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saveliy_v [14]
3 years ago
10

ABC Company received $9,631 for its 5-year, 10% bonds with a total face value of $10,000. The market rate of interest was 11%. T

he bonds pay interest annually on December 31. How much interest expense will ABC Corporation record on the first annual interest payment date using the effective-interest method?A. $1,059
B. $1,000
C. $1,074
D. $963.10
Business
2 answers:
Basile [38]3 years ago
8 0

Answer:

A. $1,059

Explanation:

Interest payment and interest expense of the bond issued on discount is different. The difference of both of these values is the amortization of discount on the bond, which is added to carrying value of the bond each year to make the carrying value equals to face value at maturity date.

Interest expense using effective interest method is calculated by multiplying the market interest rate to the net carrying value of the bond.

Carrying value of the bond in 1 st year = $9,631

Market Rate = 11%

Interest expense = $9,631 x 11% = $1059.41

Anastaziya [24]3 years ago
5 0

Answer:

The correct answer is Option A.

Explanation:

The effective interest rate (EIR) method is used when a bond is purchased at a discount or premium.

In the case of the question, the bond was purchased at $9,631 with a face value of $10,000. Interest expense is calculated as the bond price multiplied by the market rate, i.e. $9,631  x 11% = $1,059.41.

Therefore, ABC Company would record $1,059 on the first annual interest payment date using the effective-interest method.

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hoa [83]

Answer: the intentions of the parties is inferred from their conduct by the court as well as the circumstances of the contract

Explanation:

An implied contract is referred to as an agreement that's legally-binding which was created due to the actions, or circumstances of the parties that were involved.

In an implied contract, the parties typically possess no written contract, but an obligation is created by the law based on the conduct of the parties involved.

8 0
3 years ago
Hilary is a retired teacher who lives in Miami and does some consulting work for extra cash. At a wage of $50 per hour, she is w
Basile [38]

Answer:

Hilary is a retired teacher who lives in Miami and does some consulting work for extra cash. At a wage of $50 per hour, she is willing to work 10 hours per week. At $65 per hour, she is willing to work 19 hours per week.

Using the midpoint method, the elasticity of Hilary’s labor supply between the wages of $50 and $65 per hour is approximately 2.37 , which means that Hilary’s supply of labor over this wage range is elastic.

Explanation:

Midpoint elasticity = (Change in labor supplied / Average labor supplied) / (Change in wage rate / Average wage rate)

= [(19 - 10) / (19 + 10) / 2] / [$(65 - 50) / $(65 + 50) / 2]

= [9 / (29 / 2)] / [15 / (115 / 2)]

= (9 / 14.5) / (15 / 57.5)

= 0.62/0.26

Midpoint elasticity = 2.37

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5 0
3 years ago
Your parents invested $1000 into an account when you were born. The account has an interest rate of 6% and compounds monthly (12
Gelneren [198K]

Answer:

$3,310.20

Explanation:

The applicable formula in this case is

A = P x ( 1 + r )^ n

Where A= amount after 20 years

P is principle amount= $1000

r is interest rate = 6 % or 0.06 per year: monthly interest = 0.06/12

n is number of periods = 12 months x 20 years

A = $1000 x ( 1 + 0.005) ^240

A = $1000x (1.005) ^ 240

A =$1000 x 3.31020447580

A =$3,310.2044

8 0
3 years ago
A market structure in which sellers have no influence over price is known as an oligopoly monopolistic competition perfect compe
Allushta [10]
Answer Perfect competition.
4 0
3 years ago
Read 2 more answers
Billie transferred her 20 percent interest to Jean Company as part of a complete liquidation of the company. In the exchange, sh
7nadin3 [17]

Answer:

A) $200,000 loss recognized by Jean and a basis in the land of $200,000 to Billie

Explanation:

The computation is shown below:

For loss recognized, the amount would be

= Land basis - fair value of land

= $400,000 - $200,000

= $200,000

And, the basis in the land should be equal to the fair value of the land i.e $200,000

Hence, the correct option is A

By dividing the fair value from the land basis we can get the loss recognized

3 0
3 years ago
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