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oee [108]
2 years ago
11

A company intends to refinance a portion of its short-term debt in Year 2 and is negotiating a long-term financing agreement wit

h a local bank. This agreement would be noncancelable and would extend for a period of 2 years. The amount of short-term debt that the company can exclude from its statement of financial position at December 31, Year 1.
a. May exceed the amount available for refinancing under the agreement.
b. Depends on the demonstrated ability to consummate the refinancing.
c. Must be adjusted by the difference between the present value and the market value of the current debt.
d. Is zero unless the refinancing has occurred by year end.
Business
1 answer:
Alexxx [7]2 years ago
4 0

Answer:

Refinancing Short-term Debt

The amount of short-term debt that the company can exclude from its statement of financial position at December 31, Year 1:

b. Depends on the demonstrated ability to consummate the refinancing.

Explanation:

Demonstrating the ability to consummate the refinancing agreement of short-term obligations to long-term obligations enables the borrowing entity to exclude the obligations from its current liabilities and to classify the obligations as noncurrent.  This ability is demonstrated when an entity issues post-balance-sheet-date long-term obligation or equity securities or enters into a financing agreement that meets some criteria. These criteria are that the agreement lasts more than 1 year, is noncancelable by the lender, no agreement violation exists at the balance sheet date, and the lender does not default on the agreement.

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Goods Guys Foods established a trust fund that provides $125,000 in scholarships each year for needy students. The trust fund ea
antiseptic1488 [7]

Answer:

$1,724.138

Explanation:

Given:

Payment received each year = $125,000

Rate of return = 7.25 % = 0.0725

Present value = ?

Computation of Present value:

Present value = Payment received each year / Rate of return

= $125,000 / 0.0725

= $1724137.93

Present value = $1724137.93

Present value = $1,724,138 (approx)

Therefore, firm have to contribute  $1,724.138

5 0
3 years ago
Ottawa university sold 15,000 season football tickets at $80 each for its six-game home schedule. what entry should be made when
RUDIKE [14]
<span>The total revenue they earned from selling the football tickets is $1,200,000. As a result, they should debit cash for $1,200,000 and credit for unearned revenue for the same amount.</span>
4 0
3 years ago
How gross profit or loss is computed​
Nutka1998 [239]

Answer:

Take your gross sales revenue for the accounting period and subtract discounts, allowances and returns. This gives you net sales. Subtract the cost of goods sold from net sales and you get gross profit. In some cases, this might be a gross loss

5 0
3 years ago
On June 30, the board of directors of Sandals, Inc., declares and pays a 100% stock dividend on its 30,000, $1 par, common share
Gwar [14]

Answer:

The accounting entries is as follows:

Debit Retained Earnings($35 by 30,000 shares) $1,050,000

Credit: Common Shares Account at Par Value($1 by 30,000 shares)  $30,000

Credit Share Premium Account for Additional Paid in Capital ($34 by 30,000) = $1,020,000

Explanation:

A stock dividend is payment to shareholders by the company in the form of additional shares rather than dividend payment.  This is common where the company is short of liquid funds to effect payment of dividends to its shareholders. They are usually issues in the form of fractions of existing holdings. Stock dividend increases the overall share holdings of the shareholder.

For Stock Dividend, the accounting entry is to transfer from the Retained Earnings to the Share Account and Share Premium or Additional Capital account.

The Share account is credited with the par value of the additional shares issued while the difference between the par value and the market value is credited to the Share Premium account. The full amount of the stock dividend is likewise debited to the Retained Earnings account.

7 0
3 years ago
Analysis reveals that a company had a net increase in cash of $20,000 for the current year.Net cash provided by operating activi
alexandr402 [8]

Answer:

A) $4,000

Explanation:

Calculation for the beginning cash balance

Using this formula

Beginning balance=ending balance-increase in cash

Let plug in the formula

Beginning balance=$24,000 -$20,000

Beginning balance=$4,000

Therefore the beginning cash balance was:$4,000

3 0
2 years ago
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