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tia_tia [17]
3 years ago
7

Karen Austin Inc. has issued three types of debt on January 1, 2020, the start of the company’s fiscal year.(a) $10 million, 10-

year, 15% unsecured bonds, interest payable quarterly. Bonds were priced to yield 12%.(b) $25 million par of 10-year, zero-coupon bonds at a price to yield 12% per year.(c) $20 million, 10-year, 10% mortgage bonds, interest payable annually to yield 12%.
Business
1 answer:
icang [17]3 years ago
3 0

Answer:

Explanation:

Yield rate on unsecured bonds=12%

Yield rate on zero coupon bond=12%

Yield rate on 10% mortgage bonds=12%

Total debt value=10m+25m+20m=55m

Weight of unsecured bonds=10/55=0.182

Weight of zero coupon bonds=25/55=0.455

Weight of 10% mortgage bonds = 20/55= 0.363

Cost of debt=0.182*12+ 0.455*12+0.363*12=12%

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The assets of a company total $738,000; the liabilities, $219,000. what are the net assets?
ziro4ka [17]
739,000 - 219,000 = 520,000

The net assets are assets minus liabilities, so it is $520,000 in this case.
4 0
3 years ago
At the beginning of 2021, Brad’s Heating & Air (BHA) has a balance of $24,800 in accounts receivable. Because BHA is a priva
NISA [10]

Answer:

  • 3. Calculate bad debt expense for 2021 and 2022 under the allowance method and under the direct write-off method, prior to any adjusting entries.
  • 2021

Under the Allowance Method    

Dr Bad Debt Expense $ 5.960  

Cr Allowance for Uncollectible Accounts  $ 5.960

Under the Direct Write-Off Method    

There aren't movements of writen-off accounts.

  • 2022

In 2022, customers’ accounts totaling $6,800 are written off as uncollectible.

Under the Direct Write-Off Method    

Dr Bad Debt Expense $ 6.800    

Cr Accounts Receivable   $ 6.800  

Under the Allowance Method    

3. Calculate bad debt expense for 2022 under the allowance method  

Dr Bad Debt Expense $ 5.440  

Cr Allowance for Uncollectible Accounts  $ 5.440

Explanation:

  • Initial Balance  

Dr Accounts Receivable   $ 24.800

  • During 2021, install air conditioning systems on account  

Dr Accounts Receivable  $ 178.000  

Cr Sales  $ 178.000

  • During 2021, collect $173,000 from customers on account.    

Dr Cash $ 173.000  

Cr Accounts Receivable   $ 173.000

  • 3. At the end of 2021, estimate that uncollectible accounts total 20% of ending accounts receivable.    

Dr Bad Debt Expense $ 5.960  

Cr Allowance for Uncollectible Accounts  $ 5.960

  • FINAL Balance 2021  

Dr Accounts Receivable  $ 29.800  

Cr Allowance for Uncollectible Accounts  $ 5.960

  • 4. In 2022, customers’ accounts totaling $6,800 are written off as uncollectible. Under the Allowance Method  

Dr Allowance for Uncollectible Accounts $ 6.800  

Cr Accounts Receivable   $ 6.800

  • 4. In 2022, customers’ accounts totaling $6,800 are written off as uncollectible. Under the Direct Write-Off Method  

Dr Bad Debt Expense $ 6.800  

Cr Accounts Receivable   $ 6.800

  • Sub TOTAL Balance 2022  

Dr Accounts Receivable  $ 23.000  

Dr Allowance for Uncollectible Accounts  $ 840

  • 3. Calculate bad debt expense for 2022 under the allowance method  

Dr Bad Debt Expense $ 5.440  

Cr Allowance for Uncollectible Accounts  $ 5.440

  • FINAL Balance 2022  

Dr Accounts Receivable  $ 23.000  

Cr Allowance for Uncollectible Accounts  $ 4.600

If the company applies the allowance method, it means that the account Allowance for Uncollectible Accounts must show as balance the % of accounts receivables as CREDIT.

Because the company has a debit balance in that account it's necessary to register an entry that compensate the DEBIT value and reflect A CREDIT estimated as % of account receivable.

Bad accounts are those credits granted by the company and there is no possibility of being charged.

When customers buy products on credits but the company cannot collect the debt, then it's necessary to cancel the unpaid invoice as uncollectible.

One way is to directly cancel bad debts at the time it was decided that the credit is bad, the total amount reported as bad debt expenses negatively affect the income statement and the accounts receivable are reduced by the same amount, less assets

The other way is to determine a percentage of the total amount of accounts receivable as bad debts, there are many ways to analyze accounts receivable and calculate the value of bad debts.

When the company has the percentage of uncollectible accounts, the required journal entry is Bad Expenses (debit) with Reserve for Bad Accounts (credit)

At the time of cancellation, since the expenses were recognized before, we only use the Allowance for Uncollectible Accounts (Debit)  with accounts receivable (credit), with this we are recognizing the bad credit of the company.

5 0
3 years ago
The management of supply chain inventories focuses on: No Answer Selected
Dennis_Churaev [7]

Answer: both internal and external inventories

     

Explanation: In simple words, supply chain inventories refers to the  raw material, finished goods and work in process inventories like factors that together constitutes a supply chain.

Management of supply chain refers tot he process in which the organisation tries to control and maintain the flow of inventories from on stage to the other with the ultimate objective of keeping the supply of finished goods smooth throughout the period.

It starts from procuring the suitable raw materials in right quantity and right time after that it monitors the manufacturing unit so that production is done in appropriate time period and finally makes sure that finished goods will be supplied to the market as per the time period specified by the wholesalers or retailers.

7 0
2 years ago
A senator from a state with several steel-rod factories explains that it is necessary to impose trade restrictions, such as a ta
Sergio [31]

Answer:

Jobs argument

Explanation:

-The national-security argument states that some industries have to be protected by imposing tariffs to maintain the local production in case of a war.

-The unfair-competition argument says that the domestic market has to be protected when there is unfair competition because companies from other countries are subject to different regulations.

-Using-protection-as-a-bargaining-chip argument states that the threat of imposing a restriction can help to eliminate a restriction that was imposed by another country.

-Infant-industry argument says that new industries have to be protected because they don't have economies of scales that their competitors from others countries have.

-The jobs argument claims that the trade with other countries eliminates the local jobs.

According to this, the answer is that the senator is using the jobs argument to argue for the trade restriction on steel rods because he claims that it is necessary to impose those restrictions to protect the workers from losing their jobs.

8 0
3 years ago
What factors will determine the sizes of the​ shortages? The extent of the excess demand implied by the shortages will depend on
Juliette [100K]

Answer:

The answer is: C) the elasticity of​ demand, where the shortages will be larger if demand is more inelastic.

Explanation:

When the demand for a product is completely inelastic it means that the quantity demanded for that product will be the same whether its price increases or decreases. Rarely any product is completely inelastic, but inelasticity shows a tendency of buyers to keep buying a product even if its price rises, for example gasoline.

Inelastic products don´t follow the law of supply and demand, since the price doesn´t alter the demand.

If suppliers can produce enough goods (product shortages) and the quantity demanded stays the same, the price will rise. But if the demand for the product is inelastic then the shortage will get worse since every time more people will want to buy the product and their will be less product to buy.

6 0
3 years ago
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