Answer:
A. $840,000
B. Discount
C. Annual interest expense on these bonds will be more than the amount of interest paid each year.
Explanation:
Data
Bonds issued = $21,000,000
Coupin rate = 4.0%
Market Interest rate = 4.46%
Requirement A: Annual interest amount
Interest amount = Bonds issued x coupon rate
Interest amount = $21,000,000 x 4.0%
Interest amount = $840,000
Requirement B: Whether it is Premium or Discount?
Bonds that Atom Endeavour Co. issued are discount as you can clearly see in the data that the market rate is higher than the coupon rate. Investors who will buy these bonds surely expect a capital gain.
Requirement C:
The discount on the issue of bonds is amortized to interest expense over the life of the bond, therefore the interest expense on these bonds will be more than the amount of interest paid each year,
Answer:
Leveraging the experience of one group to help another group.
Explanation:
Southwestern Construction is hoping to use (leverage) the knowledge of the team in one office by sharing the knowledge with another office and hoping that the second office will also become more efficient simply by adopting the new strategies.
The Allowance for Doubtful Accounts T-account will have the write-offs of specific customers sales discounts and allowances on the credit side.
<h3>What is
Doubtful Accounts?</h3>
It lowers the value of an asset—in this case, the accounts receivable—the allowance for dubious accounts is referred to as a "contra asset."
The allowance, also known as a bad debt reserve, is management's projection of the amount of accounts receivable that customers will not pay.
Thus, option B is correct.
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Answer:
c
Explanation:
Internal rate of return is the discount rate that equates the after-tax cash flows from an investment to the amount invested. It is a capital budgeting method.
IRR can give conflicting answers when negative cash flow in mixed with positive cash flows during the life of the project. that is the negative cash flow does not occur at the beginning of the project
IRR considers the time value of money
Consider two sceneries
In the first scenario, 50,000 is invested in a project, the cash flow in year 1 and 2 is 0. the cash flow in year 3 is 150,000. IRR is 44.2%
n the second scenario, 50,000 is invested in a project, the cash flow in year 1 is 50,000. cash flow in year 2 100,000 and 3 is 0 . IRR is 100%
IRR gives higher value to cash flows occurring in earlier years
Answer:
$6
Explanation:
depreciation rate per hour using the units-of-production method = (cost of asset - residual value) / estimated hours of operation
($80,000 - $5,000) / 12,500 = $6
