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Maksim231197 [3]
3 years ago
15

A bond issue with a face amount of $500,000 bears interest at the rate of 7%. The current market rate of interest is 6%. These b

onds will sell at a price that is:
Business
1 answer:
Dennis_Churaev [7]3 years ago
8 0

Answer:

More than $500,000.

Explanation:

In the case when the coupon rate is more than the market interest rate so the bond would be on premium

And, if the coupon rate is less than the market interest rate so the bond would be on discount

And if both are equal so it should be in par

Now in the given case, since the rate of interest is 7% and the market rate of interest is 6% so it would be on premium

That means the bond price would sell at more than $500,000

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A $300,000 bond was redeemed at 98 when the carrying value of the bond was $292,000. the entry to record the redemption would in
Kobotan [32]

Answer:

correct option is a. loss on bond redemption of $2,000

Explanation:

given data

bond = $300,000

redeemed at =  98

carrying value of bond = $292,000

to find out

entry to record the redemption would include

solution

we know here that Redemption value is

Redemption value = bond × redeemed

Redemption value = $300,000 ×98%

Redemption value =$294,000     ................1

and here Carrying value is $292,000

so we paid excess amount that is

paid excess amount = $294,000 - $292,000

paid excess amount = $2000

so here correct option is a. loss on bond redemption of $2,000

6 0
3 years ago
Wildhorse Corporation enters into a 6-year lease of equipment on December 31, 2019, which requires 6 annual payments of $40,100
olga55 [171]

Answer:

31-Dec-19

Dr. Lease receivables  $ 180,498

Cr. Sales revenue         $180,498

Dr. Cost of goods sold  $ 170,000

Cr. Inventory          $ 170,000

Explanation:

The lease is recorded on the present value of all the payment to be made in the future.

We will use the present value of annuity formula

Present value of Lease = P [ ( 1 - ( 1 + r )^-n ) / r ]

where

P = annual payment = $40,100

r = implicit rate = 11%

n = numbers of payments = 6 payments

Placing values in the formula

PV of Lease = $40,100 x [ ( 1 - ( 1 + 11% )^-6 ) / 11% ] = $169,645

Now calculate the present value of guarantee residual value

PV of guarantee residual value = $20,300 x ( 1 + 11%)^-6 = $10,853

Fair value of lease = Present value of Lease payment + Present value of guarantee residual value

Fair value of lease = $169,645 + $10,853 = $180,498

Cost of equipment will be recorded in the cost of goods sold and Inventory as well.

We will pass two separate journal entries first to record the lease receivable and second to record the cost of the equipment.

3 0
2 years ago
What is the best answer choice
Scrat [10]
The answer to that would be B.
3 0
3 years ago
Wanda is organizing an Employee Appreciation Day event and is soliciting vendors to provide food and drinks. There are 638 emplo
DedPeter [7]

In this case, Wanda can calculate the revenue for her Employee Appreciation Day event by using this formula:

  • revenue = [(number of employees of the company) + (½ x number of employee of the company)] x event price
  • x = [(638) + (319)] x 2
  • x = 952 x 2
  • x = $1,914

Thus, Wanda’s expected revenue is $1,914, assuming that half of the employees are married and will be attending the Employee Appreciation Day alongside their spouse.  


6 0
3 years ago
What does partnership form of business imply
stiks02 [169]
The answer should be two or more and central
7 0
3 years ago
Read 2 more answers
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