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Gwar [14]
3 years ago
15

On October 1, Eder Fabrication borrowed $60 million and issued a nine-month promissory note. Interest was payable at maturity. I

nterest was discounted at issuance at a 12% discount rate. Prepare the journal entry for the issuance of the note and the appropriate adjusting entry for the note at December 31, the end of the reporting period.
Business
1 answer:
7nadin3 [17]3 years ago
8 0

Answer:

cash        55,110,929 debit

   note payable      55,110,929 credit

--to record singing of promissory note with discounted interest--

interest expense 1.583.741,77 debit

   note payable              1.583.741,77 credit

--to record accrued interest on note payable --

Explanation:

the note plus interest will be for 60 millions.

So to calcualte the isuance ofthe note we must calculate the present value of a lump sum at 12% discount rate:

\frac{Maturity}{(1 + rate)^{time} } = PV  

Maturity  60,000,000.00

time   0.75

rate  0.12

\frac{60000000}{(1 + 0.12)^{0.75} } = PV  

PV   55,110,929.18

then at December 31th we solve for the accrued interest:

Principal \: (1+ r)^{time} = Amount

Principal 55,110,929.18

time 0.25 (3 months over 12 month a year)

rate 0.12000

55110929.18154 \: (1+ 0.12)^{0.25} = Amount

Amount 56,694,670.95

accrued interest: 56,694,670.95 - 55,110,929.18 = 1.583.741,77

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julia-pushkina [17]

Answer:

False.

Explanation:

The organizational environment is a set of forces and conditions that operate outside an organization's boundaries and has the potential or capability of affecting its operations, resources and performance, either fully or in parts.

Some examples of an organizational environment are competitors or rivals, government policies, regulatory agencies, suppliers, customers etc.

8 0
3 years ago
Moji Mont Company has a debt-equity ratio of .25. The required return on the company’s unlevered equity is 15 percent, and the p
Gala2k [10]

Answer:

The company's worth is $24,420,000 if it is financed entirely by equity

Explanation:

The value of the company if financed entirely by equity is the perpetual cash flows that can be derived  from the company using the required rate of return  on the company's un-levered equity at 15%.

Sales                                                  $18,500,000

Variable costs(70%*$18,500,000)   ($12,950,000)

EBIT                                                    $5,550,000

tax at 34%(34%*$5,550,000)            ($1,887,000)

Net income                                          $3,663,000.

Company's worth= $3,663,000/15%

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4 0
3 years ago
Ace Construction Company contracts to build a retirement community on land owned by Smith. Jones, an adjoining landowner, expect
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Answer:

d.) Jones is an incidental beneficiary and has no right to sue for Ace Construction's breach of the contract.

Explanation:

Jones was not a direct party to the contract, in fact, any profit which he was supposed to receive was incidental in nature and thus he cannot sue Ace Construction's breach of the contract.

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Do you have a picture of it?
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Tsao Company budgets on an annual basis. The following beginning and ending inventory levels (in units) are plannned for the yea
Kisachek [45]

Answer:

 a) production units = 450,000

b) Amount of raw materials = 1,010,000.

Explanation:

The production budget is computed as follows;

Production budget = Sales budget + closing inventory - opening inventory

Production budget= 480,000 + 50,000 - 80,000

                              = 450,000 units

<em>The raw material purchase budget is the amount of material to be purchased to accommodate production need and inventory of materials to be kept.</em>

Purchase budget = usage budget + closing inventory - opening inventoy

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