Answer:
a. True
Explanation:
The Activity variance is based on the difference in actual level of activity used in flexible budget and the level of activity accounted in the planning or master budget
Answer:
a. Issuance of note:
Date Account title Debit Credit
XX-XX Accounts Payable $84,000
Notes Payable $84,000
b. The payment of the note at maturity, including interest. Assume a 360-day year.
Interest payment = 84,000 * 5% * 120/360
= $1,400
Date Account title Debit Credit
XX-XX Note Payable $84,000
Interest payable $1,400
Cash $85,400
Answer:
1. $550,000
Explanation:
1. It is given in the question that the stated interest rate and the market interest rate both are having the same rate, i.e, 12%.
Hence, the bonds are issued at the face value that is $550,000.
2. The Journal entries are as follows:
(i) On January 1,
Cash A/c Dr. $550,000
To bonds payable $550,000
(To record the bond issuance)
(ii) On December 31,
Interest Expense A/c Dr. $66,000
To cash A/c $66,000
(To record the first interest payment on December 31 assuming no interest has been accrued earlier in the year)
Workings:
Interest expense = $550,000 × 12%
= $66,000
Answer: $20,000
Explanation:
The effect of the lease on Lakeside's earnings will be the difference between the earnings from the lease and the cost of the building which will be depreciation.
Depreciation = 2,300,000/25
= $92,000 per year
Earnings per year;
= 28,000 * 4
= $112,000
Increase in earnings = 112,000 - 92,000
= $20,000
