Answer:
Effective interest recognized on June 30, 20X1, will be equal to $3,354
Explanation:
Data provided from the question,
Amount of bond issued on January 2, 20X1 = $100,000 of 6% bonds
Interest = $3000
Payable semi-annually on June 30 and December 31
Number of years to mature = 5 years
The bond issued for $95,842 with an effective interest rate of 7%
Therefore, the Effective interest recognized on June 30, 20X1 =
bond issued × effective interest rate × semiannually(1/2)
= $95,842 x 0.07 x 0.5
= $3,354
Answer:
$150
Explanation:
The Warranty Expense account is a liability account and it must include all the estimate costs associated to the merchandise sold:
100 radios were sold and the company estimates to replace 5% or them = 100 x 5% = 5 radios
the cost of replacing 5 radios = 5 radios x $30 per radio = $150
Answer:
He should attend classes at the local college to receive training in management.
Explanation:
Best option.
Answer:
A. The grocery department of a Walmart Supercenter or Target Superstore
Explanation:
- A profit center is a type of business where the business is expected to make into valuable contributions, a profit center can be treated as a separate business of the company.
- The profits and losses for that center are calculated separately. Examples of profit centers include the store, sales organization, or consulting organization.
Answer:
a. 4.94%
b. 11.48%
Explanation:
Here in this question, we are interested in calculating the pretax cost of debt and cost of equity.
We proceed as follows;
a. From the question;
The debt equity ratio = 1.15
since Equity = 1 ; Then
Total debt + Total equity = 1 + 1.15 = 2.15
Mathematically ;
WACC = Cost of equity x Weight of equity + Pretax Cost of debt x Weight of debt x (1-Tax rate)
Where WACC = 8.6%
Cost of equity = 14%
Weight of equity = 1/(total debt + total equity) = 1/(1+1.15) = 1/2.15
Pretax cost of debt = ?
Weight of debt = debt equity ratio/total cost of debt = 1.15/2.15
Tax rate = 21% = 0.21
Substituting these values, we have;
8.6% = 14% x 1/2.15 + Pretax cost of debt x 1.15/2.15 x (1-21%)
8.6% = 14% x 1/2.15 + Pretax cost of debt x 1.15/2.15 x (1-21%)
Pretax cost debt = (8.6%-6.511628%)/(1.15/2.15 x (1-21%))
Pretax cost of debt = 4.94%
b. WACC = Cost of equity x Weight of equity + After tax Cost of debt x Weight of debt
8.6% = Cost of equity x 1/2.15 + 6.1% x 1.15/2.15
Cost of equity = (8.6%-3.26279%)/(1/2.15)
Cost of equity = 11.48%
