Answer:
$ 1,035.18
Explanation:
The price of the bond can be determined using the pv excel function as below:
=-pv(rate,nper,pmt,fv)
rate is the yield of 7.8%
nper is the number of coupons before the bonds are called which is 6
pmt is the annual coupon i.e face value*coupon rate=$1000*7.2%=$72
fv is the call price in six years' time which is $1099
=-pv(7.8%,6,72,1099)=$ 1,035.18
Answer: b. Harold is not required to recognize gross income but must reduce his cost basis in the land to $130,000.
Explanation:
When Harold bought the land for $150,000 he acquired a basis of $150,000 in the land. Due to Jewel's cash problems, he managed to pay $20,000 less for the land.
For tax reporting purposes, he need not recognize gross income but he must reflect that he acquired the land for $20,000 less in his basis for the land thereby reducing the basis to $130,000.
The loss can she deduct against ordinary income in the year is $5000.
<h3>How to calculate the loss?</h3>
AGI = $140000
Less: Allowable limit = $100000
Excess = $40000
50% of excess = $20000
Less: Net loss = $15000
Loss deduction = $5000
Therefore, the loss can she deduct against ordinary income in the year is $5000.
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Answer:
Interest receivable $600
Explanation:
The interest is just for 9 months and the cash for the interest has not been received yet, so debit Interest Receivable.
Interest is calculated using the formula:
interest=Principal x rate x time
$16,000 x 5% x 9/12 = $600
Interest Revenue would be credited for $600, but that is reported on the Income Statement, not the Balance Sheet.
