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storchak [24]
2 years ago
13

Marigold Inc. has decided to raise additional capital by issuing $184,000 face value of bonds with a coupon rate of 9%. In discu

ssions with investment bankers, it was determined that to help the sale of the bonds, detachable stock warrants should be issued at the rate of one warrant for each $100 bond sold. The value of the bonds without the warrants is considered to be $144,900, and the value of the warrants in the market is $16,100. The bonds sold in the market at issuance for $144,500. (a) What entry should be made at the time of the issuance of the bonds and warrants
Business
1 answer:
shusha [124]2 years ago
6 0

Answer:

         Account Titles                                                  Debit                 Credit

         Cash                                                              $144,500

          Discount on Bonds Payable                       $‭53,941‬

          Bonds Payable                                                                      $184,000

          Paid-in Capital Stock Warrants                                            $  14,441                       

Working:

Discount on bonds payable = Bonds payable + Paid in capital stock warrant - cash

= 184,000 + 14,441 - 144,500

= $‭53,941‬

Value of bonds with warrants:

= 144,900 + 16,100

= $161,100

Value of warrants is therefore:

= Cash received / Value of bond with warrants * value of warrants

= 144,500 / 161,100 * 16,100

= $14,441

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A dealer forecasts that the discount rate on a 60-day bill will be 5.10%. The current discount rate on a 90-day bill is 5.30%. W
patriot [66]

Answer:

The maximum rate is 5.65%.

Explanation:

The break-even 30-day repo rate is the rate at which an investor can make zero profit by carrying the following described trading:

Initially raise 30-day repo at x rate; invest in 90-day bill at 5.30%;

As the 30-day repo is matured, raise fund from 60-day bill at 5.10% to repay the 30-day repo;

Then as the 60-day bill matures, use the proceed from 90-day bill to repay the amount.

In other word, we have the below calculation to illustrate the trading:

Amount repay to 02 fund raising ( through 30-day repo and 60-day bill) = Amount receipt from 90-day bill investment

[1 + x*30/365] x [ 1 +  5.1% *60/365 ] = 1 + 5.30% * 90/365

<=> 1 + x*30/365 = 1.004646 <=> x = 5.65%.

4 0
3 years ago
Textra Plastics produces parts for a variety of small machine manufacturers. Most products go through two operations, molding an
nexus9112 [7]

Answer:

1. $14,52 per direct labor hour

2. Overheads Assigned

Part A27C = $89,367

Part X82B =$95,832

Explanation:

The plantwide overhead rate is the absorption rate calculated on the entity`s to total overheads and total activity.

plantwide overhead rate = Budgeted Overheads / Budgeted Activity

                                         = ($ 740,000 + $ 610,000) / (45,000+48,000)

                                         =  $14,52 per direct labor hour

Part A27C

Molding department  (4,000× $14,52)    =  $58,080

Trimming department(2,150× $14,52)     =  $31,287

Total                                                          =  $89,367

Part X82B

Molding department (1,100× $14,52)      =  $ 15,972

Trimming department (5,500× $14,52)  =  $79,860

Total                                                         =  $95832

3 0
3 years ago
Breakeven analysis: Barry Carter is considering opening a music store. He wants to estimate the number of CDs he must sell to br
Scilla [17]

Answer and Explanation:

The computation is shown below:

a. The operating break even point in number of CD is

= Fixed operating cost ÷ (Selling price per unit - variable operating cost)

= $73,500 ÷ ($13.98 - $10.48)

= 21,000 CDs

b. Now the total operating cost is

= Fixed cost + Quantity × variable cost per unit

= $73,500 + 21,000 CDs × $10.48

= $293,580

c. If he can sell 2,000 CDs per month than annual sale is 24,000 CDs and the break even is exceeded than 3,000 CDs by taking a difference of 24,000 CDs and 21,000 CDs . So, it should go to the CD business

d. Now the EBIT is

= (Selling price × Quantity) - Fixed cost - (Variable price × Quantity)

= ($13.98 × 24,000) - $73,500 - ($10.48 × 24,000)

= $335,520 - $73,500 - $251,520

= $10,500

We simply applied the above formulas

8 0
3 years ago
Which of the following is a service business?
creativ13 [48]

Answer:

travel agency

Explanation:

as service businesses include <u>companies engaged in transport</u>, food service, distribution, retail, and other industries that sell services rather than products. These intangibles provide the primary revenue source for service businesses.

4 0
3 years ago
Read 2 more answers
Which of the following statements is true​?
stich3 [128]

Answer:

The correct answer is option C.

Explanation:

A monopolistic competitive firm has a downward sloping demand curve. Such a firm is a price maker. It decides price and output through the interaction of the marginal revenue and marginal cost.

The marginal revenue is the change in revenue because of selling an additional output. At high prices, the marginal revenue will be positive while at low prices it will be negative.

4 0
3 years ago
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