A group of businessmen and women get together to try to solve the problem of decreased sales of their company's products. One of
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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 * +
Just plug in the values and you will get:
Bond Price = 60 x 7.02 + 508.35
Bond Price = 421.41 508.35
Bond Price = $929.76
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 * +
Just plug in the values and you will get:
Bond Price = 30 x 14.21 + 502.57
Bond Price = 426.37 + 502.57
Bond Price = $928.94
Answer:
B) Debit to accumulated depreciation for $22,500.
Explanation:
As for the information provided,
Depreciation under straight line method for each year = ($45,000 - $5,000)/8 = $5,000 for each year.
Depreciation for 4 years = $5,000 4 = $20,000
Depreciation in 5th year for 6 months = $5,000/2 = $2,500
Total depreciation till 1 July Year 5 = $20,000 + $2,500 = $22,500
Carrying value of equipment in books as on date of sale = $45,000 - $22,500 = $22,500
Sale price = $20,000
Profit or loss on sale of equipment = $20,000 - $22,500 = - $2,500
So therefore, there is loss of $2,500
Thus, option c and option d are invalid.
Further cash received on sale is debited and not credited thus, option a is also invalid.
As the total accumulated depreciation = $22,500
The correct entry will include debit to accumulated depreciation of $22,500.
Thus, option b is correct.