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kati45 [8]
2 years ago
7

Saturn Corporation issued $300,000 par value 10-year bonds at 107 on January 1, 20X3, which Star Corporation purchased. Pluto Co

rporation owns 65% of Saturn's voting shares. On Jan 1, 20X7, Pluto Corporation purchased $120,000 face value of Saturn bonds from Star for $118,020. On the date Pluto purchased the bonds, the bonds' carrying value on Saturn's book was $126,019. The bonds pay 12 percent interest annually on December 31. The preparation of consolidated financial statements for Saturn and Pluto at December 31, 20X9, required the following consolidating entry:
Based on the information given above, what amount of gain or loss on bond retirement is included in the 20X7 consolidated income statement?
a. $8,000 gain
b. $5,200 gain
c. $8,000 loss
d. $5,200 loss
Business
1 answer:
taurus [48]2 years ago
8 0

Answer:

a. $8,000 gain

Explanation:

The face value of the bonds purchased by Pluto Corporation are $120,000. The bonds are purchased at discount of $1,980.  The bonds have carrying value of $126,019 at the time of purchase. The net gain or loss is calculated by the difference between two values.

$120,000 - $126,019 - $6,019

The discount amount of the bond was $1,980.

Total gain on the bonds approximately ($6,019 + $1,980) = $8,000

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Dilution Solutions, Inc. repurchased 500 shares of its $2 par value common stock for $10,000. The effect of this transaction on
Sedbober [7]

Answer: $10,000 increase in Treasury Stock

Explanation:

Treasury stock, is also known refered to as the treasury shares and it occurs when stock is bought buy the issuing company back from the stockholders.

This results in the reduction in the total number of outstanding shares that can be found on the open market. In the above scenario, since Dilution Solutions, Inc. repurchased 500 shares of its $2 par value common stock for $10,000, this will bring about a $10,000 increase in the treasury stock.

3 0
2 years ago
According to WSJ article, companies like Apple, Deere, and Walt Disney recently issued new bonds on the market, totaling $27 bil
lana66690 [7]

Answer: Fall in Benchmark Interest Rates.

Explanation:

This activity was caused by a Refinancing Drive. Refinancing is when entities get a new loan with a lower interest rate and pay off the older loan with a higher interest rate so that they can pay at the lower rate.

Bond interest rates are usually fixed so when interest rates in a country fall, bond holders don't benefit from that. One option they have to take advantage of that is to go on a Refinancing Drive and issue new bonds at those lower rates and then pay off the older ones.

That is what Apple, Deere, and Walt Disney have done.

3 0
2 years ago
A group of middle school students wants to raise money to help build a new school track. They decided to sell donuts before scho
never [62]

Answer:

25 cent/donuts

Explanation:

Demand function have these two points (275, 0), (175, 25)

Demand function equation:

y - 25 = \frac{25 - 0}{175-275} (x-175)

-100y + 2500 = (x - 175)

-4y + 100 = x - 175

x + 4y = 100 + 175

x + 4y = 275....................equ 1

Similarly Supply function have these point (150,0), (200, 50)

Supply function equation:

y - 50 = \frac{50 - 0}{200-150}(x- 200)

50y - 2500 = x - 200

y - 50 = x - 200

x - y = 200 - 150

x - y = 150

By equation 1 & 2

x + 4y = 275

x - y =  150 ==> x = 150+y

So from equ 1 => x + 4y = 275

=> 150+y+4y = 275

=> 150+5y = 275

=> 5y = 275 - 150

=> 5y = 125

=> y = 25

So, the price that the students should charge per donut so that there is neither a surplus nor a shortage of donuts is 25 cent/donuts

4 0
2 years ago
Pool Perfection provided pool maintenance services worth $1,600 during July; in June, the customers had paid in advance for thes
arlik [135]

Answer:

$1,600

Explanation:

It is important to note that the company uses accrual basis accounting. The Service Revenue account should be credited for $1,600

7 0
3 years ago
Which one of the following statements is INCORRECT? Group of answer choices The higher the GDP of a country, the more equal its
Nataly [62]

Answer:

The higher the GDP of a country, the more equal its income distribution. FALSE

Explanation:

The country with the highest GDP, the US, has a medium to high Gini coefficient in income inequality (0.39), and the higher the number, the worse off. China which has the second highest GDP, has a very high coefficient (0.51). The countries with the lowest coefficient are Slovak Republic (0.24), Slovenia (0.24) and Czech Republic (0.25), and they are not necessarily very wealthy nations.

Several developing nations, e.g. Uruguay (0.37), Ukraine (0.26), Uganda (0,.37), etc., all have better income distribution than the US and China. Although generally, countries with high GDP have a a higher income distribution than average, it is not always that way.

4 0
3 years ago
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