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murzikaleks [220]
3 years ago
12

Nivan Co. issued $500,000 of 5 percent, 10-year, callable bonds on January 1, Year 1, at their face value. The call premium was

3 percent (bonds are callable at 103). Interest was payable annually on December 31. The bonds were called on December 31, Year 5. Required Prepare the journal entries to record the bond issue on January 1, Year 1, and the bond redemption on December 31, Year 5. Entries for accrual and payment of interest are not required
Business
1 answer:
Sav [38]3 years ago
8 0

Answer and Explanation:

The journal entries are shown below:

On Jan 1

Cash $500,000

          To Bond Payable  $500,000

(Being the issuance of the bond is recorded)

On Dec 31

Bond Payable $500,000

Loss on redemption $15,000    ($500,000 × 3%)

          To Cash    ($500,000 × 103%)  $515,000

(Being the redemption of the bond is recorded and the remaining balance or we can say balancing figure is debited to loss on redemption)

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Sparks Corporation has a cash balance of $19,500 on April 1. The company must maintain a minimum cash balance of $16,000. During
Ganezh [65]

Answer:

Cash borrow  = 10500

so correct option is a. $10,500

Explanation:

given data

Ending cash balance = $16,000

Beginning cash balance = $19,500

expected cash receipts = $68,000

Cash disbursements = $82,000

solution

we know that Ending cash balance is express as

Ending cash balance = Beginning cash balance + Cash receipts - Cash disbursements + Cash borrow   .............................1

we get here Cash borrow put here value

$16,000 = $19,500  + $68,000 - $82,000 + Cash borrow

solve it we get

Cash borrow  = 10500

so correct option is a. $10,500

4 0
3 years ago
Which of the following describes the goal that should be pursued when setting transfer prices? Minimize opportunity costs. Maxim
nata0808 [166]

Answer:

Establish incentives for autonomous division managers to make decisions that are in the overall organization's best interests (i.e., goal congruence).

4 0
3 years ago
Read 2 more answers
Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere often have annua
Veseljchak [2.6K]

Answer:

Bond price=$888.35

Explanation:

<em>The value of the bond is the present value (PV) of the future cash receipts expected from the bond. The value is equal to present values of interest payment plus the redemption value (RV) discounted at the yield rate</em>

<em>Value of Bond = PV of interest + PV of RV</em>

The value of bond for Local School District can be worked out as follows:

Step 1

PV of interest payments

PV = A × (1+r)^(-n)/r

A-annul interest payment:

= 7.5% × 1,000× = 75

r-Annual yield = 8.6%

n-Maturity period = 25  

PV of interest payment:

=75× (1- (1+0.086)^(-25)/0.086)

= 761.22

Step 2

<em>PV of Redemption Value</em>

= 1000 × (1.017)^(-25)

= $127.131

Step 3

<em>Price of bond</em>

=761.222 + 127.13

=$888.35

6 0
3 years ago
The Gorman Group issued $900,000 of 13% bonds on June 30, 2016, for $967,707. The bonds were dated on June 30 and mature on June
Charra [1.4K]

Answer:

cash      967,707 debit

  premium on BP      67,707 credit

  Bnds Payable     900,000 credit

interest expense 58062.42  debit

premium on BP 437.58       debit

       cash                     58500 credit

Explanation:

procceds 967,707

face value 900,000

premium on bonds payable 67,707

<em><u>first interest payment</u></em>

carrying value x market rate

967,707 x 0.06 = 58062.42

then cash outlay

face valeu x bond rate

900,000 x 0.065 = 58,500

the difference will be the amortization

8 0
3 years ago
When the expected rate of inflation is higher than the actual rate of inflation, wealth is: A. not redistributed at all. B. redi
Gemiola [76]

Answer:

D. redistributed from borrowers to lenders.

Explanation:

  • The inflation is the increase of the price levels of the goods and the services in the economy for a long time and shows a reduction in the purchasing power, a common measure is the price index.
  • Very high rates of inflation are caused by the massive growth of the money supply the expected rate of inflation of wealth is measured by the distribution of the wealth of the borrowers to the lenders that create hoardings of prices and fluctuations in the real demands.
3 0
3 years ago
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