Answer:
case 1)
bonds payable 24,000
loss on retirement 5,000
discount on BP 4,500
cash 24,500
case 2)
bonds payable 24,000 debit
premium on BP 1,000 debit
gain on retirement 500 credit
cash 24,500 credit
Explanation:
we are going to write off the bonds payable and their discount account
we also debit the cash account for the amount of cash outlay to retire the bond
the difference between cash and the carrying value will be the loss on retirement when lower
and a gain on retirement when higher.
case 1)
carrying value 19,500
total cash outlay (24,500)
loss on retirement (5,000)
case 2)
carrying value 25,000
total cash outlay (24,500)
gain on retrement 500
Answer:
Dr Mohan account 627
Cr Sales 627
Explanation:
Preparation of Journal entry
If the amount of RS. 600 is the goods costing that was supplied to mohan in which the issued invoice is 10% above cost with a 5% discounts the First step will be to calculate the Invoice price.
Calculation of the invoice price
Invoice price=[600+10%*600)+[5%*(600+10%*600)]
Invoice price=(600+60)-[5%*(600+60)]
Invoice price=660-(5%*660)
Invoice price=660-33
Invoice price=627
Now let prepare the Journal entry
Dr Mohan account 627
Cr Sales 627
(Being to record good sold to Mohan)
The main disadvantage of the valuation method is that the terminal value tends to dominate the total value in many cases.
In a free cash flow valuation, the intrinsic value equals present value of its free cash flow and thus, the net cash flow is left over for distribution to stockholders and debt-holders in each period.
- So, the disadvantage of the free cash flow valuation method is that the terminal value tends to dominate the total value in many cases.
Hence, the Option B is correct.
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