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mario62 [17]
3 years ago
7

A company issued 5-year, 7% bonds with a par value of $500,000. The market rate when the bonds were issued was 6.5%. The company

received $505,000 cash for the bonds. Using the straight-line method, the amount of recorded interest expense for the first semiannual interest period is:
Business
1 answer:
san4es73 [151]3 years ago
4 0

Answer:

The correct answer is $17,000.

Explanation:

According to the scenario, the given data are as follows:

Bonds percent = 7%

Par value of bonds = $500,000

Market rate = 6.5%

Cash received = $505,000

So, we can calculate the amount of recorded interest for semiannual interest period by using following formula:

First we calculate the premium on bonds,

So, Premium on bonds = Cash received - Par value of bonds

= $505,000 - $500,000

= $5,000

So, straight line amortization = Premium on bonds ÷ years

= $5,000 ÷ 5

= $1,000

So, Amount of interest expense for first semiannual is as follows:

Amount of interest = ( Par value of bonds × Bonds percent ) ÷ 2 - (straight line amortization ÷ 2)

= ( $500,000 × 7% ) ÷ 2 - ( $1,000 ÷ 2 )

=  $17,500 - $500

= $17,000.

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A company is considering whether to purchase or lease a piece of equipment for an upcoming project. The cost to purchase is $10,
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Answer:

If the company is going to use the machine for 20 days, it is cheaper to lease it.

Explanation:

Giving the following information:

The cost to purchase is $10,000 plus $100 per day to operate or $500 per day to lease

<u>First, we need to structure the total cost formula for each option:</u>

Purchase= 10,000 + 100x

x= number of days

Lease= 500x

x= number of days

<u>Now, we can determine the total cost for 20 days:</u>

Purchase= 10,000 + 100*20= $12,000

Lease= 500*20= $10,000

If the company is going to use the machine for 20 days, it is cheaper to lease it.

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3 years ago
At a busy meeting of the international sprout growers, you want to make contact with as many people as possible. luckily, you re
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The correct option is B.
The eight minute rule is put in place to improve efficiency and productivity. In a busy meeting, where one is meeting a lot of new people that one will like to interact with, this rule demands that one should only spend only a few minute with each person.
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3 years ago
On October 1, 2021, Blue Corp. issued $744,000, 7%, 10-year bonds at face value. The bonds were dated October 1, 2021, and pay i
Luda [366]

Answer:

Blue Corp.

Journal Entry

Date            Account Titles and Explanation   Debit   Credit

Oct. 1, 2021 Cash                                        $744,000

                   Bonds Liability                                     $744,000

To record the issuance of the 7%, 10-year bonds at face value.

Explanation:

a) Data and Analysis:

Face value of 7%, 10-year bonds = $744,000

Bonds issue = at face value

Issue date = October 1, 2021

Interest payment = annual

Interest payment date = October 1

Annual interest payment = $52,080 ($744,000 * 7%)

Records on December 31, 2021:

Accrual of interest for the year:

Interest Expense $13,020

Interest payable $13,020

To accrue interest for 3 months.

Records on October 1, 2022:

Interest Expense $39,060

Interest payable $13,020

Cash $52,080

To record the interest payment.

8 0
3 years ago
WaterwayCorporation had net credit sales of $13100000 and cost of goods sold of $9070000 for the year. The average inventory for
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Answer:

The inventory turnover for the period is 5

Explanation:

Inventory turnover is the ratio which stated that how many times the company replaces as well as sells the stock of goods during a specific year or period.

The formula for computing the inventory turnover is as:

Inventory turnover = Cost of goods sold / Average inventory

where

Cost of goods sold (COGS) = $9,070,000

Average inventory = $1,814,000

Putting the values above:

Inventory turnover = $9,070,000 / $1,814,000

Inventory turnover = 5

8 0
3 years ago
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