Answer:
Explanation:
The journal entry is shown below:
On September 30
Bonds payable A/c Dr $1,000,000
Loss on bond retirement A/c Dr $20,000
To Discount on Bond A/c $10,000
To Cash A/c $1,010,000
(Being the callable bond is recorded)
The computation is shown below:
For cash
= Par value of bond + Premium
= $1,000,000 + $10,000
= $1,010,000
For Loss, it would be
= $1,010,000 - $990,000
= $20,000
And, the remaining amount would be transferred to discount on bond
Answer:
Stock value today = $1.21
Explanation:
Current Dividend = D
= $1.13
After 5 years that is D
= $0.50
Since expected growth = 0
Therefore
P
= D / Ke = 0.5/18% = $2.77
Its present value will be 
= $1.21
Stock value today = $1.21
Answer:
The amount of depreciation expense the lessee should record for the first year of the lease is $108,000
Explanation:
To calculate the depreciation expense for each year the first thing you have to do is to substruct from the initial value the fair value at the end fo the lease, obtaining this way the depreciable amount.
For this case it would be:
$810,000 - $270,000= $540,000
Then you have to divide the depreciable amount by the years of the term the lease.
$540,000/5= $108,000
Answer: $17.28
Explanation:
6 month free concession in first year drops rent to:
= 20 / 2
= $10
Effective rent = [Present value of Year 1 rent + Present value of Year 2 rent + Present value of Year 3 rent ] / [ 1 - (1 / (1 + rate)^ number of years) / rate]
= [(10 / (1 + 10%) ) + (21 / (1 + 10%)²) + (22 / (1 + 10%)³)] * [1 - (1 / (1 + 10%)³/ 10%)]
= (9.09 + 17.355 + 16.5289) / 2.48685
= $17.28
When people take money out of the bank, they have to pay them back with a little more and interest is why.<span />
