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Lilit [14]
3 years ago
11

For each of the transactions in items 2 through 13, indicate the two (or more) effects on the accounting equation of the busines

s or company..The owner invests personal cash in the business.AssetsIncrease Decrease No EffectLiabilitiesIncrease Decrease No EffectOwner's (or Stockholders') EquityIncrease Decrease No Effect
Business
1 answer:
user100 [1]3 years ago
7 0

Answer:

2. The owner invests personal cash in the business.

Assets: Increase  

Liabilities: No Effect

Owner's (or Stockholders') Equity: Increase

3. The owner withdraws cash from the business for personal use.

Assets: Decrease

Liabilities: No Effect

Owner's (or Stockholders') Equity: Decrease

4. The company receives cash from a bank loan.

Assets: Increase

Liabilities: Increase

Owner's (or Stockholders') Equity: No Effect

5. The company repays the bank that had lent money to the company.

Assets: Decrease

Liabilities: Decrease

Owner's (or Stockholders') Equity: No Effect

6. The company purchases equipment with its cash.

Assets: one increases and another decreases, but it total assets don't change

Liabilities: No Effect

Owner's (or Stockholders') Equity: No Effect

7. The owner contributes his/her personal truck to the business.

Assets: Increase  

Liabilities: No Effect

Owner's (or Stockholders') Equity: Increase

8. The company purchases a significant amount of supplies on credit.

Assets: Increase

Liabilities: Increase

Owner's (or Stockholders') Equity: No Effect

9. The company purchases land by paying half in cash and signing a note payable for the other half.

Assets: Increase

Liabilities: Increase

Owner's (or Stockholders') Equity: No Effect

10. In May, Company X records the transaction by a debit to Accounts Receivable for $5,000 and a credit to Service Revenues for $5,000. What is the effect of this entry upon the accounting equation for Company X?

Assets: Increase

Liabilities: No Effect

Owner's (or Stockholders') Equity: Increase

11. In June, Company X receives the $5,000. What is the effect on the accounting equation and which accounts are affected at Company X?

Assets: No Effect

Liabilities: No Effect

Owner's (or Stockholders') Equity: No Effect

12. What is the effect on Client Q's accounting equation in May when Client Q records the transaction as a debit to Consultant Expense for $5,000 and a credit to Accounts Payable for $5,000?

Assets: No Effect

Liabilities: Increase

Owner's (or Stockholders') Equity: Decrease

13. What is the effect on Client Q's accounting equation in June when Client Q remits the $5,000? Also, which accounts will be involved?

Assets: Decrease

Liabilities: Decrease

Owner's (or Stockholders') Equity: No Effect

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Answer:

Growth rate 2.4%

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MV=D1/(Ke-g)

Where MV=share market value=$15

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By putting above values in formula, we get;

MV=D1/(Ke-g)

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15*7.2%-15g=.72

1.08-15g=.72

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g= -.36/-15

g=2.4%

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For fixed-rate bonds it's important to realize that the value of the bond has a(n)-Select relationship to the level of interest
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Answer:

Answer is explained in the explanation section below.

Explanation:

It's necessary to remember that the value of fixed-rate bonds is inversely proportional to the level of interest rates. The value of the bond decreases as interest rates rise; moreover, the value of the bond rises as interest rates fall. A Bond with a lower coupon sells for less than its face value. When the going rate of interest is higher than the coupon rate, this condition arises. The value of the asset would increase over time. A higher coupon bond is one that sells for a higher price than its face value. When the going rate of interest is lower than the coupon rate, this condition arises. Its value will gradually decrease until it reaches its maturity value. A par value bond that sells at par, with a coupon rate equal to the current interest rate. The coupon is usually set at the going market rate on the day the bond is sold, so it sells at par at first.

Calculations:

C = Coupon Payments = $60 (Par Value x Coupon Rate)

n = number of years = 10

i = market rate or required yield = 7% = 0.007

K = number of coupon payments in 1 year = 1

P = value at maturity or par value = 1000

Present value of ordinary annuity formula:

Bond Price = C/k * [\frac{1 - \frac{1}{(1 + \frac{i}{k})^{nk}  } }{\frac{i}{k} } ] + \frac{P}{(1 + \frac{i}{k})^{nk}  }

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Similarly,

Data:

C = Coupon Payments = $60 (Par Value x Coupon Rate)

n = number of years = 10

i = market rate or required yield = 7% = 0.007

K = number of coupon payments in 1 year = 2

P = value at maturity or par value = 1000

Present value of ordinary annuity formula:  

Bond Price = C/k * [\frac{1 - \frac{1}{(1 + \frac{i}{k})^{nk}  } }{\frac{i}{k} } ] + \frac{P}{(1 + \frac{i}{k})^{nk}  }

Just plug in the values and you will get:  

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Bond Price = 426.37 + 502.57

Bond Price = $928.94

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Answer:

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