Answer and Explanation:
The computation is shown below:
Interest payable:
= Borrowed amount × rate of interest × given months ÷ total months
= $80,000 × 7% × 5 ÷ 12
= $2,333.33
And,
Interest expense:
= Borrowed amount × rate of interest × given months ÷ total months
= $80,000 × 7% × 3 ÷ 12
= $1,400
So here for recording the payment of interest the interest payable is debited for $2,333.33
The same is to be considered
Answer:
The correct answer to the following question is Pro forma financial statements.
Explanation:
A subsequent event can be defined as an event which takes place after the reporting period, but before the financial statements of a company are issued. And depending on what kind of event they are like additional information or new events, it will be decided whether these events should be disclosed in a company's financial statement or not.
If it is decided that the subsequent event should be disclosed in the company's financial statement then a pro forma financial statement would be made, in which nature and financial effect of the subsequent event should be disclosed.
Answer:
Price will increase by $277.58
Explanation:
Market rate of Interest of a zero coupon bond can be determined by following formula
Market Rate of Interest = [ ( F / P )^(1/30) ] - 1
4.25% = [ ( $5000 / P )^(1/30) ] - 1
0.0425 + 1 = ( $5000 / P )^1/30
( 1.0425 )^30 = (( $5000 / P )^1/30)^30
3.4856 = $5000 / P
P = $5,000 / 3.4856
P = $1,434.46
Now Calculate the change in Price
Change in price = $1,434.46 - $1,156.88 = $277.58
Price will increase by $277.58
The total amount of money being transferred into and out of a business
