Answer:
Explanation:
N=64, x tb=3, S=1.5, 1-alpha= 0.98
=> 1- alpha/2 =0.49 => z alpha/2= 2.33
E= 2.33×1.5/ căn 64= 0.437
Khoảng cách [ x tb +- E]=[ 2.563; 3.437]
Assume a firm generates $2,500 in sales, has a $800 increase in accounts receivable and has a $500 increase in accounts payable during an accounting period. Based solely on this information, cash flow from operations will increase by:
Answer:
Cash flow from operations will increase by $2,200.
Explanation:
The amount of increase in cash flow from operations can be calculated as follows:
Increase in cash flow from operations = Sales - Increase in accounts receivable + Increase in accounts payable …………… (1)
Sales = $2,500
Increase in accounts receivable = $800
Increase in accounts payable = $500
Substituting the values into equation (1), we have:
Increase in cash flow from operations = $2,500 - $800 + $500 = $2,200
Therefore, cash flow from operations will increase by $2,200.
A buyer of $7,000 in merchandise inventory failed to take advantage of the vendor's credit terms of 2/15, n/45, and instead paid the invoice in full at the end of 45 days. By not taking advantage of the cash discount, the buyer lost the discount of:_________
a. 100
b. 77
c. 1155
d. 770
e. 231
Given:
The credit terms are: [tex]\bold{\frac{2}{15} \ \ \frac{n}{45}}[/tex]When the [tex]2\%[/tex] discount with [tex]\bold{45\ days}[/tex] to paySo, the price of the merchandise is: [tex]\bold{ 7000}[/tex]Calculating the cash discount:
[tex]= \bold{7000 \times 2\%}\\\\= \bold{7000 \times \frac{2}{100}}\\\\= \bold{70\times 2}\\\\= \bold{\$140}[/tex]
Therefore the answer is "140", and all the given choices are wrong.
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Financial information for Forever 18 includes the following selected data: ($ in millions except share data) 2021 2020 Net income $ 160 $ 171 Dividends on preferred stock $ 22 $ 17 Average shares outstanding (in millions) 250 300 Stock price $ 11.92 $ 10.87 Required: 1-a. Calculate earnings per share in 2020 and 2021.
Answer:
Earnings per share = (Net income - Preferred dividends) / Number of shares outstanding
2020:
= (171 - 17) / 300
= $0.51 per share
2021:
= (160 - 22) / 250
= $0.55 per share
Required information
A bank reconciliation proves the accuracy of the depositor's and the bank's records. The bank statement balance is adjusted for items such as outstanding checks and unrecorded deposits made on or before the bank statement date but not reflected on the statement. The book balance is adjusted for items such as service charges, bank collections for the depositor, and interest earned on the account. The company's bank reconciliation at June 30 included interest earned in the amount of $150. Complete the necessary journal entry .
Answer:
Date Account Title Debit Credit
June 30 Cash $150
Interest revenue $150
Explanation:
Interest earned is considered to be revenue so it will be credited to the interest revenue account.
Cash will be debited because the interest revenue increased it and assets are debited when they increase.
For each of the following separate transactions:
Sold a building costing $31,500, with $20,600 of accumulated depreciation, for $8,600 cash, resulting in a $2,300 loss.
Acquired machinery worth $10,600 by issuing $10,600 in notes payable.
Issued 1,060 shares of common stock at par for $2 per share.
Note payables with a carrying value of $40,300 were retired for $47,600 cash, resulting in a $7,300 loss.
(a) Prepare the reconstructed journal entry.
1. Record Sale of Building
2. Record Acquisition of machinery
3. Record the issuance of common stock for cash
4. Record payment of cash to retire debit
(b) Identify the effect it has, if any, on the investing section or financing section of the statement of cash flows.
Answer:
a) Journal Entries:
1. Debit Sale of Building $31,500
Credit Building $31,500
To transfer building to sale of building account.
Debit Accumulated Depreciation $20,600
Credit Sale of Building $20,600
To transfer accumulated depreciation to sale of building account.
Debit Cash $8,600
Credit Sale of Building $8,600
To record the proceeds received from the sale of building.
2. Debit Machinery $10,600
Credit Notes Payable $10,600
To record the acquisition of machinery.
3. Debit Cash $2,120
Credit Common stock $1,060
Credit APIC $1,060
To record the issuance of 1,060 shares of common stock at par for $2 per share.
4. Debit Note payables $40,300
Debit Loss (Interest expense) $7,300
Credit Cash $47,600
To record the retirement of the note payable.
b) Effect of transactions on Investing or Financing sections of the Statement of Cash Flows:
Investing activities:
Sale of Building +$8,600
Financing activities:
Issuance of common stock +$2,120
Notes payable -$47,600
Explanation:
a) Data and Analysis:
Sale of Building $31,500 Building $31,500
Accumulated Depreciation $20,600 Sale of Building $20,600
Cash $8,600 Sale of Building $8,600
Machinery $10,600 Notes Payable $10,600
Cash $2,120 Common stock $1,060 APIC $1,060 shares of common stock at par for $2 per share.
Note payables $40,300 Interest Loss $7,300 Cash $47,600
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Answer:
liability risk
Explanation:
Answer:
liability risk is right opstion
Today, Li has $900,000 (treat this as a cash inflow) in an account that gives an 8% return each year. He has been investing $7,000 a year at the end of each year for 30 years. How much did he have in his account 30 years ago
Answer:
The present value should be $10,635.116
Explanation:
The computation of the present value is given below:
Interest rate i.e. RATE should be 8%
PMT is $7,000
NPER is 30
FV is $900,000
The formula is given below:
=-PV(RATE,NPER,PMT,FV,TYPE)
After applying the above formula, the present value should be $10,635.116
Which of the following is not a standard organizational structure
Question Completion with Options:
i. Line Organisation
ii. Staff Organisation
iii. Functional Organisation
iv. Committee Organisation Code
Answer:
The option that is not a standard organizational structure is:
iv. Committee Organisation Code
Explanation:
The organizational structure adopted by an entity reflects how some of its rules, roles, and responsibilities are directed between organizational levels in order to achieve its goals. The organizational structure also shows the information flows between different levels within the entity. Traditionally, organizations maintained hierarchical, functional, divisional, matrix, and flat organizational structures. Given current digitalization with its internet of things (IoT), more decentralized, network, and team-based organizational structures have emerged.
There are hundreds if not thousands of wineries. Each winery tries to emphasize how their product is superior to others, though they are all close substitutes. Barriers to entry are low in this industry, and profits for new entrants are small. Which industrial model best fits the wine market
Answer: Monopolistic competition
Explanation:
Based on the information given in the question, the industrial model that best fits the wine market is a monopolistic competition.
Monopolistic competition refers to a form of imperfect competition whereby there are many producers that are competing against each other. They sell differentiated products, therefore the products are not perfect substitutes
In a monopolistic competition, the barriers to entry are low in this industry, and profits for new entrants are small. The firms in the industry possess some market power and therefore can charge a price that's higher price than a competitor. It should also be noted that a zero economic profit is earned in the long run.
Kim Thorsten uses rationale to make decisions for project implementation. She believes that the right decisions can be made only through analysis and examination. Each time she needs to make a decision, she weighs all options before taking action. Which of the following is a characteristic of Thorsten's personality type according to the Myers-Briggs Type Indicator (MBTI) classification?
a. intuitive
b. thinking
c. introverted
d. perceiving
e. feeling
Answer: b. thinking
Explanation:
Kim Thorsten has the personality type known as thinking. People like her are logical when they make decisions which means that they rely less on emotion and use rationale and evidence to make decisions.
These people are pragmatists and will only make a decision that they believe is objectively the best one after considering other options. This is what Kin does and why she is under thinking.
Marconi Co. has the following information available for the current year:
Net Sales (all on credit) $1,125,000
Bad Debt Expense 90,000
Accounts Receivable, Beginning of Year 180,000
Accounts Receivable, End of Year 82,500
Allowance For Doubtful Accounts, Beginning of Year 57,000
Allowance For Doubtful Accounts, End of Year 77,000
Required:
What was the amount of write-offs during the year?
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How to write business proposal
Below is budgeted production and sales information for Flushing Company for the month of December. Product XXX Product ZZZ Estimated beginning inventory 29,000 units 18,500 units Desired ending inventory 34,800 units 15,100 units Region I, anticipated sales 344,000 units 273,000 units Region II, anticipated sales 192,000 units 143,000 units The unit selling price for product XXX is $5 and for product ZZZ is $16. Budgeted production for product ZZZ during the month is a.416,000 units b.412,600 units c.599,800 units d.431,100 units
Answer:
The correct option is b.412,600 units.
Explanation:
Given:
Product XXX Product ZZZ
Estimated beginning inventory 29,000 units 18,500 units
Desired ending inventory 34,800 units 15,100 units
Region I, anticipated sales 344,000 units 273,000 units
Region II, anticipated sales 192,000 units 143,000 units
Therefore, we have:
Estimated beginning inventory for product ZZZ = 18,500 Units
Desired ending inventory for product ZZZ = 15,100 Units
Total anticipated sale at regions I and II= Region I, anticipated sales + Region II, anticipated sales = 273,000 + 143,000 = 416,000 units
Budgeted production for product ZZZ during the month = Total anticipated sale at regions I and II + Desired ending inventory for product ZZZ - Estimated beginning inventory for product ZZZ = 416,000 + 15,100 - 18,500 = 412,600 units
Therefore, the correct option is b.412,600 units.
Calculating the Direct Materials Price Variance and the Direct Materials Usage Variance Guillermo's Oil and Lube Company is a service company that offers oil changes and lubrication for automobiles and light trucks. On average, Guillermo has found that a typical oil change takes 24 minutes and 6.2 quarts of oil are used. In June, Guillermo's Oil and Lube had 980 oil changes. Guillermo's Oil and Lube Company provided the following information for the production of oil changes during the month of June:
Actual number of oil changes performed: 980
Actual number of quarts of oil used: 6,020 quarts
Actual price paid per quart of oil: $5.10
Standard price per quart of oil: $5.05
Required:
a. Calculate the direct materials price variance (MPV) and the direct materials usage variance (MUV) for June using the formula approach.
b. Calculate the total direct materials variance for oil for June.
Answer:
Results are below.
Explanation:
To calculate the direct material price variance, we need to use the following formula:
Direct material price variance= (standard price - actual price)*actual quantity
Direct material price variance= (5.05 - 5.1)*6,020
Direct material price variance= $301 unfavorable
To calculate the direct material quantity variance, we need to use the following formula:
Direct material quantity variance= (standard quantity - actual quantity)*standard price
Direct material quantity variance= (6,076 - 6,020)*5.05
Direct material quantity variance= $282.8 favorable
Standard quantity= 980*6.2= 6,076
Finally, the total direct material variance:
Total direct material variance= Direct material quantity variance - Direct material price variance
Total direct material variance= 282.8 - 301
Total direct material variance= $18.2 unfavorable
Journalize the entries for the following transactions:
Mar. 1 Established a petty cash fund of $771.
31 The amount of cash in the petty cash fund is now $632. The fund is replenished based on the following receipts: office supplies, $33 selling expenses, $113.
Record any discrepancy in the cash short and over account. If an amount box does not require an entry, leave it blank.
Answer:
Mar 1
Dr Petty Cash $771.00
Cr Cash $771.00
Mar 31
Dr Office Supplies $33.00
Dr Selling Expenses 113.00
Cr Cash Short and Over $27.00
Cr Cash $119.00
Explanation:
Preparation of the entry to Record any discrepancy in the cash short and over account.
Mar 1
Dr Petty Cash $771.00
Cr Cash $771.00
(To record petty cash)
Mar 31
Dr Office Supplies $33.00
Dr Selling Expenses 113.00
Cr Cash Short and Over $27.00
[($33+$133+$632)-$771]
Cr Cash $119.00
(33+$133-$27)
(To Record discrepancy in the cash short and over account)
Investing $2,000,000 in TQM's Channel Support Systems initiative will at a minimum increase demand for your products 1.7% in this and in all future rounds. (Refer to the TQM Initiative worksheet in the CompXM.xls Decisions menu.) Looking at the Round 0 Inquirer for Andrews, last year's sales were $163,189,230. Assuming similar sales next year, the 1.7% increase in demand will provide $2,774,217 of additional revenue. With the overall contribution margin of 34.1%, after direct costs this revenue will add $946,008 to the bottom line. For simplicity, assume that the demand increase and margins will remain at last year's levels. How long will it take to achieve payback on the initial $2,000,000 TQM investment, rounded to the nearest month
The Lumber Division of Paul Bunyon Homes Inc. produces and sells lumber that can be sold to outside customers or within the company to the Construction Division. The following data have been gathered for the coming period:
Lumber Division:
Capacity200,000 board feet
Price per board foot$2.50
Variable production cost per bd. ft.$1.25
Variable selling cost per bd. ft.$0.50
Construction Division:
Board feet needed60,000
Outside price paid per bd. ft.$2.00
If the Lumber Division sells to the Construction Division, $0.35 per board foot can be saved in shipping costs.
If current outside sales are 130,000 board feet, what is the minimum transfer price that the Lumber Division could accept?
a. $1.25
b. $1.40
c. $1.75
d. $2.50
Answer:
b. $1.40
Explanation:
The computation of the minimum transfer price that the Lumber Division could accept is shown below:
= Variable production cost per bd. ft. + Variable selling cost per bd. ft.
= $1.25 + $0.50
= $1.40
Hence, the minimum transfer price that the Lumber Division could accept is $1.40
Therefore the option b is correct
The minimum transfer price that the Lumber Division could accept is $1.40.
What is transfer price?Transfer pricing is the method in which the product is sold out bey one subsidiary to another but within the company.
This method is used when the subsidiaries of a parent company are measured as separate earnings essences.
The computation of the minimum transfer price:
The minimum transfer price is found out by apply the formula:
[tex]\text{Minimum Transfer Price}= \text{Variable Production Cost per bd. ft.}-\text{Variable Selling Cost per bd. }[/tex]
According to the given case,
Variable production cost per bd. ft. = $1.25,
Variable selling cost per bd. ft. = $0.50.
Now apply the values in the above formula, we get:
[tex]\text{Minimum Transfer Price}= \text{Variable Production Cost per bd. ft.}-\text{Variable Selling Cost per bd. }\\\\\text{Minimum Transfer Price}= \$1.25 + \$0.50\\\\\text{Minimum Transfer Price}=\$1.40[/tex]
Therefore, the minimum transfer price that the Lumber Division to accept is $1.40. So, option D is correct.
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Andy contracts with Susan to feed his dog while he is Europe during the month of July. Andy calls and revokes on July 1st after Susan has gone out and purchased the necessary products to perform but has not yet feed the dog once. A court will likely:
Answer: D. Enforce the contract.
Explanation:
This falls under the doctrine of Promissory estoppel. This posits that when a party to a contract has invested their money into procuring the necessary tools to fulfil their part of the contract, the other party may not cancel the contract unless they pay the former party what they would have made from the contract.
This is because the party that used their money to procure tools (Susan in this case) would not have done so if the other party (Andy) had not made a promise to them in the contract that they would fulfil their part of the bargain.
The Courts would therefore enforce the contract.
Unearned Revenue: The company collected $24,000 rent in advance on September 1,
debiting Cash and crediting Unearned Rent Revenue. The tenant was paying 12
months' rent in advance and occupancy began September 1. Answer the four questions
below as of 12/31. Whenever you see the word "unearned," it always indicates a liability
account. Most liability accounts include the word "payable," as those liabilities will be
paid back. An unearned account is a liability that will be worked off, rather than paid
off.
1. The beginning balance of Unearned Revenue: (5 pts)
Answer:
Time period from September 1 - December 31 is 4 months and this means that the tenant has occupied the place for 4 months. Hence, 4 months rent would be accrued.
12 Month rent amount = $24,000
Per month rent amount = $240,00/12 month = $2,000
So, Rent for 4 months = 4 month * $2,000 = $8,000
Adjusting Entry
Date Account titles Debit Credit
Dec 31 Unearned Rent Revenue $8,000
Rent Revenue $8,000
Fender Manufacturing Company needs to know its anticipated cash inflows for the next quarter by month. Cash sales are 10% of total sales each month. Historically, sales on account have been collected as follows: 50% in the month of the sale, 35% in the month after the sale, and the remaining 15% two months after the sale. Sales for the quarter are projected as follows:
January: $60,000
February: $30,000:
March: $90,000.
Accounts receivable on December 31 were $45,000. The expected cash collections of Fender Manufacturing Company for March are:_________
Answer:
Fender Manufacturing Company
The expected cash collections of Fender Manufacturing Company for March is:
= $58,050
Explanation:
a) Data and Calculations:
Cash sales = 10% of total sales
Credit sales = 90% (100% - 10%)
Cash collections from credit sales:
Month of the sale (50%)
Month after the sale (35%)
Two months after (15%)
Accounts receivable on December 31 = $45,000
January February March
Projected sales $60,000 $30,000 $90,000
Cash sales $6,000 $3,000 $9,000
Credit sales $54,000 $27,000 $81,000
Cash collections from credit sales:
Month of the sale (50%) $27,000 $13,500 $40,500
Month after the sale (35%) 31,500 18,900 9,450
Two months after (15%) 13,500 8,100
Cash collections from credit sales $58,050
The expected cash collections of Fender Manufacturing Company for March =
Cash collections from credit sales $58,050
Cash sales 9,000
Total cash receipts for the month $67,050
Sales totaled $1,277,750 for the year, variable selling and administrative expenses totaled $158,710, and fixed selling and administrative expenses totaled $212,190. There was no beginning inventory. Assume that direct labor is a variable cost. Under variable costing, the company's net operating income for the year would be:
Complete Question:
Krepps Corporation produces a single product. Last year, Krepps manufactured 32,150 units and sold 26,900 units. Production costs for the year were as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead $234, 695 $154, 320 $279, 705 $482, 250 Sales totaled $1,277,750 for the year, variable selling and administrative expenses totaled $158,710, and fixed selling and administrative expenses totaled $212.190. There was no beginning inventory. Assume that direct labor is a variable cost. Under variable costing, the company's net operating income for the year would be:
Multiple Choice
O $28,350 higher than under absorption costing.
0 $28,350 lower than under absorption costing.
0 $78,750 lower than under absorption costing,
0 $78,750 higher than under absorption costing.
Answer:
Krepps Corporation
Under variable costing, the company's net operating income for the year would be:
0 $78,750 lower than under absorption costing
Explanation:
a) Data and Calculations:
Production units = 32,150 units
Sales units = 26,900 units
Production costs :
Direct materials $234, 695
Direct labor $154, 320
Variable manufacturing overhead $279, 705
Fixed manufacturing overhead $482, 250
Sales for the year $1,277,750
Variable selling and administrative expenses $158,710
Fixed selling and administrative expenses $212,190
Income Statement under variable costing:
Sales for the year $1,277,750
Variable cost of goods sold $559,520
Variable selling and administrative expenses $158,710
Total variable costs $718,230
Contribution margin $559,520
Fixed manufacturing overhead $482,250
Fixed selling and administrative expenses $212,190
Total fixed costs $694,440
Net operating loss $134,920
Direct materials $234, 695
Direct labor $154, 320
Variable manufacturing overhead $279, 705
Total variable manufacturing cost $668,720
Production units = 32,150
Unit costs = $20.60
Cost of goods sold = $559,520 ($20.80 * 26,900)
Income Statement under absorption costing:
Sales for the year $1,277,750
Cost of goods sold $963,020
Gross profit $314,730
Fixed selling and administrative expenses $212,190
Variable selling and administrative expenses $158,710
Total fixed costs $370,900
Net operating loss $56,170
Direct materials $234, 695
Direct labor $154, 320
Variable manufacturing overhead $279, 705
Fixed manufacturing overhead $482, 250
Total manufacturing costs $1,150,970
Production units = 32,150
Cost per unit = $35.80
Cost of goods sold = $963,020 ($35.80 * 26,900)
Difference = $78,750 ($134,920 - $56,170)
Model of media richness
Answer:
Media richness theory states that all communication media vary in their ability to enable users to communicate and to change understanding. ... A primary driver in selecting a communication medium for a particular message is to reduce the equivocality, or possible misinterpretations, of a message.
Answer:
The term "media wealth" was described in 1986 by Richard Daft and Robert Lengel for the first time in the context of the media wealth theory. Media wealth describes the learning density that can be transmitted by a specific communication medium.
Explanation:
Before the growth of electronic communication media, MRT was developed to help managers decide which medium was best suited to communicate a message in business situations.
Rich media, such as conversations and phone calls, were best considered to be not-routine messages, while lean media were considered acceptable to routine messages like unaddressed memoranda.
The media wealth has been extended in the past two decades to cover the strengths and weaknesses of new media – from email to websites, video lectures, voice men, and immediate messages.
In media-rich contexts, humans evolved. Facial communication was the only way to communicate for hundreds of thousands of years living in stable, close-knit social groups. The concept of media choice did not exist until about 5,000 years ago, because it was not one-to-one or nothing apart from smoke signals.
Lopez Company has a single employee, who earns a salary of $60,000 per year. That employee is paid on the 15th and last day of each month. On January 15, based, in part, on the information set forth in the accounting records, the following must be withheld from the employee's pay: FICA—Social Security Taxes (at 6.2%), FICA—Medicare Taxes (at 1.45%), Employee Federal Income Taxes (in the amount of $400), Employee State Income Taxes (in the amount of $25), and Employee Medical Insurance (in the amount of $100). (The employee‘s paycheck has not yet been prepared.) Entries to prepare the January 15 journal entry for Lopez would include:
Answer:
Debit Salaries Expense $2,500
Credit FICA—Social Security Taxes Payable $155
Credit FICA—Medicare Taxes Payable $36.25
Cedit Employee Federal Income Taxes Payable $400,
Credit Employee State Income Taxes Payable $25
Credit Employee Medical Insurance Payable r $100
Credit Salaries Payable $1,783.75
Explanation:
Preparation of the January 15 journal entry for Lopez
January 15
Debit Salaries Expense $2,500
Credit FICA—Social Security Taxes Payable $155
(6.2%*$2,500)
Credit FICA—Medicare Taxes Payable $36.25
(1.45%*$2,500)
Cedit Employee Federal Income Taxes Payable $400,
Credit Employee State Income Taxes Payable $25
Credit Employee Medical Insurance Payable r $100
Credit Salaries Payable $1,783.75
($2,500-$155-$36.25-$25-$100)
The Anti-Trust Department also monitors cartels within the United States. As long as they don't control more than 40 percent of the market, then the Anti-Trust Department will leave them alone.
a. Investigating cartels is a responsibility of the Federal Reserve Bank.
b. This is a true statement.
c. This statement is false.
d. The US. Anti-Trust Department does not investigate cartels in America
Answer:
c. This statement is false.
Explanation:
Anti-Trust Department is the department in the united states that could enforced the anti-trusted law. They have the right to investigate onto the collusion, this could harm the competition that could lead the welfare loss
Since large share could be considered so it should be controlled and investigated
Therefore the given statement is false
plan content of paragraph in outline form
Suppose the government offers a subsidy to laptop sellers. Say whether each group of people gains or loses from this policy.
a. Laptop buyers:
b. Laptop sellers:
c. Desktop computer sellers (assuming that they are different from laptop manufacturers):
d. Desktop computer buyers (assume laptops are a substitute for desktops):
Answer:
a. loses
b. gains
c. loses
d. loses
Explanation:
the cost to the buyer, sellers of laptops and desktops would result in the above listed loses or gains.
If the government offers a subsidy to laptop sellers, the laptop buyer would bear the loss, and seller gains, and the desktop computer seller and buyer bear the loss also.
What is subsidy?A subsidy, often known as a government incentive, is a type of financial assistance or support given to a particular economic sector with the goal of supporting economic and social policy.
Although most usually associated with government assistance, the phrase subsidy can refer to any sort of assistance, such as that provided by NGOs or as implicit subsidies.
In the above case, The subsidy will help the seller in producing the laptops as the seller gains more profit from the customers, as a result, buyer will bear the loss.
Subsidy will also not help the Desktop computer sellers and the buyers, as it is beneficial to the only seller of the laptop in which the laptops are the substitute of desktops.
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In general, a project's free cash flows will fall in one of the following three categories: initial outlay, annual free cash flows over the project's life, and the terminal free cash flow.
a) true
b) false
Answer:
a true espero te sirva ;))))))))
a. Billed customers for fees earned, $112,700.
b. Purchased supplies on account, $4,500.
c. Received cash from customers on account, $88,220.
d. Paid creditors on account, $3,100.
e. On October 12, fees earned on account were $14,600.
Required:
Journalize this transaction.
Answer:
C.
Explanation:
A corporation issues for cash $1,000,000 of 8%, 20-year bonds, interest payable annually, at a time when the market rate of interest is 10%. The straight-line method is adopted for the amortization of bond discount or premium. Which of the following statements is true?
a. The amount of the annual interest expense is computed at 8% of the bond carrying amount at the beginning of the year.
b. The amount of the annual interest expense gradually decreases over the life of the bonds.
c. The amount of unamortized discount decreases from its balance at issuance date to a zero balance at maturity.
d. The amount of unamortized premium decreases from its balance at issuance date to a zero balance at maturity.
Answer:
d.The unamortized discount decreases from its balance at issuance date to a zero balance at maturity
Explanation:
The amount of annual interest is the carrying amount at the beginning of each year multiplied by the market rate of interest of 10%(not the discount rate of 8%)
Also, a bond whose market interest rate is higher than the coupon rate would be issued at a discount(not at a premium, let alone having an unamortized premium)
A farmer needs to borrow $1,000. The local PCA will make a 2-year loan fully amortized at 10% (annual rate) with quarterly payments. A $10 loan fee and stock purchase is required. The borrower stock requirement is the lesser of $1,000 or 2% of loan principal. Assume that sufficient money is borrowed to cover the $1,000, the fee and the stock requirement. Also assume that the stock requirement is returned to borrower when the loan is paid off and the last debt payment can be reduced by the stock amount. How much money needs to be borrowed
Answer:
the amount required to be borrowed is $1,030.60
Explanation:
The computation of the amount required to be borrowed is given below:
= (Sufficient money + loan fee) ÷ (1 - given percentage)
= ($1,000 + $10) ÷(1 - 0.02)
= $1,030.60
Hence, the amount required to be borrowed is $1,030.60
We simply applied the above formula so that the correct value could comes and the same should be relevant
