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Elan Coil [88]
3 years ago
15

Headland Company loans Sarasota Company $2,190,000 at 6% for 3 years on January 1, 2020. Headland intends to hold this loan to m

aturity and has the financial ability to do so. The fair value of the loan at the end of each reporting period is as follows. December 31, 2020 $2,238,000 December 31, 2021 2,210,000 December 31, 2022 2,190,000 Prepare the journal entry(ies) at December 31, 2020, and December 31, 2022, for Headland related to these bonds, assuming (a) it does not use the fair value option, and (b) it uses the fair value option. Interest is paid on January 1.
Business
1 answer:
Scrat [10]3 years ago
5 0

Answer:

A. December 31, 2020

Dr Interest Receivable $131,400

Cr Interest Revenue ($131,400)

December 31, 2022

Dr Interest Receivable $131,400

Cr Interest Revenue ($131,400)

B. December 31, 2020

Dr Interest Receivable $131,400

Cr Interest Revenue ($131,400)

Dr Debt Investment $48,000

Cr Unrealized Holding Gain or Loss-Income ($48,000)

December 31, 2022

Dr Interest Receivable $131,400

Cr Interest Revenue ($131,400)

Dr Unrealized Holding Gain or Loss-Income $20,000

Cr Debt Investments ($20,000)

Explanation:

A. Preparation of the journal entry(ies) at December 31, 2020, and December 31, 2022 assuming it does not use the fair value option,

December 31, 2020

Dr Interest Receivable $131,400

Cr Interest Revenue ($131,400)

($2,190,000*6%)

December 31, 2022

Dr Interest Receivable $131,400

Cr Interest Revenue ($131,400)

B. Preparation of the journal entry(ies) at December 31, 2020, and December 31, 2022 assuming it uses the fair value option. Interest is paid on January 1

December 31, 2020

Dr Interest Receivable $131,400

Cr Interest Revenue ($131,400)

Dr Debt Investment $48,000

Cr Unrealized Holding Gain or Loss-Income ($48,000)

($2,238,000-2,190,000)

December 31, 2022

Dr Interest Receivable $131,400

Cr Interest Revenue ($131,400)

Dr Unrealized Holding Gain or Loss-Income $20,000

Cr Debt Investments ($20,000)

(2,210,000-2,190,000)

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Country Alpha has 15 thousand acres of land and 45 thousand laborers, whereas Country Beta has 100 thousand acres of land and 20
Monica [59]

Answer: b. good B; good A

Explanation:

According to the Heckscher-Ohlin model, a country should export the good that is has a relative abundance in and import the good it has relative scarcity in.

Find out labor to land ratio of both countries:

Country Alpha = 45 / 15 = 3

Country Beta = 200 / 100 = 2

Country Alpha has 3 labor units per acre

Country Beta has 2 labor units per acre

Country Alpha therefore has more labor abundance and should export the labor intensive good which is good A which means <u>Country B will import A</u>.

Country Beta should <u>export more land intensive good which is good B. </u>

6 0
3 years ago
What change in investment strategies has contributed to our economic system evolving into institutional capitalism, according to
Oxana [17]

Answer:

From the end of the Middle Ages to the first centuries of the Modern Era, some new investment strategies were developed, which contributed greatly to the development of capitalism.

Explanation:

In particular, group investment in companies that did not have a single, personal owner. This is what we know today as corporations.

The main advantage of a corporation is that many investors pour their money, something that raises the amount of capital, while at the same time not holding full personal responsability over their investments in case the corporation fails. In other words, investors do not have to pay with their personal wealth in case of corporate failure.

Two important early corporations are the Dutch East India Company, and the British East Indian Company. They were very important for the development of capitalism.

5 0
3 years ago
A landowner owned a large piece of property containing an inn and a bakery. She entered into a contract to sell the property to
pickupchik [31]

Answer:

The most likely result at trial is that the landowner's claim for specific performance will be successful, and she will be awarded the entire price of contract.

Explanation:

When there isn't a statute, the buyer bears the risk of loss when property subject to a contract for sale is destroyed without fault of any party prior to the date specified for closing. Unless the contract specifies otherwise, the buyer must pay the contract price even if the property is damaged by fire.

The inn was burned down in this case after the landowner and the buyer signed a contract for the sale of the property, but before the closing date. The contract appears to be silent on the risk of loss, and no appropriate statute exists. As a result of the common law rule, the buyer bears the risk of loss. Therefore, the landowner has the right to particular execution of the contract, which implies that the entire stipulated contract price must be paid by the buyer.

Regardless of the property's drop in worth owing to the fire, the $1 million contract price must be paid by the buyer because he bears the risk of loss.

Therefore, the most likely result at trial is that the landowner's claim for specific performance will be successful, and she will be awarded the entire price of contract.

6 0
3 years ago
X Company has two production departments, A and B. The following is budgeted information for all of its products in 2019, and ac
Zina [86]

Answer:

Explanation:

Overhead allocated to Product X = Department A overhead cost+ Department B overhead cost

=  $51,157.84+$5755.62=

= $56,913

Calculations:

Using a single-driver allocation system, with direct labor hours as the driver, how much overhead was allocated to Product X:

Department A's Overhead rate per labor hour = Overhead costs/Total direct labor hours  = $4300000/60000 hours = $71.66 per hour

Overhead (Department A) = $71.66per hour*724 labor hours

= $51,157.84

Department B's Overhead rate per labor hour = Overhead costs/Total direct labor hours  = $2200000/60000 hours = $36.66 per hour

Overhead (Department A) = $36.66 per hour*157 labor hours

= $5755.62

6 0
3 years ago
Last year, you earned a rate of return of 11.29 percent on your bond investments. During that time, the inflation rate was 4.6 p
nordsb [41]

Answer:

the real rate of interest of  6.39 %

Explanation:

given,

rate of return on your bond  = 11.29 %

the inflation rate  = 4.6 %

real rate of return = ?

rate of return = (\dfrac{1+ return\ rate}{1 + inflation }-1)\times 100

rate of return = (\dfrac{1+ 0.1129 }{1 + 0.046 }-1)\times 100

rate of return = (\dfrac{1+ 0.1129 }{1 + 0.046 }-1)\times 100

rate of return = (\dfrac{1.1129}{1.046 }-1)\times 100

                    = 6.39 %

the real rate of interest of  6.39 %

5 0
3 years ago
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