Curly just graduated from State U and has three job offers: teaching at a prestigious private high school nine months a year wit
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Answer:
<u>Journal entries:</u>
cash 493,574.88 debit
bonds payable 435,000.00 credit
premium on bp 58,574.88 credit
--to record issuance--
Interest expense 19743
Amortization 6357
cash 26100
--to record Dec 31st, 2020--
Interest expense 19488.72
Amortization 6611.28
cash 26100
--to record June 30th, 2021--
bonds payable 130,500.00 debit
premium on bp 13,681.98 debit
interest expense 17,400.00 debit
gain on redemption 25,081.98 credit
cash 136,500.00 credit
--to record redemption--
premium on BP 4,813.04 debit
interest expense 13,456.96 debit
cash 18,270 credit
-- to record December 31st, 2021--
Explanation:
First, we solve for the proceeds from the bonds payable:
C 26,100 (435,000 x 12% / 2)
time 8 ( 4 years x 2)
yield to maturity 0.04 ( 8% / 2)
PV $175,724.6412
Maturity 435,000.00
time 8.00
rate 0.04
PV 317,850.24
PV c $175,724.6412
PV m $317,850.2392
Total $493,574.8804
We now build the amortization schedule.
We take this value, we multiply by the interest rate and then, solve for amortization and ending carrying value.
<u>To record the redemption:</u>
accrued interest:
435,000 x 0.12 x 4/12 (months from June to oct) = 17,400
premium:
480,606.6 - 435,000 = 45,606.6
proportional of premium:
45,606 / 435,000 x 130,500 = 13.681,98
we now solve for the gain/loss on redemption:
130,500 + 13,681.98 + 17,400 = 161.581,9 value redeem
for cash 136,500
gain on redemption 25.081,98
bonds payable 130,500.00 debit
premium on bp 13,681.98 debit
interest expense 17,400.00 debit
gain on redemption 25,081.98 credit
cash 136,500.00 credit
Now, we solve for Dec 31st, 2021 entry.
bonds payable: 435,000 - 130,500 = 304,500
premium: 45,606 - 13,681.98 = 31.924,02
interest expense:
(304,500 + 31,924.02) x 0.04 = 13,456.96
cash outlay:
304,500 x 0.06 = 18,270
amortization 18,270 - 13,456.96 = 4,813.04
Answer:
Jacobs will earn $1,080,000
Explanation:
The earnings of the work factor are made up of two factors: Transfer Earnings + Economic Rents.
Transfer earnings are defined as the minimum required amount that a company must pay its workers to keep them in the workplace. Below this amount, the worker will leave his job. In this case, the Transfer Earnings are $ 80,000, which is the base salary of every designer.
On the other hand, the Economic Rents are the additional income that the worker receives and that is above the minimum level they need to supply his work (In this case, the additional income is given by Jacobs' special ability). In numerical terms, the Economics Rents amount is equivalent to the difference between the earnings obtained by the Jacobs company and the earnings obtained by the other companies.
That is: 1,500,000 - 500,000 = 1,000,000.
Therefore Jacobs salary is equivalent to 80,000 + 1,000,000 = 1,080,000.
From this, it can be deduced that approximately 92% of Jacobs' salary is equivalent to Economic Rents. From the theoretical point of view, this makes sense, because the demand for designers (which is a highly qualified profession) is very inelastic, and the more inelastic the greater the proportion of Economic Rents as part of the salary. In the annexes, I show it graphically.
