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arlik [135]
3 years ago
12

On January 1, Year 1. a company issues $100.000 of 8% bonds maturing in 10 years when the market rate of interest is 9%. The bon

ds were issued at a discount. Market interest rates drop to 6% by December 31, Year 2. The company retires these bonds on December 31, Year 2. Which of the following is true?
a) The bonds can be retired at their carrying value
b) The company will incur a loss
c) The company will incur again
d) No gain or loss will be recorded
Business
1 answer:
Margarita [4]3 years ago
5 0

Answer:

b) The company will incur a loss

Explanation:

The market rate at the time of issue = 9%, while coupon rate = 8%, it says bonds provide lesser return when compared to the market rate.  

At end of year 2 market rate drops to 6% which is lower than the Bond's coupon rate. Which means the bond's providing high return when compared to the market. So, company to retire the bonds need to pay more than the par value.

As company should retire these bonds more than par value, the company incur a loss.

Option 'B is correct

The company incur a loss

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Forlornistan is a country in the midst of a serious economic downturn. Forlornistan's GDP has declined steadily for over three y
goblinko [34]

Answer:

The correct answer is option c.

Explanation:

Forlornistan is experiencing an economic downturn, the GDP has steadily declined, the employment rate is very low and the CPI is falling.

All these characteristics show that the economy is going through economic depression.

Depression refers to the situation in which an economy suffers a downturn in economic activities. It involves decrease in output level, price and employment rate.

6 0
3 years ago
During the adjusting process two transactions were missed. The first is for unearned rent revenue of which $450 was earned durin
masya89 [10]

Answer:

3. net income is understated by $175

Explanation:

There were two transactions omitted. The first transaction is unearned rent revenue of which $450 was earned. This earned rent revenue increases income by $450. While the second transaction was accrued interest payable of which $275 is owed. This interest payable increases liabilities by $275.

Therefore, from the above, income or revenue is understated by $450, while expenses is understated by $275.

Therefore, net income is understated by income less expenses, thus 450 - 275 = $175. This also implies that liabilities are overstated by $175.

4 0
3 years ago
Which two investment options would be best if you are 20 year old, just starting to save, and want to retire when you are 70? Co
Murljashka [212]

Answer:

Diverisify

Explanation:

The best option would be to diverisify between various things. Part into a promising crypto such as Ethereum or Bitcoin. Part into some basic index funds such as the SPY (S&P500), some bigger tech companies such as Apple and finally a more risky investment into a stock or crypto which is only in the beginning of its age. If you would like protection against a crisis or similar you could buy some Put options for your stocks.    

3 0
3 years ago
A restaurant chain sponsors a charity that provides support to the parents of children being treated for cancer. How would the u
VARVARA [1.3K]

Answer:

b. The money spent is worth the boost it gives to corporate image.

Explanation:

A restaurants charity  can be known as the activities related to the corporate social responsibility. Here the activities can be considered over and above what the law related to the land has prescribed and normally it is motivated to represent the company really care for the society also not the profit is only the purpose and in return the society helps the company to increased the profits

Therefore the option b is correct

4 0
3 years ago
Which of the following is true about corporate cultures?a. Corporate cultures are not influenced by the people comprising that o
vladimir1956 [14]

Answer:

Corporate cultures can hinder individuals in making the "right" decisions.-c.

6 0
3 years ago
Read 2 more answers
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