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castortr0y [4]
3 years ago
15

Several years ago, Walters Company issued bonds with a face value of $1,000,000 at par. As a result of declining interest rates,

the company has decided to call the bond at a call premium of 5 percent over par. Record the retirement of the bonds. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Business
1 answer:
Pavel [41]3 years ago
8 0

Answer:

Walter company Journal $

Date

Bond investment Dr 1,000,000

Bond premium Dr 50,000

Bank Cr. 1,050,000

Narration. Bond retirement at a premium of 5% over par.

Explanation:

The bond investment account is kept fixed at the amount at which it was subscribe, the corresponding interest are debited to income statement on payment to the bond holders.

In the same vein the retirement of the bond at a premium represents an expenses to the firm which has to be debited to the income statement on payment to the bond holders.

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Sankey Co. has earnings per share of $3.95. The benchmark PE is 18.8 times. What stock price would you consider appropriate
trapecia [35]

Answer:

Stock price = $74.26

Explanation:

<em>The value of a share can be determined using the price earning ratio model. According to this model, the price of a share is estimated as the EPS of the company multiplied by a representative (benchmark) price- earning (P/E) ratio</em> .

The  ratio relates the price of a stock to its earning. A stock with a higher P/R indicates a high potent for growth.

Price of stock =Earnings per share( EPS) × benchmark P/E ratio  

The appropriate comparative price earnings ratio in the question has been given as 18.8 times.

DATA-

EPS- 3.95

PE- 18.8

Stock price = 3.95 ×  18.8= $74.26

Stock price = $74.26

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