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solmaris [256]
3 years ago
15

Which of the following characteristics would lead theauditor to assess inherent risk relating to financial reporting at a higher

level?a. The account balance represents an asset that is relatively easily stolen.b. The controls over the account balance are weak.c. The company has a history of exactly meeting analyst estimates.d. The company is in an industry that is mature and declining.
Business
1 answer:
gayaneshka [121]3 years ago
6 0

Answer:

C. The company has a history of exactly meeting analyst estimates.

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On the first day of its fiscal year, Chin Company issued $10,000,000 of five-year, 7% bonds to finance its operations of produci
Orlov [11]

Answer:

Chin Company

Journal Entries

1. Issuance of the bonds:

Debit Cash $9,594,415

Debit Bond Discounts $405,585

Credit Bonds Liability $10,000,000

To record the issuance of the bonds at a discount.

2. June 30:

Debit Bond Interest Expense $383,777

Credit Cash $350,000

Credit Amortization of Bond Discount $33,777

To record the first interest payment and amortization of bond discount.

3. December 31:

Debit Bond Interest Expense $385,128

Credit Cash $350,000

Credit Amortization of Bond Discount $35,128

To record the second interest payment and amortization of bond discount.

b. The amount of the bond interest expense for the first year:

June 30: Bonds' Interest expense = $383,777

Dec. 31: Bonds' Interest expense = $385,128

Total bond interest expense for the first year = $768,905

c. Chin Company was able to issue the bonds for only $9,594,415 rather than for the face amount of $10,000,000 because the bonds were issued at a discount and not face value.  Bonds can be issued at face value, discount, or premium, depending on the prevailing investor's sentiments and the attractiveness of the bonds to investors.

Explanation:

a) Data and Calculations

Face value of bonds = $10 million

Discounted value (Cash receipt) = $9,594,415

Total amount of discount = $405,585

Bond's interest rate = 7%

Market yield = 8%

Bond maturity period = 5 years

Payment period = semiannually

Issuance of the bonds:

Cash $9,594,415 Bond Discounts $405,585 Bonds Liability $10,000,000

June 30:

Cash payment for interest = $350,000 ($10,000,000 * 3.5%)

Bonds' Interest expense = $383,777 ($9,594,415 * 4%)

Amortization of bond discount = $33,777 ($383,777 - $350,000)

Bond book value = $9,628,192 ($9,594,415 + $33,777)

December 31:

Cash payment for interest = $350,000 ($10,000,000 * 3.5%)

Bonds' Interest expense = $385,128 ($9,628,192 * 4%)

Amortization of bond discount = $35,128 ( $385,128 - $350,000)

Bond book value = $9,663,410 ($9,628,192 + $35,218)

4 0
2 years ago
A permanent employee works in the same position for his or her entire career.
kompoz [17]

Answer:

false

Explanation:

6 0
3 years ago
on november 1, 2021, aviation training corp. borrows $60,000 cash from community savings and loan. aviation training signs a thr
Juli2301 [7.4K]

Answer:

Explanation:

Nada babosa gracias

6 0
2 years ago
Shambo Corporation has provided the following contribution format income statement. Assume that the following information is wit
morpeh [17]

Answer:

26.66 or 27%

Explanation:

The computation of the margin of safety percentage is shown below:

Margin of Safety

= 100 - Break Even %

= 100 - 73.33

= 26.66 or 27%

Working Note

Sales (3,000 units) $60,000

Less: Variable expenses -$42,000

Contribution margin -$18,000

CM Ratio (A) 30.00%

Fixed expenses (B) 13,200

Break Even Point C = B ÷ A 44,000

Break Even % of Total Sale 73.33%

5 0
3 years ago
On March 1, 2019, Baltimore Corporation had 60,000 shares of common stock outstanding with a par value of $5 per share. On March
Eva8 [605]

Answer:

The retained earning would be debited by ($60,000)

Explanation:

According to the given data we have the following:

Number of shares outstanding=60,000

par value of $5 per share

stock dividend declared=cc

Therefore,  to calculate the amount either (debited) or credited to retained earnings we would have to make the followin calculation:

Dividend value=Number of shares outstanding×par value of $5 per share×stock dividend declared

Dividend value=60,000×$5×20%

Dividend value=($60,000)

Therefore, as the dividend paid reduces retained earnings, the retained earning would be debited by ($60,000)

3 0
3 years ago
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