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
Phantasy [73]
3 years ago
6

The long-term liability section of Rainbow Digital Corporation’s balance sheet as of December 31, 2020, included 10% bonds havin

g a face amount of $1,000,000 and a remaining discount of $139,294. Disclosure notes indicate the bonds were issued to yield 12%. Interest expense is recorded at the effective interest rate and paid on June 30 and December 31 of each year. On July 1, 2021, Rainbow Digital retired the bonds at 101 before their scheduled maturity. What is the amount of gain (loss) on early extinguishment of bonds?
Business
1 answer:
Anon25 [30]3 years ago
4 0

Answer:

Loss on early extinguishment = 1,008,357.64

Explanation:

Data:

T = Interest rate = 10% = 0.10

FA = Face amount = $1,000,000

RD = Remaining Discount = $139,294

Y = Yield rate = 12% = 0.12

RT = Retirement Time = 6/12 = 0.5

BA = Bonds at = 101% = 1.01

EE = Gain (loss) on early extinguishment = ?

IE = Interest Expense = ?

D = Discount on bond payable = ?

Calculations:

IE = Y * (FA - RD) * RT

IE = 0.12 * ($1,000,000 - $139,294) * 0.5 = 0.12 *  $860,706 * 0.5 = $51,642.36

D = FA - [IE - (T * FA * RT)]

D = $1,000,000 - [$51,642.36 - (0.10 * $1,000,000 * 0.5)] = $1,000,000 - [$51,642.36 - $50,000] = $1,000,000 - $1,642.36 = $998,357.64

EE = FA - [D + (FA * BA)]

EE = $1,000,000 - [$998,357.64 + ($1,000,000 * 1.01)] = $1,000,000 - [$998,357.64 + $1,010,000] = $1,000,000 - 2,008,357.64 = -1,008,357.64

EE = -1,008,357.64 (Loss)

You might be interested in
What are three goods provided by the federal government?
Rudiy27
Housing insurance and food stamps   I think?
8 0
2 years ago
Included in Sage Company’s December 31, 2020, trial balance are the following accounts: Prepaid Rent $5,870, Debt Investments (t
Sunny_sXe [5.5K]

Answer:

Step 1:

Start by setting it up with the divisor 20 on the left side and the dividend 16 on the right side like this:

           

 2 0 ⟌ 1 6  

Step 2:

The divisor (20) goes into the first digit of the dividend (1), 0 time(s). Therefore, put 0 on top:

       0    

 2 0 ⟌ 1 6  

Step 3:

Multiply the divisor by the result in the previous step (20 x 0 = 0) and write that answer below the dividend.

       0    

 2 0 ⟌ 1 6  

       0    

Step 4:

Subtract the result in the previous step from the first digit of the dividend (1 - 0 = 1) and write the answer below.

       0    

 2 0 ⟌ 1 6  

     - 0    

       1    

Step 5:

Move down the 2nd digit of the dividend (6) like this:

       0    

 2 0 ⟌ 1 6  

     - 0    

       1 6  

Step 6:

The divisor (20) goes into the bottom number (16), 0 time(s). Therefore, put 0 on top:

       0 0  

 2 0 ⟌ 1 6  

     - 0    

       1 6  

Step 7:

Multiply the divisor by the result in the previous step (20 x 0 = 0) and write that answer at the bottom:

       0 0  

 2 0 ⟌ 1 6  

     - 0    

       1 6  

        0  

Step 8:

Subtract the result in the previous step from the number written above it. (16 - 0 = 16) and write the answer at the bottom.

       0 0  

 2 0 ⟌ 1 6  

     - 0    

       1 6  

     -   0  

       1 6  

You are done, because there are no more digits to move down from the dividend.

The answer is the top number and the remainder is the bottom number.

Therefore, the answer to 16 divided by 20 calculated using Long Division is:

0

16 Remainder

Explanation:

8 0
3 years ago
You need some money today and the only friend you have that has any is your ‘miserly' friend. He agrees to loan you the money yo
Bingel [31]

Answer:

B. The total interest = $4.35

Explanation:

The first question to answer, is  what is the present value of the annuity of the loan and then based on that the total interest can be calculated.

<h2>Present value of annuity= A x [(1-(1+r)-n)/r]*(1+r) </h2>

Where the A represents Annuity = or $20

The r represents the rate or 1.5%

and the n represents the number of periods which is 6 months

Calculating the value =

= 20 x [(1-1.015^-6)/0.015]*1.015

= 20 x [(1-0.91454219251)/0.015]*1.015

= 20*5.782644973

=$115.65

Now that the loan amount is known, the Total Interest can be calculated as follows

Total Interest= number of payments x monthly payments) - the loan amount (calculated above)

= 20 x 6 -115.65

= 120-115.65

The total interest = $4.35

8 0
3 years ago
On January 1, 2015, East Lansing, Inc, issues $2,000,000 of 10 percent, 5-year bonds that pay interest of $100,000 semiannually.
Trava [24]

Answer:

The answer is option D

Explanation:

The bond can be issued at par, at a discount or at a premium depending on the coupon rate and the market interest. The price of the bond which pays semi annual coupon can be calculated using the formula of bond price. The formula to calculate the price of the bond is attached.

First we need to determine the semi annual coupon payment, periods and YTM.

Semi annual coupon payments = 2000000 * 0.1 * 6/12 = 100000

Semi annual periods = 5 * 2 = 10

Semi annual YTM = 0.08 * 6/12 = 0.04

Bond Price = 100000 * [(1 - (1+0.04)^-10) / 0.04]  +  2000000 / (1+0.04)^10

Bond Price = $2162217.916

The price of the bond is thus $2162290 approx. The difference in answers is due to rounding off.

5 0
3 years ago
A newly created design business called Smart Art is just finishing up its first year of operations. During the year, there were
vladimir2022 [97]

Answer:

Bad debts expenses shall be $ 850

Explanation:

The balance in the bad debts expense account shall be the aggregate of the amounts written off and the estimated uncollectible accounts based on ageing at the year end.

Amount written off during the year                                                 $ 650

Estimated uncollectible account provided at year end                 <u>$ 200</u>

Total Bad Debts expenses                                                               $ 850

4 0
3 years ago
Read 2 more answers
Other questions:
  • Are there direct variables that have no effect on business' competitive position
    11·1 answer
  • Why are closing costs a one time fee?
    15·1 answer
  • Shiloh canvasses for her favorite politicians. she has discovered that asking someone to do a small favor makes it easier to con
    7·1 answer
  • EcoFabrics has budgeted overhead costs of $1,162,350. It has allocated overhead on a plantwide basis to its two products (wool a
    8·1 answer
  • How did the constitution differ from the articles of confederation? Match the correct document on the left to each of the featur
    9·2 answers
  • For personal finance course
    12·1 answer
  • Apt Adapt Inc. is formed to coordinate the design and delivery of projects and products to help communities cope with the effect
    5·1 answer
  • Time Rem
    9·1 answer
  • One of the main factors when determining which companies to buy policies from is whether or not the company is _____ strong.
    13·1 answer
  • In 25 years, a bond with a 4.75% annual interest rate earned $2,375 as interest. What was the principal amount of the bond if th
    7·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!