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pychu [463]
3 years ago
15

When bonds are sold at a premium and the effective interest method is used, at each subsequent interest payment date, the cash p

aid is:
A. Less than the effective interest.
B. Equal to the effective interest.
C.Greater than the effective interest.
D. More than if the bonds had been sold at a discount.
Business
1 answer:
lorasvet [3.4K]3 years ago
4 0

Answer:

C.Greater than the effective interest.

Explanation:

<u>example</u>

face value 1,000,000

issued at 1,100,000

premium of 100,000

the bond rate is 8%

and the effective rate is 6%

1,100,000 x 6%/2 = 33,000 interest expense

cash proceeds 1,000,000 x 8%/2 = 40,000 cash

amortization on premium 40,000 - 33,000 = 7,000

The cash payment (40,000) are greater than the effective interest (33,000)

If that wouldn't be the case, he premium won't depreciate

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Many companies secure financing from various sources with various payback periods. Not all funding sources are the same, and in
insens350 [35]

Answer and Explanation:

The classification of the funds as a short term or long term strategy as follows;

a. Line of credit = short term financing

b. Commercial paper = short term financing

c. Trade credit = short term financing

d. Bank load of 10 months = short term financing

e. Bond = long term financing  

f. Stock = long term financing  

g. Bank load of 20 months = long term financing

In this way, the classifications of the funds has to be done

5 0
3 years ago
Altoid Company sold most of its inventory produced during the period. The manager needs to close the $1,200 balance of Manufactu
Likurg_2 [28]

Explanation:

The journal entry to close the books is

Cost of Goods sold A/c Dr $1,200

       To Manufacturing Overhead A/c $1,200

(Being the under-applied overhead is recorded)

Since the jobs were undercosted, that means the overhead is applied under overhead so we debited the cost of goods sold account and credited the manufacturing overhead account. Both the items are recorded for $1,200

5 0
3 years ago
Which of the following is false? Economists who advocate discretionary monetary policy argue that it is more likely to achieve t
just olya [345]

Answer: None of the above

Explanation:

All of the above are correct.

For option A, Economists who advocate discretionary monetary policy do indeed believe that the monetary authority using this policy is more flexible to shape the best monetary policy to the existing circumstances.

Option B is also correct because Crowding out occurs when the government increases investment by borrowing which leaves less money for the private sector to borrow so they spend less. The government spent money here yet the private sector did not spend less so it is Zero Crowing out.

Option C by option B's explanation holds true because the entire amount the Government increased by was denied the private sector.

Option D is also true as not all Economists prefer rule-based monetary policy to discretionary monetary policy.

They are all true.

3 0
3 years ago
Sean and Yvette Durand live in Swarthmore, PA. Yvette's father, Bob, lives in Sweden. For each of the following transactions tha
Amanda [17]

Answer:

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Explanation:

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8 0
3 years ago
Q 5.34: A wholesaler offers credit terms 1/10, n/30. A fabric store bought goods worth $6,500 from the wholesaler. Within the di
AnnyKZ [126]

Answer:

the wholesaler received $6,138 as payment.

Explanation:

The seller would receive the the amount owing to customer less the return credit and cash discount of 1 %.

The calculation of this amount is as follows :

Account Receivable                        $6,500

Less Return Credit                            ($300)

                                                         $6,200

Less Cash discount ($6,200 × 1%)      ($62)

Payment                                            $6,138

Conclusion :

the wholesaler received $6,138 as payment.

6 0
3 years ago
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