrium. However, potential saver who do not lend money will prefer a higher interest rates.
Therefore, the correct options related to the two aspects of efficiency that the equilibrium of market for loanable funds exhibits are as follows:
a. Savers who lend money are willing to accept a lower minimum interest rate than potential savers who do not lend money.
b. Investment projects that are financed by savers have larger rates of return than projects that do not receive financing.
Answer:
The journal entry should be:
Dr Investment in Leghorn Corporation XX
Cr Accounts receivable XX
Explanation:
Foghorn Company must record the noncash payment as an asset which should be equal to the amount of money that it generally would have collected from the services provided. Since the payment is done through stocks, it must record that collection as an investing account.
Since transferring stocks usually takes a couple of days at least, the original journal entry should have recorded a debit to accounts receivable and a credit to service revenue.
