Answer:
cash 96,535 debit
discount on BP 3,465 debit
Bonds Payable 100,000 credit
Explanation:
We need to determinate the price at which the bonds were issued:
Which is the present value of the coupon payment and maturity
Coupon payment: 100,000 x 10% / 2 = 5,000
time 4 (2 years x 2 payment per year)
rate 0.06 (12% annual / 2 = 6% semiannual)
PV $17,325.5281
Maturity (face value) $100,000.00
time 4.00
rate 0.06
PV 79,209.37
PV c $17,325.5281
PV m $79,209.3663
Total $96,534.8944
As the bonds are issued below face value there is a discount:
100,000 - 96,535 = 3,465
the entry will recognize the cash procceds and the creation of a liaiblity
we will also use an auxiliar account for the discount on the bonds
Answer:
The correct answer is false.
Explanation:
A firm incurs both variable cost and fixed cost in the short run. If the firm is able to cover the variable cost in the short run it will continue operating. However, if it is not able to cover its variable cost it will stop operating.
So, if the demand falls such that total revenue is not able to cover total cost but the variable cost is being covered, the firm will not stop production.
In the long run, all the costs are variable. So when the revenue is not able to cover cost, the firms will stop operating.
STEM: nanobiologist, statistician, automotive engineer.
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A) Payment = Loss - Deductible
because you always need to pay your deductible so you won't get this amount of money back