1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
shusha [124]
3 years ago
14

Collins Company borrowed $1,250,000 from BankTwo on January 1, 2016 in order to expand its mining capabilities. The five-year no

te required annual payments of $325,545 and carried an annual interest rate of 9.5%. What is the amount of expense Collins must recognize on its 2017 income statement
Business
1 answer:
hoa [83]3 years ago
5 0

Answer:

Collins Company must recognize $118,750 (which is annual interest paid on the capital) in its 2017 income statement as an expense item if the method of computing the interest is the flat rate method.

If it is reducing balance rate, then the amount deducted will equal $ 87,823

Explanation:

According to the principles of Financial Accounting, the interest portion of any loan must be entered as an expense item. The portion of the principal being paid back is recorded as part of the liability of the company in the period under consideration. It often goes by the term Loan Payable or Notes Payable.

Hence to arrive at the answers given above, you must note that the year in question is 2017 and that the loan took effect from January 2016.

When computing for interest payable, two methods may be used:

  1. Flat rate method: which requires that the interest rate applicable is computed on the capital and multiplied by the number of years the loan will run.

That is, $1,250,000 x 9.5% x 5 = Total Interest Rate Applicable.

= $593,750 so going by this method, the interest rate to be entered is

= $593, 750/5

= $118,750

   2. Reducing balance rate method: This requires the rate of interest to be applied each year succesievely having taken into account the capital which way paid in the previous year.

That is, [Initial Capital-Annual Payments] *9.5%

For year 2016, annual payment will be Zero. Given that the loan started in that year. In 2017 however, the annual payment will apply as shown below:

= [$1,250,000-$325,545] *9.5%

= $924, 455 * 9.5%

= $87,823 (approximately)

Cheers!

You might be interested in
Kelly Malone plans to have $51 withheld from her monthly paycheck and deposited in a savings account that earns 12% annually, co
natita [175]

Answer:

$1,774.2

Explanation:

Compute the accumulated amount in the account on the date of last deposit'

Formula used to find out the future value ordinary annuity is:

Future value factor of ordinary annuity (FVF-0A =_{n,i} ) = \frac{1-(1+i^)^ {n} }{i}

1- oily Future value of ordinary annuity (FV-OA) = R (FVF-0A_{n,i} )

Where:

R = annual return (ordinary annuity)

(FVF-0A_{n,i} ) = future value of an ordinary annuity of I for n periods at i interest

Substituting the values:

Future value of ordinary annuity (FV-OA) = R (FVF-0A_{n,i} )

                                                             = $50 (FVF-OA 12_{2.5X 12\frac{12}{12}  }  )

                                                              =$50 X 34.7849

51 X 34.7849\\=1,774

                                                    

6 0
3 years ago
Your bank account pays an interest rate of 8 percent. You are considering buying a share of stock in XYZ Corporation for $110. A
erica [24]

Your bank account pays an interest rate of 8 percent. You are considering buying a share of stock in XYZ Corporation for $110. After 1, 2, and 3 years, it will pay a dividend of $5. You expect to sell the stock after 3 years for $120. Is XYZ a good investment-This statement is False

Explanation:

Your bank account pays an interest rate of 8 percent. You are considering buying a share of stock in XYZ Corporation for $110. After 1, 2, and 3 years, it will pay a dividend of $5. You expect to sell the stock after 3 years for $120. Is XYZ a good investment

The above statement is false, since it is a bad investment because after figuring out the stock's value you get $108.15, which is less than what you initially paid for it.

4 0
3 years ago
Your body uses minerals for many different jobs, including __________. (select all that apply.)
yan [13]

Your body uses minerals for many different jobs, including building bones

making hormones regulating your heartbeat

Hormones are molecules that are created and released by specific glands to regulate and govern the functioning of particular cells and organs. The term "endocrine glands" refers to these specific glands.

Hormones are chemicals that, as was already mentioned, effectively serve as the body's messengers. Specialized glands called endocrine glands release these substances. Hormones all over the body, these endocrine glands are located. These messengers regulate a variety of physiological processes as well as psychological wellbeing. In preserving the body's homeostasis, they play a significant role.

Protein hormones are soluble in water and made of amino acids. Since the cell membrane is made up of a phospholipid bilayer that prevents any fat-insoluble molecules from diffusing into the cell, peptide hormones cannot flow through it.

Learn more about Hormones here

brainly.com/question/13020697

#SPJ4

7 0
2 years ago
Sutton Enterprises makes gadgets using a two-step process that involves machining and assembly, respectively. During the period,
MaRussiya [10]

Answer:

Total equivalent units= 11,890

Explanation:

Giving the following information:

Assembly Department completes 10,200 gadgets and transfers them to Finished Goods Inventory.

The Assembly Department has 2,600 gadgets in the process that are 65% complete for conversion.

<u>To calculate the equivalent units, we need to multiply the % complete for the number of units started:</u>

Units completed= 10,200

Units in ending inventory= 2,600*0.65= 1,690

Total equivalent units= 11,890

5 0
3 years ago
What level of government is most closely associated with zoning?
balandron [24]
Local
Shhsbsn( I needed 20 chacters)
7 0
3 years ago
Other questions:
  • Kansas Enterprises purchased equipment for $72,500 on January 1, 2021. The equipment is expected to have a five-year service lif
    14·1 answer
  • Suppose that the United States and China trade exclusively with each other. What will happen to the value of the U.S. dollar, ce
    7·1 answer
  • American president obama enacted a five-year freeze on federal salaries to help the government achieve its objectives of reducin
    15·1 answer
  • Dextra Computing sells merchandise for $17,000 cash on September 30 (cost of merchandise is $11,900). The sales tax law requires
    7·1 answer
  • Which two statements are true about batch size, lead time, and utilization? (Choose two.)
    11·1 answer
  • 1. NPVs, IRRs, and MIRRs for Independent Projects
    14·1 answer
  • A test was administered to a group of students the morning after homecoming. Several of the students appeared tired and some wer
    12·1 answer
  • A firm has issued $25 million in long-term bonds that now have 9 years remaining until maturity. The bonds carry a 9% annual cou
    11·1 answer
  • The Sunland Acres Inn is trying to determine its break-even point during its off-peak season. The inn has 50 rooms that it rents
    5·1 answer
  • The following information was available for Pina Colada Corp. at December 31, 2022:
    12·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!