Answer:
Journal Entry
01 July Debit Investment $240 million Credit Bank $200 million Credit Discount on investment $40 million
31 Dec Debit Bank $7,2 Million Debit Discount on Bond $0.8 million Credit Interest Income $8 million
Debit Fair Value loss on investment $30 million Credit Investment $30 million
Explanation:
Interest is received semiannually
6%/2 = 3%
interest = $240 million * 3% =7,200,000
8%/2 = 4%
Interest market $200 million * 4% =8,000,000
Fair value loss = 240 million - 210 million
= 30 million loss because cost is greater than fair value
it's Kevin Duran doesn't need an explanation
Answer:
Income Statement For the Year Ended 2014 $
Revenue 2,984,000
Cost of Goods Sold (1,419,000)
Gross Profit 1,565,000
Selling, general, and administrative expenses (454,000)
Earnings before Interest and Tax 1,111,000
Interest Expense (288,000)
Profit before Tax 823,000
Tax Expense (318,000)
Profit After Tax 505,000
Operating Cash Flows $
Earnings before Interest and Tax 1,111,000
Depreciation 258,000
Interest Expense (288,000)
Tax Expense (318,000)
Cash Flow from Operating Activities 763,000
Explanation:
Revenue is an income statement item which is reported at the top. Cost of Goods Sold is deducted from revenue to find out Gross Profit. After the Gross Profit is derived then we deduct Selling and Administrative cost. We can now have Earnings before Interest and Tax (EBIT). Interest Expense is deducted from the EBIT. We derived Profit before Tax. After that we deduct Tax Expense and we can have Profit After Tax.
Operating cash flows starts with Earnings before Interest and Tax. We add back Depreciation and deduct interest expense and Tax expense. Cash flow from Operating Activities is derived.
Answer:
Consider the following analysis.
Explanation:
<u>Net Income is adjusted for below
</u>
Depreciation and amortization expense.
Revenues and expenses that did not provide or use cash.
Changes in current liabilities related to operating activities.
Gains and losses from nonoperating items.
<u>Net Income is not adjusted for:
</u>
Changes in noncurrent assets and noncurrent liabilities.
Answer: The overall price level increased.
Explanation: The rise in the overall price level is termed as inflation. From the information we can see that the average price of the three goods in 2015 was $7.50. A year later, the average price changed to $7.58.
Therefore, the overall price level rose as the average price level increased from $7.50 to $7.58.