2

When Patey Pontoons issued 6% bonds on January 1, 2018, with a face amount of $600,000, the market yield for bonds of similar ri

Sliva [168]

Answer:

1.- issued at : $579,378

2.- the schedule is attached.

3 and 4.- journal entries

cash 579,378 debit

discount on bonds payable 20,622 debit

bonds payabe 600,000 credit

--to record issuance-------

interest expense 20278.23 debit

discount on bonds payable 2278.23 credit

cash 18000 credit

--to record June 30th payment---

5.-At December 31th 2018 will report as follow:

bonds payable 600,000

discount on bonds (15,986)

net 584,014

6.- it will report interest expense for:

20,278.23 June

20,357.97 December

total: 40.636,2‬

7.- maturity:

interest expense 20,898.55

discount on bonds payable 2,898.55

cash 618,000

Explanation:

For the value of the bonds at issuance, we will calcualtethe present value of the coupon payment and the maturity at market rate.

$C \times \frac{1-(1+r)^{-time} }{rate} = PV\\$

C 18,000 ( 600,000 x 0.06/2)

time 8 (4 years x 2 payment per year

rate 0.035(market rate / 2)

$18000 \times \frac{1-(1+0.035)^{-8} }{0.035} = PV\\$

PV $123,731.1997

$\frac{Maturity}{(1 + rate)^{time} } = PV$

Maturity 600,000.00

time 8.00

rate 0.035

$\frac{600000}{(1 + 0.035)^{8} } = PV$

PV 455,646.93

PV c $123,731.1997

PV m $455,646.9337

Total $579,378.1334

for the schedule we will multuply the carrying value by the market rate.

the ncompare with the proceed in cash to know the amortizaiton.

This amortization will increase the carrying value of the loan.

5 0

3 years ago

Robert is the sole shareholder and CEO of ABC, Inc., an S corporation that is a qualified trade or business. During the current

olga2289 [7]

Answer:

$272,000

Explanation:

The qualified business income of Robert is $272,000 as the Robert salary of $81,600 is already deducted from the net income .

4 0

3 years ago

A stock you are evaluating just paid an annual dividend of $2.70. Dividends have grown at a constant rate of 2.4 percent over th

Nady [450]

Answer:

Value of the stock in four years: $22.69

Explanation:

We use the gordon model to sovle for the intrinsic value (fair value) of the share according to their future cash flow:

$\frac{divends_1}{return-growth} = Intrinsic \: Value$

the formula uses next year dividends so we need to calcualte:

2.70 x 1.024 = 2,7648‬

Now we can solve for the value of the stock:

g = 0.024

r = 0.158

$\frac{2.7648}{0.158-0.024} = Intrinsic \: Value$

Present Value = 20.63283582

That is the value of the stock today.

Now we apply the grow factor for the next four year:

$Principal \: (1+ r)^{time} = Amount$

Principal 20.63283582

time 4.00

rate 0.02400

$20.6328358208955 \: (1+ 0.024)^{4} = Amount$

Amount 22.69

6 0

3 years ago

What inspired Selfridge to ensure that customers in his store could browse at their leisure?

Vadim26 [7]

Answer:

the strict policies at other stores that took away the pleasure of shopping inspired Selfridge to ensure that other customers at his store could browse at their leisure

5 0

3 years ago

The internal rate of return method is not subject to the limitations of the net present value method when comparing projects wit

zalisa [80]

Answer: A. The internal rate of return is expressed as a percent rather than the absolute dollar value of present value.

Explanation:

The internal rate of return is used in calculating the rate of return for the investment of a company. During the calculation, external factors like cost of capital, inflation, risk free rate are all excluded.

The internal rate of return method is not subject to the limitations of the net present value method when comparing projects with different amounts invested because it's expressed as a percent rather than the absolute dollar value of present value..

3 0

3 years ago