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
Bess [88]
3 years ago
14

On January 1, 2020, Carter Company makes the two following acquisitions. 1. Purchases land having a fair value of $200,000 by is

suing a 5-year, zero-interest-bearing promissory note in the face amount of $337,012. 2. Purchases equipment by issuing a 6%, 8-year promissory note having a maturity value of $250,000 (interest payable annually). The company has to pay 11% interest for funds from its bank. (a) Record the two journal entries that should be recorded by Carter Company for the two purchases on January 1, 2020. (b) Record the interest at the end of the first year on both notes using the effective-interest method.
Business
1 answer:
viktelen [127]3 years ago
3 0

Answer:

PART A.

1. January 1, 2020

Account Titles and Explanation Debit Credit

Land 200,000

Discount on Notes Payable 137,012

Notes Payable 337,012

2. January 1, 2020

Account Titles and Explanation Debit Credit

Equipment 185,673

Discount on Notes Payable 64,327

Notes Payable 250,000

Solution:

A. 2. Computation of the discount on notes payable:

Maturity value $250,000

Present value of $250,000 due in 8 years at 11% = $250,000 x 0.43393 = $108,483

Present value of $15,000 payable annually for 8 years at 11% annually = $15,000 x 5.14612

= 77,192

Present value of the note (185,675)

Discount $64,325.

PART B

1. December 31, 2020

Account Titles and Explanation Debit Credit

Interest Expense 22,000

Discount on Notes Payable 22,000

2. December 31, 2020

Account Titles and Explanation Debit Credit

Interest Expense 20,424.08

Discount on Notes Payable 5,424.08

Interest Payable 15,000

Solution:

(b) 1. Discount on Notes Payable = ($200,000 x 11%) = $22,000

(b) 2. Interest Expense = ($185,675 x 11%) = $20,424

Interest Payable = ($250,000 x 6%) = $15,000

You might be interested in
Given the following data: Average operating assets $ 504,000 Total liabilities $ 23,520 Sales $ 168,000 Contribution margin $ 85
kipiarov [429]

Answer:

9%

Explanation:

According to the given situation, the solution of return on investment is shown below:-

Return on investment = (Net operating income ÷ Average operating assets) × 100

now, we will put the values into the above formula

= ($45,360 ÷ $504,000) × 100

= 0.09 × 100

= 9%

Therefore for computing the return on investment we simply applied the above formula.

7 0
3 years ago
A basic finding of labor economics is that workers who have more experience in the labor force are paid more than workers who ha
weqwewe [10]

Answer:

1. A basic finding of labor economics is that workers who have more experience in the labor force are paid more than workers who have less experience (holding constant the amount of formal education). True

2. This might be the case because people with more experience have usually had more on-the-job training. True

3. Some studies have also found that experience at the same job (called job tenure) has an extra positive influence on wages. Job tenure is valuable because people gain <u>job-specific knowledge</u> that is useful to the firm.

Explanation:

A worker with more experience means more on-the-job training, this drastically increases the worker's value of the marginal product of labor.

5 0
2 years ago
Investment can be increased both by reducing taxes on private saving and by reducing the government budget deficit.
Romashka [77]

Answer:

1. Increasing

2. A. The elasticity of private saving with respect to the after-tax real interest rate

B. The response of private saving to changes in the government budget deficit

C. The elasticity of investment with respect to the interest rate

Explanation:

1. It is difficult to implement both of these policies at the same time because reducing taxes on private spending has the effect of <u><em>Increasing</em></u> the government budget deficit.

A Government budget deficit is acquired when the government spends more than it earns. The Government earns money from taxes and if it spends more than it receives in taxes, that will lead to a deficit. If taxes on Private spending are reduced, this will lead to less tax revenue for the government thereby increasing the Deficit.

2. All of the listed options are useful in determining which policy would be a more effective way to raise investment.

The elasticity of private saving with respect to the after-tax real interest rate refers to how much private saving changes in reaction to a change in the tax rates. This can enable one decide how much investment will be expected if the Government reduces or increases taxes.

The response of private saving to changes in the government budget deficit is also a useful factor to look at because private savings reduce when government deficits reduce.

Also how much does investment change by due to interest rates. This will be important to note in terms of Private Investment to see if it will be beneficial to use it over reducing the government budget deficit given a certain interest rate.

7 0
3 years ago
you deposit $6000 in an account earning 2% interest compounded continuously. how much will you have in the account in 10 years?
Gre4nikov [31]

Future Value is $7,327.20

<h3>What is compound interest ?</h3>

Compound interest is the interest on deposits that is computed using both the original principal and the interest accrued over time.

It is thought that the concept of "interest on interest" or compound interest first appeared in Italy in the 17th century. Compared to simple interest, which is just charged on the principal amount, it will cause a sum to grow more quickly.

Money grows more quickly when it is compounded, and compound interest increases as the number of compounding periods increases.

CI formula :  A = P(1 + r/n)^nt

where,

P = principal balance,

r = interest rate,

n = number of times interest is compounded per time period and

t = number of time periods.

To solve this question :

A = P(1 + r/n)^nt

= 6,000 (1 + 0.02/12) 120

= USD 7,327.20

To know more about compount interest, visit :

brainly.com/question/14295570

#SPJ4

4 0
1 year ago
Wowee Appliances is setting up production and distribution facilities in India to meet the growing demand there. The company's e
SpyIntel [72]

Answer: the correct answer is these traits will help the manager persevere through culture shock.

Explanation:

Culture shock.- the feeling of disorientation experienced by someone who is suddenly subjected to an unfamiliar culture, way of life, or set of attitudes.

5 0
2 years ago
Other questions:
  • A new mall will be constructed in a large city. Why are business owners most likely viewing a topography map before construction
    5·1 answer
  • Vaida, a manager, sets up delivery schedules for the logistic team for the orders received online, as part of their new e-Commer
    6·2 answers
  • If the economy experiences an inflationary gap, a contractionary monetary policy will __________ investment and _______ interest
    13·1 answer
  • After a fairly short plane ride from new york city, irving found himself on a dusty road with goats, chickens, and motor scooter
    5·1 answer
  • Need asap<br><br> Submit your essay on what's next for digital video in the future.
    12·1 answer
  • Your purpose for writing a formal business letter should be clearly stated in _____.
    14·2 answers
  • What are Apple’s dollar amounts for assets, liabilities, and equity at September 29, 2018? Confirm that the accounting equation
    8·1 answer
  • Discuss two shortcomings of using Gross Domestic Product as the primary measure of a country’s economic performance.
    6·1 answer
  • The double-a of american airlines, the peacock of nbc, and the apple with a missing bite of apple are examples of a _______. bra
    13·1 answer
  • from 7 pm to midnight only percent of the personal and commercial vehicles on the streets and highways are being driven for econ
    15·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!