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Ganezh [65]
3 years ago
10

On January 1, Year 1, Willette Company sold $240,000 of 6% ten-year bonds. Interest is payable semiannually on June 30 and Decem

ber 31. The bonds were issued for $180,181, priced to yield 10%. What is the amount of effective interest expense that should be recorded for the six months ended June 30, Year 1
Business
1 answer:
konstantin123 [22]3 years ago
4 0

Answer: $9,009

Explanation:

To find the Effective Interest Rate, you should convert the stated interest rate into a semi-annual interest rate as that is when interest is payable.

Effective interest Rate = 10% Per annum

= 10/2

= 5%

5% is to be paid Semi-annaully.

Interest Expenses for the first 6 months is therefore,

= Issue Price * effective interest rate

= 180,181 * 5%

= $9,009

$9,009 is the amount of effective interest expense that should be recorded for the six months ended June 30, Year 1.

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Appalachian Ski Shop signs a three-month note payable to help finance increases in inventory for the winter ski season. The note
kolezko [41]

Answer:

Interest Expense 696 Interest Payable 696

Explanation:

Based on the information given the appropiate adjusting journal entry to be made on December 31, 2022 for the interest expense accrued to that date, If we assumed that no journal entries have been made previously to accrue interest is:

December 31, 2022

Dr Interest Expense $696

Cr Interest Payable $696

($34800*8%*3/12)

(To record interest expense accrued)

3 0
3 years ago
You receive an invoice for $565.00 with terms 3/10, net 30. If you pay it immediately, how much will you pay
Alika [10]
565 x 3% = $16.95

$656 - $16.95 = $548.05
3 0
3 years ago
Pharmecology just paid an annual dividend of $2.00 per share. It’s a mature company, but future EPS and dividends are expected t
lesantik [10]

Answer:

a. Current Stock Price is $ 30.67

b. Current Stock price using forecasted real dividend and a real discount rate is $ 69.00

Explanation:

a. The question belongs to dividend discount model. It is used to calculate intrinsic price of the stock. This model assumes that price of stock or share is equal to net present value of its future dividends.

Price of Stock =  (Current year Dividend x ( 1+ growth rate)) / (nominal cost of capital - growth rate)

Current year Dividend = $ 2

Nominal Cost of Capital = 10.25 % or .1025

Growth rate = 3.50 % or 0.0350

Price of Stock = ( $2 x (1 + 0.035) / (.1025 - .035))

Price of Stock =  $ 2.07 / ( .1025 - 0.0350) = $ 30.67  

b. Price of Stock = Current year Dividend + (Dividend x( 1+ growth rate)) / (real cost of capital - growth rate)

Real Cost of Capital = [ (1 + nominal cost of Capital) / ( 1 + inflation rate)-1 ]

Inflation rate = 3.50 % or .0350

Real Cost of Capital  = [ ( 1 + .1025) / ( 1 + .0350) - 1 ] = 0.0652 or 6.50 %

Price of Stock =(Dividend x ( 1 + growth rate)) / ( Real cost of Capital - Inflation rate)

Price of Stock = ($ 2 x ( 1 + 0.0350)) / (0.0650 - 0.0350)  

Price of Stock = $ 69          

   

7 0
3 years ago
You are choosing between these four investments and you want to be​ 95% certain that you do not lose more than 8.00 % on your in
Ainat [17]

Answer:

Corporate Bonds and T-Bills will have return above 8%

Explanation:

given data

investments  = 4

investment = 8 %

solution

first of all we get  95% confidence interval that is as

and here  investment returns and standard deviation are attach so

95% confidence interval = Return - 2 × SD to Return + 2 × SD    ................a

so here

we can see here as per table attach

here only Corporate Bonds and T-Bills will have return above 8%    

8 0
3 years ago
Use the following Window Breeze Company income statement to answer the question. Window Breeze Company is a small manufacturer o
Vikki [24]

Missing information:

How much is the value of full costing ending inventory?

Answer:

$8,750

Explanation:

1,000 units were produced and 800 were sold, so ending inventory = 200 units

total production cost per unit (under full costing) = $35,000 / 800 = $43.75

ending inventory = $43.75 x 200 = $8,750

Full costing basically refers to absorption costing, which calculates COGS using both variable and fixed costs (total production costs).

8 0
3 years ago
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