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Marina86 [1]
3 years ago
7

On January 1, 2021, Ithaca Corp. purchases Cortland Inc. bonds that have a face value of $330,000. The Cortland bonds have a sta

ted interest rate of 5%. Interest is paid semiannually on June 30 and December 31, and the bonds mature in 10 years. For bonds of similar risk and maturity, the market yield on particular dates is as follows:
January 1, 2021 11.0%
June 30, 2021 12.0%
December 31, 2021 14.0%

Required:
a. Calculate the price Ithaca would have paid for the Cortland bonds on January 1, 2021 (ignoring brokerage fees), and prepare a journal entry to record the purchase.
b. Prepare all appropriate journal entries related to the bond investment during 2021, assuming Ithaca accounts for the bonds as a held-to-maturity investment. Ithaca calculates interest revenue at the effective interest rate as of the date it purchased the bonds.
c. Prepare all appropriate journal entries related to the bond investment during 2021, assuming that Ithaca chose the fair value option when the bonds were purchased, and that Ithaca determines fair value of the bonds semiannually. Ithaca calculates interest revenue at the effective interest rate as of the date it purchased the bonds.
Business
1 answer:
balu736 [363]3 years ago
4 0
Prince Levi Ackerman x princesses aiako
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$22,000

Explanation:

The original cost of the car was : $26,000

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The car was bought at a price higher than its fair market value by :

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If the nominal interest rate per year is 10% and the inflation rate is 4%, the real rate of interest is closest to
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Answer:

Real interest rate= 0.06 = 6%

Explanation:

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The real interest rate is the result of deducting from the nominal interest rate the inflation rate. I<u>nflation has the opposite effect than the interest rate on the value of money through time.</u>

Real interest rate= nominal interest rate - inflation rate

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Which situation is the most likely result of a price ceiling being set below the equilibrium price?
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Date       General Journal         Debit$       Credit$

Oct 31      Cash                           10000

                      Notes payable                        10000

Dec 1       Account receivable     900  

                       Service revenue                      900

Dec 31     Interest expense         100

                (10000*6%*2/12)

                       Interest payable                       100

                Interest receivable       9

                (900*12%*1/12)

                        Interest revenue                       9

June 1      Cash                             954  

                        Notes receivable                    900

                        Interest receivable                    9

                        Interest revenue                       45

June 30   Notes payable          10000  

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                         Cash                                         10400

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