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marusya05 [52]
2 years ago
9

The balance sheet of Indian River Electronics Corporation as of December 31, 2020, included 11.75% bonds having a face amount of

$91.5 million. The bonds had been issued in 2013 and had a remaining discount of $4.5 million at December 31, 2020. On January 1, 2021, Indian River Electronics called the bonds before their scheduled maturity at the call price of 102.
Required: Prepare the journal entry by Indian River Electronics to record the redemption of the bonds at January 1, 2021. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars.)
Business
1 answer:
Vanyuwa [196]2 years ago
3 0

Answer:

January 1, 2021

Bonds Payable                                           $91.5 million Dr

Loss on Redemption-Bonds Payable      $6.33 million Dr

         Discount on Bonds Payable                    $4.5 million Cr

         Cash                                                            $93.33 million Cr

Explanation:

To calculate the loss on redemption of the bonds, we first need to calculate the value at which bonds have been redeemed. The bonds are redeemed at 102 which means they are redeemed at 102% of the face value.

Redemption amount = 91.5 million * 102% = 93.33 million

The bonds have a carrying value on redemption date of,

Carrying value = Face Value - Discount

Carrying value = 91.5 - 4.5 = $87 million

The loss on redemption of bonds is = 93.33 - 87 = $6.33 million

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Calculation of regular earnings

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3 years ago
Wendell’s Donut Shoppe is investigating the purchase of a new $40,000 donut-making machine. The new machine would permit the com
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<u>Solution and Explanation:</u>

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<u>Answer:2 </u>The internal rate of return promised by the new machine to the nearest whole percent is:

Particulars  Year  Amount ($)

Cash outflow  0  -40000

Cash inflow  1  10000

                2  10000

               3  10000

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IRR   13%

=13% using IRR function in excel.

<u>Answer:3</u> IRR=17%

with salvage value

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Cash outflow  0  -40000

Cash inflow  1  10000

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Shelly’s preferences for consumption and leisure can be expressed as U(C, L) = (C – 100) * (L – 40). This utility function impli
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C = 10[110 - L] + 320

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where,

C- consumption

w - wages

t - taxes

L - Leisure

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L = 100 then,

C = 420

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MRS=\frac{220}{70}

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(d) At optimal level,

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Preparation of the journal entry to record this transaction on January 2, 2020, and on December 31, 2020.

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Answer:

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