Answer:
(a) Journalize the payment of the bond interest on January 1, 2022.
Dr Interest payable - bonds payable 40,400
Cr Cash 40,400
The interest expense on the bonds payable should have been accrued on the 2021 balance sheet, that is why we debit interest payable and not interest expense.
(b) Assume that on January 1, 2022, after paying interest, Blossom calls bonds having a face value of $100,000. The call price is 103. Record the redemption of the bonds.
Dr Bonds payable 100,000
Dr Call premium 3,000
Cr Cash 103,000
(c) Prepare the adjusting entry on December 31, 2022, to accrue the interest on the remaining bonds.
interest expense = $405,000 x 8% = $32,400
Dr Interest expense - bonds payable 32,400
Cr Interest payable - bonds payable 32,400
Answer:
Direct Cost.
Explanation:
As Newtech Inc. has hired John for the position of a software programmer to work on their new project. Salary paid to John by Newtech Inc. would be direct cost. Direct costs are the costs which can be tied directly to the manufacturing of products and services and they can be traced very easily as well. Labor cost, commissions, manufacturing supplies, direct material are the direct costs which can traced back to the manufacturing products quite easily.
Answer:
Dividend in arrears $ 1,000,000
Total Dividend $ 2,000,000
Explanation:
The dividend at 5% of $100 par value is $5 per unit of shares. Recall, each unit of the preference shares has a par value of $100
Dividend calculation = $5 multiplied by the total unit of shares
previous year shares dividend is 5 x 200, 000 unit of shares = $ 1,000,000
This year total dividend payout will be current year of $1,000,000 plus previous year of $1,000,000 = $2,000,000
Answer: b. Set higher prices to the students as their demand is relatively more inelastic.
Explanation:
Price elasticity of demand measures the change in quantity demanded to changes in price levels.
If demand is inelastic, a small change in price has a small effect on quantity demanded. An inelastic demand usually has a coefficient of less than 1.
The elasticity of demand for students and senior citizens are both inelastic but that of the students is greater than that of senior citizens. They are less responsive to price changes when compared with senior citizens.
Answer:
It will take 3 years to have enough money to purchase the car.
Explanation:
We can use either Compounding or Discounting Formula to determine the time it will take to make $19,970 from $15,000 when the investment rate is 10%. Lets go with the Compounding Formula:
Future Value = Present Value * (1 + i) ^ n
<u>Re-arrange equation for "n" which is the Time Period:</u>
⇒ FV / PV = (1 + i) ^ n
Taking log on both sides;
⇒ log (FV / PV) = log (1 + i) ^ n
OR log (FV / PV) = n log (1 + i)
OR n = log (FV / PV) / log (1 + i)
Simply put values now;
⇒ n = log (19,970 / 15,000) / log (1 + 10%) = log (1.33) / log (1.1) = .12 / .04
OR n = 3
