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SVETLANKA909090 [29]
3 years ago
6

S&L Financial buys and sells securities which it classifies as available-for-sale. On December 27, 2021, S&L purchased C

oca-Cola bonds at par for $875,000 and sold the bonds on January 3, 2022, for $880,000. At December 31, the bonds had a fair value of $873,000, and S&L has the intent and ability to hold the investment until fair value recovers. Prepare journal entries to record (a) any unrealized gains or losses occurring in 2021 and (b) the sale of the bonds in 2022, including recognition of any unrealized gains in 2022 prior to sale and reclassification of amounts out of OCI.
Business
1 answer:
yKpoI14uk [10]3 years ago
5 0

Answer:

S&L Financial

Journal Entries

Date               Description                            DR                        CR

a. 2021

Jan 3             Bond - available for sale        $875,000    

                    Cash                                                                  875,000

                   Being the purchase of bond.

Dec 31          Income statement                        2,000

                   Bond                                                                      2,000

                  Being the changes in fair value of the bond

b. 2022

               Cash                                                  880,000

               Bond                                                                      873,000

              Income statement                                                     7,000

            Being the amount realized at sales of bond                                  

Explanation:

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2 years ago
In the economy, tax revenue collected by the government this year is $15 million and government outlays are $13 million. This co
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Answer:

budget surplus of $2 million

Explanation:

When income or receipt increases from the outlay, then budget surplus arises. Whereas when outlay increases from the income or receipts the budget deficit arises.

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What is generally the difference between blue-collar workers and white-collar workers?
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3 years ago
Turnbull Co. is considering a project that requires an initial investment of $1,708,000. The firm will raise the $1,708,000 in c
Anna35 [415]

Answer:

11.06%

Explanation:

Calculation to determine What will be the WACC for this project

First step is to calculate the Weight of Debt

Weight of Debt = $750,000 / $1,708,000

Weight of Debt = 0.4391

Second step is to calculate the Weight of Preferred Stock

Weight of Preferred Stock = $78,000 / $1,708,000

Weight of Preferred Stock = 0.0457

Third step is to calculate the Weight of Equity

Weight of Equity = $880,000 / $1,708,000

Weight of Equity = 0.5152

Fourth step is to calculate After Tax Cost of Debt

After Tax Cost of Debt = 11.1% * (1 – 0.40)

After Tax Cost of Debt = 6.66%

Now let calculate WACC using this formula

WACC = (Weight of Debt * After Tax Cost of Debt) + (Weight of Preferred Stock * Cost of Preferred Stock) + (Weight of Equity * Cost of Equity)

Let plug in the formula

WACC = (0.4391 * 0.0666) + (0.0457 * 0.1220) + (0.5152 * 0.1470)

WACC = 0.02924406+0.0055754+0.0757344

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WACC =11.06%

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2 years ago
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