Answer:
a) Prepare the journal entry to record interest at the effective interest rate at December 31.
- Interest expense (10% × 1/2 × $380) = $19.0
-Cash (paid to bondholders) (9% × 1/2 × $400) = $18.0
- Discount on Bond Payable 19.0 - 18.0 = 1
Account Title Dr Cr
Interest expense 19
Discount on Bond Payable 1
Cash 18
What would be the amount(s) related to the bonds that Agee would report in its statement of cash flows for the year ended December 31, 2018, if it uses the direct method?
-Agee would report the cash inflow of $380 million from the sale of the bonds as a cash inflow from Financing Activities in its statement of cash flows. (selling bonds is a financing activity)
-The $18.0 million cash interest paid is cash outflow from Operating Activities because Interest is an Income Statement (Operating) item.
Answer:
The correct answer is B.
Explanation:
Giving the following information:
Determine which costing method (variable costing or absorption costing) accounts for fixed manufacturing costs as costs of the period:
a. at the time of incurrence,
b. at the time the finished units to which the fixed overhead relates are sold.
Absorption costing allocated fixed manufacturing costs to the product. Therefore, the fixed costs go to the cost of goods sold.
Answer:
$495,614.80
Explanation:
The interest paid will be the total amount paid minus the principal amount.
The amount paid after 30 years using compound interest will be
the future amount. Interest rate is compounded monthly . There are 12 compounds in a year, equivalent to 360 after 30 years.
interest is 4.35 per year or 4.35/12 per month
FV = P x ( 1+ r)N
Fv = 185,000 x ( 1+ 0.3625/100)360
Fv = 185,000 x (1.003625)30
Fv = 185,000 x 3.67899783
Fv = 680,614.60
Interest paid will be = $,614.80 - $185,000.00
=$495,614.80
Answer:
The value of X is A. 6.53 percent.
The value of Y is B. 10.83 percent
Explanation:
Note: See the full question as attached as picture below
Spot 1 Year Spot 2 Year Forward 1 Year (1-year maturity)
Treasury 3.0% 4..75% x
BBB Corporate Debt 7.5% 9.15% y
The formula to calculate the forward rate is: F1.1 = [(1+S2)² / (1+S1)] - 1
For treasury
F1.1 = [(1+4.75%)² / (1+3.0%)] - 1
F1.1 = 1.09725625 / 1.03 - 1
F1.1 = 6.53%
For BBB Corporate Debt
F1.1 = [(1+9.15%)² / (1+7.5%)] - 1
F1.1 = 1.19137225 / 1.075 - 1
F1.1 = 10.83%
I looked it up and the answer I was given is Ciroc