Answer:
Option A, total debits to the inventory account would be $37,800, is correct
Explanation:
The cost of the merchandise inventory to Wilson Company is the cost of the inventory purchased and the freight-in cost.
In other words, the amount to be recognized in merchandise inventory account is the sum of both amounts i.e $35,000+$2800=$37,800
This would be debited to merchandise inventory and $2,800 would be credited to the cash account while $35,000 is credited to accounts payable
Answer: (a) 6%
(b) 10.61%
(c) Yes
Explanation:
a) After tax cost of debt = Yield (1- tax)
= 8 ( 1 - 0.25)
= 8 × 0.75
= 6%
b) 
= 0.1061 or 10.61%
Note: Cost of preferred stock is not tax deductible
c),Yes the treasurer is correct ,The cost of debt is 5% less than cost of preferred stock [10.61 - 6 = 4.61%]
Answer:
The recognized gain is $2000
Explanation:
The carrying value of the cab sold is the difference between the original cost of $23,000 and the accumulated depreciation of $16,000, hence, carrying value is $7000($23000-$16,000)
The cash proceeds from the disposal of then cab are $9000
Gain on disposal of cab=$9000-$7000
Gain on disposal of cab=$2000
Answer:
June 30 Bond Interest Expense Dr $81000
Cash Cr $81000
(6%/2*$2,700,000)
December 31 Bond Interest Expense Dr $81000
Cash Cr $81000
Bonds Payable Dr $2,700,000
Cash Cr $2,700,000
Explanation:
Record the entry for the first semiannual interest payment and the second semiannual interest payment.
June 30 Bond Interest Expense Dr $81000
Cash Cr $81000
(6%/2*$2,700,000)
December 31 Bond Interest Expense Dr $81000
Cash Cr $81000
Record the entry for the maturity of the bonds on December 31, 2022 (assume semiannual interest is already recorded).
Bonds Payable Dr $2,700,000
Cash Cr $2,700,000
The correct statement among the given is 'cost of equity is always equal to or greater than the cost of debt'
.
Option-c
<u>Explanation:
</u>
Debt on assets which are less likely to lose is secured more uncertainty leads to lower returns, hence lower costs. The risk of loss to equity holders also remains greater and not even assured against any collateral. In comparison to higher risk equity holders foresee higher returns.
This is why debt costs are higher. Such high risk will lead to higher equity costs than debt costs. To investors, equity costs would be returned on equity investment, and debt costs would be made as part of debt investment.
