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ArbitrLikvidat [17]
3 years ago
8

E14.3 (LO 1) (Entries for Bond Transactions) Presented below are two independent situations. 1. On January 1, 2020, Simon Compan

y issued $200,000 of 9%, 10-year bonds at par. Interest is payable quarterly on April 1, July 1, October 1, and January 1. 2. On June 1, 2020, Garfunkel Company issued $100,000 of 12%, 10-year bonds dated January 1 at par plus accrued interest. Interest is payable semiannually on July 1 and January 1. Instructions For each of these two independent situations, prepare journal entries to record the following. a. The issuance of the bonds. b. The payment of interest on July 1. c. The accrual of interest on December 31. (Kieso 14-38) Kieso, Donald E., Jerry Weygandt, Terry Warfield. Intermediate Accounting, 17th Edition. Wiley, 02/2019. VitalBook file. The citation provided is a guideline. Please check each citation for accuracy before use.
Business
1 answer:
Savatey [412]3 years ago
8 0

Answer:

1) January 1, 2020

Dr Cash 200,000

    Cr bonds payable 200,000

July 1, first coupon payment

Dr Interest expense 4,500

    Cr Cash 4,500

December 31, fourth coupon payment

Dr Interest expense 4,500

    Cr Interest payable 4,500

2) June 1, 2020

Dr Cash 104,000

     Cr Bonds payable 100,000

     Cr Bond interest payable 4,000

July 1, first coupon payment

Dr Interest expense 2,00

    Cr Cash 2,000

December 31, accrued interest expense

Dr Interest expense 6,000

    Cr Interest payable 6,000

 

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In July, one of the processing departments at Okamura Corporation had beginning work in process inventory of $26,000 and ending
notsponge [240]

Answer:

Total cost accounted will be $192000

So option (C) will be correct answer

Explanation:

We have given beginning work in process inventory = $26000

Ending work in process inventory = $31000

And cost of units transferred from the department is $161000

We have to find the total cost accounted

Total cost account will be equal to sum of ending process inventory and cost of units transferred out from the department

So total cost accounted = $31000 + $161000 = $192000

So option (C) will be correct answer  

7 0
3 years ago
Suppose that a delivery company currently uses one employee per vehicle to deliver packages. Each driver delivers 60 packages pe
lisabon 2012 [21]

Answer:

a. What is the MRP per driver per day?

  • the marginal revenue product per driver = 60 packages x $20 = $1,200 per day

b. Now suppose that a union forces the company to place a supervisor in each vehicle at a cost of $300 per supervisor per day. The presence of the supervisor causes the number of packages delivered per vehicle per day to rise to 60  packages per day What is the MRP per supervisor per day? By how much per vehicle per day do firm profits fall after supervisors are introduced?

  • if the drivers were already delivering 60 packages per day without the supervisor, then the addition of the supervisor doesn't change anything. So the MRP of the supervisor is $0. That means that the company's profits will decrease by $300 per day due to the supervisors.

c. How many packages per day would each vehicle have to deliver in order to maintain the firm's profit per vehicle after supervisors are introduced?

  • $300 / 20 = 15 packages per day
  • in order to maintain the profit per vehicle, each team of delivery man + supervisor should be able to deliver 75 packages per day.

d. Suppose that the number of packages delivered per day cannot be increased but that the price per deliver might potentially be raised. What price would the firm have to charge for each delivery in order to maintain the firm's profit per  vehicle after supervisors are introduced?

  • $300 / 60 = $5
  • the price of each package delivered should increase by $5 to $25 per package.
6 0
3 years ago
One year ago, Alpha Supply issued 15-year bonds at par. The bonds have a coupon rate of 6.5 percent, paid semiannually, and a fa
Masja [62]

Answer:

option (C) - 6.11%

Explanation:

Data provided :

Coupon rate one year ago = 6.5% = 0.065

Semiannual coupon rate = \frac{0.065}{2} = 0.0325

Face value = $1,000

Present market yield = 7.2% = 0.072

Semiannual Present market yield, r = \frac{0.072}{2} = 0.036

Now,

With semiannual coupon rate bond price one year ago, C

= 0.0325 × $1,000

= $32.5

Total period in 15 years = 15 year - 1 year = 14 year

or

n = 14 × 2 = 28 semiannual periods

Therefore,

The present value = C\times[\frac{(1-(1+r)^{-n})}{r}]+FV(1+r)^{-n}

= \$32.5\times[\frac{(1-(1+0.036)^{-28})}{0.036}]+\$1,000\times(1+0.036)^{-28}

or

= $32.5 × 17.4591 + $1,000 × 0.37147

= $567.42 + $371.47

= $938.89

Hence,

The percent change in bond price = \frac{\textup{Final price - Initial price}}{\textup{Initial price}}\times100\%

= \frac{\textup{938.89-1,000}}{\textup{1,000}}

= - 6.11%

therefore,

the correct answer is option (C) - 6.11%

4 0
3 years ago
Mariposa Inc is considering improving its production process by acquiring a new machine. There are two machines management is an
kondor19780726 [428]

Answer:

Machine B should be purchased because it has a lower equivalent annual cost

Explanation:

To determine the better of the two options, we would compare the equivalent annual cost of each options using a discount rate of 14% per annum

Equivalent annual cost = Total PV of cost /Annuity factor

Total PV of cost = Initial cost + PV of annual operating cost

PV of annual operating cost= Annual operating cost × Annuity factor

Annuity factor = (1- (1+r)^(-n))/r

r- rate , n- years

Machine A

PV of annual operating cost = 8,000 × (1- 1.14^(-3)/0.14= 18573.05622

PV of total cost = 290,000 +18573.05622 =  308,573.06  

Uniform Annual cost =  308,573.06 /2.321632027 =  132,912.13  

Equivalent annual cost = $132,912.13

Machine B

PV of annual operating cost = 12,000 × (1- 1.14^(-2)/0.14= 19759.92613

PV of total cost = 180,000   + 19759.92613 =  199,759.93  

Equivalent annual cost =  199,759.93 /1.6466=$121,312.15  

Equivalent annual cost = $121,312.15

Machine B should be purchased because it has a lower equivalent annual cost

Total PV of cost

6 0
2 years ago
Which of the four external processes in the consumer’s culture do you think have been the most important to the success of Dove’
Tcecarenko [31]

Answer and explanation:

Dove's campaign for "Real Beauty" used the values, personality and lifestyle features to drive its advertisements to success. Dove achieved that purpose promoting the idea that there is no set definition of beauty and spreading the point of view that women are beautiful on their own.

Dove tore down the stereotype of conventional beauty by targeting its products to women of different ages, races, sizes, and social classes which helped to broaden the company's market segment since most women identified themselves with Dove's advertisements.

3 0
3 years ago
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