When convertible preferred stock is converted into common stock:______.
a. cash is debited.
b. a gain or loss can be recognized.

Answers

Answer 1

Answer:

b. a gain or loss can be recognized.

Explanation:

Convertible preferred stock is an option for shareholders with preferred shares where they have the choice of converting their preferred shares to common shares. The conversion is best done at a time when the common stock is above the conversion price. At this time, the stockholder can make a profit or gain. But if the common share is below the conversion price, the shareholder would most likely record a loss if he converts.

One disadvantage of this conversion process is that, once the preferred stock is converted to the common stock, the preferred shareholder gives up his rights as a preferred shareholder which includes no fixed dividends and higher claims on assets.


Related Questions

King Company issued bonds with a face amount of $1,600,000 in 2015. As of January 1, 2020, the balance in Discount on Bonds Payable is $4,800. At that time, King redeemed the bonds at 102.Required:Assuming that no interest is payable, make the entry to record the redemption.

Answers

Answer:

January 1, 2020

Bonds Payable                                          1600000 Dr

Loss on Redemption of bonds                 36800 Cr

     Discount on Bonds Payable                        4800 Cr

     Cash                                                              1632000 Cr

Explanation:

The redemption of bonds before the maturity usually requires a payment for redemption which is a certain percentage of its face value. It is usually higher than the face value. The above bonds are redeemed at 102 which means at 102% of the face value of the bonds. Thus, the cash paid to redeem the bonds is,

Cash = 1600000 * 102%  =  1632000

The bonds have a carrying value, which is the face value less discount or add premium, of,

Carrying value = 1600000 - 4800  =  $1595200

If they are redeemed for an amount in excess of the carrying value, they are redeemed at a loss.

The loss on redemption is,

Loss = 1595200 - 1632000 = $36800

A firm has net working capital of $2,715, net fixed assets of $22,407, sales of $31,350, and current liabilities of $3,908. How many dollars' worth of sales are generated from every $1 in total assets

Answers

Answer:

So, from every $1 of total assets, $1.08 worth of sales are generated.

Explanation:

To calculate how many dollars worth of sales are generated by $1 of total assets, we use the total assets turnover ratio. It is an accounting measure that measures the efficiency of the company's assets in generating sales. It calculates the dollar values of sales generated by each $1 of total assets. The formula for total assets turnover is,

Total Assets Turnover = Sales / Average Total Assets

We already know the level of sales. We need to determine the value of total assets first.

Total Assets = Fixed assets + Current Assets

As we know that net working capital = current assets - current liabilities,

So, the current assets are,

2715 = Current assets - 3908

2715 + 3908 = Current assets

Current assets = $6623

Total assets = 6623 + 22407

Total assets = $29030

Total Assets Turnover = 31350 / 29030

Total assets turnover = 1.0799 rounded off to 1.08

So, from every $1 of total assets, $1.08 worth of sales are generated.

Which of the following is an advantage of job specialization? 1 point A. The quality of work increases. B. Jobs can be mastered quickly. C. Employees are more involved with their jobs. D. The work is less repetitive. E. Task specialization has no clear advantages to the organization

Answers

Answer: B. Jobs can be mastered quickly.

Explanation:

Job specialization is when the employees in an organization focuses and concentrates on one particular aspect in a organization. Specialization makes employees more efficient and also effective at their role.

Also, jobs can be mastered quickly since the employees typically focuses on one particular aspect in the organization.

What term means managing the entire organization so that it excels on all dimensions of products and services that are important to customers?

Answers

Answer:

Total Quality Management

Explanation:

Total Quality Management is an approach in which all the employees of the company work to improve the entire process to offer a good customer experience. According to this, the answer is that the term that means managing the entire organization so that it excels on all dimensions of products and services that are important to customers is Total Quality Management.

The income statements for Federer Sports Apparel for 2022 and 2021 are presented below.
FEDERER SPORTS APPAR
Income Statement
For the Years Ended December 31
Year Increase Decrease
2019 2018 Amount %
Net sales 18,800,000 15,500,000
Cost of goods 13,200,000 7,000,000
Gross prof 5,600,000 8,500,000
Operating expenses 1,600,000 1,200,000
Depreciation expense 1,000,000 1,000,000
Inventory write-down 200,000 0
Loss (litigation) 1,500,000 300,000
Required:
Prepare a horizontal analysis for 2022 using 2021 as the base year.

Answers

Answer and Explanation:

The Preparation of horizontal analysis for 2022 using 2021 as the base year is prepared with the help of a spreadsheet.

Horizontal analysis is a method for the analysis of financial statements that indicates fluctuations in the amount of the related products over a period of time. It is a valuable instrument for determining trend situations.

So, with the help of the spreadsheet, we will be able to find the net income by using the formulas.

The horizontal analysis of the Income Statement is the analytical form of preparing the income statement to determine the accurate amount and percentage of changes in each item of the income statement.

The horizontal income statement is attached below.

The horizontal analysis determines the change in the amounts of each account. The percentage change is the division of a change in amount by the base amount of the base year.

In this case, the base year was 2021.

Therefore, the change in amounts will be determined based upon the figures of the base year.

To know more about horizontal analysis, refer to the link:

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Charlie hopes to accumulate $83,000 in a savings account in 10 years. If he wishes to make a single deposit today and the bank pays 3 percent compounded annually on deposits of this size, how much should Charlie deposit in the account

Answers

Answer:

PV= $61,759.80

Explanation:

Giving the following information:

Future value (FV)= $83,000

Number of years (n)= 10 years

Interest rate (i)= 3% compounded annually

To calculate the initial deposit, we need to use the following formula:

PV= FV/(1+i)^n

PV= 83,000 / (1.03^10)

PV= $61,759.80

In a(n) _____ decision, there may be several "right" answers, and there is no precise way to get a right answer. A. recurring B. ad hoc C. nonstructured D. structured

Answers

Answer:

C. nonstructured

Explanation:

-Recurring decision refers to a decision that has to be made regularly.

-Ad hoc decision refers to a decision made for a specific situation.

-Nonstructured decision is a decision that can have multiple solutions that are correct and you don't have a form to define which one is the right option.

-Structured decision is when you make a decision using a process that has been established to manage a specific situation.

According to this, the answer is that in a(n) nonstructured decision, there may be several "right" answers, and there is no precise way to get a right answer.

Suppose the price level and value of the U.S. Dollar in year 1 are 1 and $1, respectively. Instructions: Round your answers to 2 decimal places. a. If the price level rises to 1.35 in year 2, what is the new value of the dollar?

Answers

Answer:

0.74

Explanation:

Data provided  in the question

Price level = 1.35

According to the given situation, the computation of the new value of the dollar is shown below:-

The New value of the dollar = 1 ÷ Price level

= 1 ÷ 1.35

= 0.74074

or

= 0.74

Therefore for computing the new value of the dollar we simply applied the above formula.

Digby's turnover rate for this year is 6.33%. This rate is projected to remain the same next year and no further downsizing will occur from automating. What would the total recruiting cost be for Digby, assuming it spends the same amount extra above the $1,000 recruiting base as they did this year?

Answers

Answer:

Total recruitment cost = $316.5

Explanation:

Note:

Given question is incomplete,

The number of employees = 5,000

Given:

Turnover rate for this year = 6.33%

Find:

Total recruitment cost

Computation:

Total recruitment cost = Turnover rate for this year × The number of employees

Total recruitment cost = 5,000 × 6.33%

Total recruitment cost = $316.5

The total recruiting cost will be $316.5 for Digby.

Given information

Assumed the number of employees is 5,000

Turnover rate for this year = 6.33%

Total recruitment cost = Turnover rate for this year * The number of employees

Total recruitment cost = 5,000 *  6.33%

Total recruitment cost = $316.5

Therefore, the total recruiting cost will be $316.5 for Digby.

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Which of the following statements is true of the new product development process? Question 8 options: 1) Commercialization is the process of inviting broad communities of people such as customers, employees, and scientists into the new product innovation process. 2) The purpose of the idea screening stage is to create a large number of ideas. 3) The concept testing stage is the stage at which the product and its proposed marketing program are introduced into realistic market settings. 4) Under the business analysis stage, if the new product satisfies the company's objectives, the product then moves to the product development stage. 5) A product concept is the way consumers perceive an actual or potential product.

Answers

Answer: 4) Under the business analysis stage, if the new product satisfies the company's objectives, the product then moves to the product development stage.

Explanation:

The Business Analysis stage of the New Product Development Process is a more in-depth analysis of the product to find out the viability of the product in the market and what it means for the firm.

Here the big questions are asked such as;

The Cost of the product to produceIf adequate profit will be generatedProjected market demandExisting competitors etc

Once these questions have been answered and other analysis made and the company is satisfied, the product can then move to the Product Development Stage.

It is true that under the business analysis stage, if a new product satisfies the company's objectives, it moves to the product development stage.

In a New Product Development Process, the Business Analysis stage entails in-depth analysis of the product to find out the viability of the product in the market and what it means for the firm.

The questions asked in the  Business Analysis stage includes:

The Cost of the product to produce If adequate profit will be generated Projected market demand Existing competitors

In conclusion, it is true that under the business analysis stage, if a new product satisfies the company's objectives, it moves to the product development stage.

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A company reported that its bonds with a par value of $50,000 and a carrying value of $57,500 are retired for $60,600 cash, resulting in a loss of $3,100. The amount to be reported under cash flows from financing activities is:

Answers

Answer:

The amount this company would report under cash flows from financing activities is $60,600.

Explanation:

These cash flows of $60,600 represent the actual cash outflows, an amount that bondholders would receive from the company in retirement of the bonds.  The statement of cash flows records the actual cash inflows and outflows of a company transactions during a particular accounting period.  Every item is adjusted to reflect the actual cash flows.  It is strictly based on the Cash Basis of accounting instead of the accrual basis.

true or false: a supply curve describes how much a producer of services are willing to sell at different prices

Answers

Answer:

True

Explanation:

The supply curve is a graph showing the quantities of a good or service a supplier is willing and able to supply at differnt prices.

According to the law of supply. the higher the price, the higher the quantity supplied and the lower the price, the lower the quantity supplied.

the supply curve is upward sloping

Assume the Residential Division of KappyKappy Faucets had the following results last year:
Net sales $6,360,000
Operating income 636,000
Average total assets 5,300,000
Management's target rate of return 16%
What is the division's return on investment?

Answers

Answer:

12%

Explanation:

Calculation for the division's return on investment

Using this formula

Return On Investment = Operating income /Average total assets

Let plug in the formula

Return on investment= $636,000/$5,300,000

Return on investment= 0.12*100

Return on investment=12%

Therefore the division's return on investment will be $12%

Identify factors that could prevent an older, established company from effecting an enterprise-wide, customer-centric culture.

Answers

Answer:

A more established company may find it difficult to implement an enterprise-wide, customer-centric culture due to the following reasons:

A) Existence of a Multi-Product Business Model

A business entity that is well established with a lot of years under its belt will find it a tough challenge to shift from a product-oriented business model to a customer-oriented business model.

To be product-focused simply means that that a company has woven its organisational structure around products. For examples, a company that is into the gaming business may have teams for their Sports Betting Section, another for their online gaming section, game hardware section, gaming apps section etc.

First, for these various teams, their performance metric will largely depend on how functionally efficient their products are.  

Second, techy or geeky staff are seldom efficient when it comes to emotional intelligence - a key requirement for being customer efficient.

One way to handle this is to ensure that there is a central Customer Relationship Management team that oversees the customers for each product.

B) Organisational Inflexibility

As direct to the point as it sounds, getting market intelligence for with the intention to use them for decision making is challenging. What is tougher is the ability to implement the insights from such intelligence to effect a turn around in the way customers perceive and respond to a company's offerings.

The ability to quickly take gather market intel, agree on a strategic direction based on same and execute can be referred to organisational agility.  

The more bureaucratic and hierarchical an organisation is (this, by the way, characterises older and more established business systems) the less agile it is likely to be.

Cheers!

   

The managerial accountant at Space Right Office Cubicles calculates fixed overhead variances to complete the August report. The actual fixed overhead cost in the month of August was and the budgeted fixed overhead cost was . The standard hours in August were and the standard rate per machinehour was . Calculate the standard fixed overhead cost allocated to​ production, the fixed overhead budget​ variance, and the fixed overhead volume variance. A. ​; ​F; U B. ​; ​F; U C. ​; ​F; U D. ​; ​F; U

Answers

Answer: d. $36,400; $1700 F; $500 U

Explanation:

1. Standard fixed overhead cost allocated to​ production

= Standard Hours * Standard rate per machine hour

= 2,600 * 14

= $36,400

2.  Fixed overhead budget​ variance

= Budget overhead cost - Actual overhead cost

= 36,900 - 35,200

= $1,700 favorable

3. Fixed Overhead Volume Variance

= Standard fixed overhead cost - Budgeted overhead

= 36,400 - 36,900

= -$500

= $500 Unfavorable

The following data relate to factory overhead cost for the production of 10,000 computers: Actual: Variable factory overhead $262,000 Fixed factory overhead 90,000 Standard: 14,000 hrs. at $25 350,000 If productive capacity of 100% was 15,000 hours and the total factory overhead cost budgeted at the level of 14,000 standard hours was $356,000, determine the variable factory overhead controllable variance, fixed factory overhead volume variance, and total factory overhead cost variance. The fixed factory overhead rate was $6.00 per hour. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

Answers

Answer:

Calculation of variable overhead controllable variance

Standard hours allowed for 10,000 computers = 14,000 hours

Budgeted variable expense = Standard hours allowed * variable overhead rate

= 14,000 * ($25 - $6)

= $266,000

Variable overhead controllable variance = Actual variable overhead expense - Budgeted variable overhead expense

= $262,000 - $266,000

=$4,000 (Unfavorable)

Calculation of fixed overhead volume variance:

Applied overhead = Number of computers produced * Fixed overhead rate

= 10,000 * $6.00

= $60,000

Budgeted fixed overhead = $90,000

Fixed overhead volume variance = Budgeted fixed overhead - Applied fixed overhead

 = $90,000 - $60,000

= $30,000 (Favorable)

Calculation of Total factory overhead volume variance:

Total factory overhead cost variance = Variable overhead controllable variance + Fixed overhead volume variance

= - $4,000 + $30,000

= $26,000 (Favorable)

I have question with it can you help me please??​

Answers

Answer:

Pick-up Later:

Set a pickup date

Process the transaction

Place all the items in the pickup area near the front of the store

Place a note on the items indicating they are sold.

Explanation:

The purpose of the above procedure is to enable the customer to take delivery of purchased goods hitch-free.  The pick-up area needs to be covered against rain so that the mulch and topsoil do not degrade.  It is assumed that the customer's contact information and payment have been secured before the arrangement for pick-up later.

Your text outlines three basic categories of electronic commerce applications: business-to-consumer (B2C), business-to-business (B2B) and consumer-to-consumer (C2C). B2C applications:_______.
A. Involve businesses developing attractive electronic marketplaces to entice customers and sell products and services to consumers.
B. Involve both electronic business marketplaces and direct market links between businesses .
C. Involve consumers buying and selling with each other in an auction process at an auction website, as well as personal advertising of products or services to buy or sell at electronic newspaper sites or personal websites.
D. None of the choices are correct.

Answers

Answer:

A. Involve businesses developing attractive electronic marketplaces to entice customers and sell products and services to consumers.

Explanation:

The Business to Consumer (B2C) sales strategy corresponds to a type of sale aimed at the final consumer. This sale takes place at retail, and occurs according to the consumer purchase decision process, which identifies their needs, judges the options according to their preferences and desires and finally chooses the option that best suits their search for a particular product or service.

Therefore, in the B2C strategy, retail companies have as main objective to create in the consumer the desire for a purchase, so the most appropriate option for this issue is that developing attractive electronic markets will help the company to attract customers and sell products and services to consumers.

Fed is open to changing bond policy Fed policymakers signaled for the first time that they could increase or decrease stimulation of the economy in the​ future, but not now. ​Source: Los Angeles Times​, May​ 1, 2013 What are the ripple effects and time lags that the Fed must consider in deciding when to increase or decrease stimulation of the​ economy?

Answers

Answer:

When the Fed raises the federal funds rate, the inflation rate decreases about two years later.

Explanation:

When trying to stimulate the economy either by increasing or decreasing, policymakers have to take into consideration how it would effect interest rate, amount of money available in the economy, loans that would be acquired by banks and the behavior of interest rate.

Interest rate can be impacted quickly even though the period of time it would take for such action to have a reflection on what quantity of money is available in the economy. Then also a period of 2 years would be taken for this action to take effect on inflation.

Therefore

When the Fed raises the federal funds rate, the inflation rate decreases about two years later.

TB MC Qu. 6-75 Kuzio Corporation produces and ... Kuzio Corporation produces and sells a single product. Data concerning that product appear below: Per Unit Percent of Sales Selling price $ 150 100 % Variable expenses 75 50 % Contribution margin $ 75 50 % The company is currently selling 6,500 units per month. Fixed expenses are $184,000 per month. The marketing manager believes that a $7,800 increase in the monthly advertising budget would result in a 190 unit increase in monthly sales. What should be the overall effect on the company's monthly net operating income of this change

Answers

Answer:

Effect on income= $6,450 increase

Explanation:

Giving the following information:

Contribution margin= $75

The marketing manager believes that a $7,800 increase in the monthly advertising budget would result in a 190 unit increase in monthly sales.

To calculate the effect on income, we need to use the following formula:

Effect on income= increase in contribution margin - increase in fixed costs

Effect on income= 190*75 - 7,800

Effect on income= $6,450 increase

In the context of early advertising, the invention of the _____ made advertising via posters, handbills, and signs possible.

Answers

Answer:

The printing press.

Explanation:

The printing press and its form of works are known to be an early age form that have been used and still in use for advertising. Advertisements of this form are seen in form of newspapers or magazines and are sometimes included as brochures or fliers. Write ups used in the print media to grab the attention of the specific target audience comes under the purview of print advertising.

Newspapers readers and also other publications methods have a tendency to browse the print ads that they come across. Moves to purchase these products could possibly not be instantaneous, but it does settle down in their subconscious mind. Next time they see the product in the market, they are tempted to buy it.

Identify at least two challenges that Salesforce faces and explain why these are important challenges to Salesforce.

Answers

Answer:

Two challenges that Salesforce may face today:

1. Competitions

2. Cash Flows

Explanation:

1. Salesforce has been the global Software-as-a-Service (SaaS) provider for Customer Relationship Management (CRM) system. However, they are challenged by new market joiners such as Hubspot. There are also new startups offering free and simple cloud-based CRM systems that targetting small businesses. The entry of the new competitors seriously threatens the leading market share of Salesforce.

2. The current pandemic affected negatively to all enterprises, including Salesforce's outstanding customers. They should expect a drop in their total number of fee payers while the cost to maintain their high product standard is still the same as before. It may give them a lot of working capital headaches.

Zane, a new employee, is eager to get a promotion soon, and he hopes he can quickly rise through the ranks at the company. He decides to ask his supervisor, Mary, for professional development advice. This is an example of which of the following types of communication?
a. Downward
b. None of these are correct.
c. Upward
d. Horizontal
e. Diagonal

Answers

Answer:

C

Explanation:

Upward communication is communication from lower hierarchy in the organisation to higher hierarchy in the organisation

Downward communication is communication from higher hierarchy in the organisation to lower hierarchy in the organisation

Horizontal communication is communication within the same organisation hierarchy

Diagonal communication is cross functional communication between employees at different levels of the organisation

John is considering purchasing a commercial building. His accountant is working with him to determine the property’s value to John. The initial cost of an investment property plus the cost of any additional improvements less qualified deductions represents the:

Answers

Answer:

Adjusted basis

Explanation:

Adjusted basis in accounting is used to calculate the net value of an asset. This is done by reducing depreciation deductions from the original value and adding capital expenses like cost of improvement.

This method is best used when there is need to get accurate gain and loss records, and for tax purposes.

In the given scenario John's accountant is using the adjusted basis when he calculates initial cost of an investment property plus the cost of any additional improvements less qualified deductions

A brand manager for a certain company must determine how much time to allocate between radio and television advertising during the next month. Market research has provided estimates of the audience exposure for each minute of advertising in each​ medium, which it would like to maximize. Costs per minute of advertising are also​ known, and the manager has a limited budget of ​

Answers

Answer:

Optimization

Explanation:

Since we were told that the brand manager has limited budget of $25,000 which makes the manager to decide that television adverts is much more effective than radio adverts making him to allocates, at least 70% of the time to television, based on this I wiill run OPTIMIZATION test reason been that optimization will help and enable me to make the best or most effective use of available resource which will in turn Reduce costs while improving the performance which is why the brand manager decide to allocate 70% to Television in order to make the business more efficient as well as cost effective.

Moped, Inc. purchased machinery at a cost of $44,000 on January 1, 2017. The expected useful life is 5 years and the asset is expected to have salvage value of $4,000. Moped depreciates its assets using the double-declining balance method. What is the firm's depreciation expense for the year ended December 31, 2017?

Answers

Answer:

Annual depreciation= $16,000

Explanation:

Giving the following information:

Purchase price= $44,000

Useful life= 5 years

Salvage value= $4,000

To calculate the depreciation expense under the double-declining balance, we need to use the following formula:

Annual depreciation= 2*[(book value)/estimated life (years)]

Annual depreciation= 2*[(44,000 - 4,000) / 5]

Annual depreciation= 16,000

As an American investor, you are trying to calculate the present value of a £25 million cash flow that will occur one year in the future. You know that the spot exchange rate is S= $1.9397/ £ and one-year forward rate is F= $1.9581/ £. You also know that the appropriate dollar cost of capital for this cash flow is 6.25% and that the appropriate pound cost of capital for this cash flow is 5.25%. a) What is the present value of the £25 million cash flow from the standpoint of a British investor, and what is the dollar equivalent of this amount? b) What is the present value of the £25 million cash flow from the standpoint of a U.S. investor who first converts the £25 million into dollars and then applies the dollar discount rate?

Answers

Answer:

1. Present value in pound=$23,752,969

Dollar equivalent=$46,073,634

2.Dollar equivalent for U.S investors=$48,952,500

Present value in pound=$46,072,918

Explanation:

1a.Calculation for present value of the £25 million cash flow

Using this formula

Present value in pound =cash flow*(1/1+Cash flow cost of capital)^ One year in the future

Let plug in the formula

Present value in pound=$25,000,000*(1/1+0.0525)^1

Present value in pound=$25,000,000*(1/1.0525)^1

Present value in pound=$25,000,000*0.950119

Present value in pound=$23,752,969

1b.Calculation for the dollar equivalent of this amount

Using this formula

Dollar equivalent=Present value in pound*Spot exchange rate

Let plug in the formula

Dollar equivalent=$23,752,969*$1.9397

Dollar equivalent=$46,073,634

2a. Calculation for the Dollar equivalent for U.S investors

Using this formula

Dollar equivalent for U.S investors=Cash flow*one-year forward rate

Let plug in the formula

Dollar equivalent for U.S investors=$25,000,000*$1.9581

Dollar equivalent for U.S investors=$48,952,500

2b. Calculation for the present value of the £25 million cash flow from the standpoint of a U.S. investor .

Using this formula

Present value in pound =Cash flow*(1/1+Cash flow cost of capital)^ One year in the future

Let plug in the formula

Present value in pound=$48,952,500*(1/1.0625)^1

Present value in pound=$48,952,500*0.941176

Present value in pound=$46,072,918

Therefore the Present value in pound for question 1 is $23,752,969 while the Dollar equivalent is $46,073,634.

The Dollar equivalent for U.S investors in question 2 is $48,952,500 while the Present value in pound is $46,072,918

assume the following information about the market and JumpMaster's stock. JumpMaster's beta = 1.50, the risk free rate 2%, the market risk premium is 10.0%. Using CAPM, what is the expected return for JumpMaster's stock?

Answers

Answer:

Expected market return = 17%

Explanation:

Given the Jump master’s beta = 1.50

Risk free rate = 2%

Market risk premium  = 10%

To find the expected return we have to use the below formula.

Expected market return = Riskfree rate + Beta × Market risk premium

Now insert all the values in order to get the expected market return.

Expected market return = 2 + 1.50 × 10

Expected market return = 17%

On August 1, 2010, a company issues bonds with a par value of $600,000. The bonds mature in 10 years and pay 6% annual interest, payable each February 1 and August 1. The bonds sold at $592,000. The company uses the straight-line method of amortizing bond discounts. The company's year-end is December 31. Prepare the general journal entry to record the interest accrued at December 31, 2010.

Answers

Answer:

Dr Discount on BP 8,000

Cr Cash 592,000

Cr Bond payable 600,000

Dr Interest expense 15,333.33

Cr Interest payable 15,000

Cr Discount on BP 333.33

Dr Interest payable 15,000

Dr interest expense 3,066.67

Cr Cash 18,000

Cr Discount on BP 333.33

Explanation:

Preparation of the general journal entry to record the interest accrued at December 31, 2010.

Based on the information given we were told that the company issues bonds with a par value of the amount of $600,000 in which the bonds mature in 10 years with a 6% annual interest and sold at the amount of $592,000 this means that the transaction will be recorded as:

Dr Discount on BP 8,000

(600,000-592,000)

Cr Cash 592,000

Cr Bond payable 600,000

(To record issuance of the bonds)

Dr Interest expense 15,333.33

Cr Interest payable 15,000 (600,000 x 6% x 5/12 )

Cr Discount on BP 333.33

(8,000 / (10years* 2 payment =400*5/6=333.33)

(To record year end adjustment entry)

Dr Interest payable 15,000

(600,000 x 6% x 5/12 )

Dr interest expense 3,066.67

(600,000 x 6% x 1/12=3,000)

(400 - 333.33= 66.67)

(3,000+66.67=3,066.67)

Cr Cash 18,000

(600,000 x 6% x 6/12)

Cr Discount on BP 333.33

(8,000 / (10years* 2 payment =400*5/6=333.33)

(To record first interest payment to bondholders)

Brunette Company is contemplating investing in a new piece of manufacturing machinery. The amount to be invested is $180,000. The present value of the future cash flows generated by the project is $163,000. Should they invest in this project?

Answers

Answer:

No,  as the net present value comes in negative

Explanation:

As we know that

Net present value = Present value of cash inflows - Initial investment

where,

Present value os $163,000

And, the initial investment is $180,000

Now placing these values to the above formula

So, the net present value is

= $163,000 - $180,000

= -$17,000

Therefore the company should not accept the project as net present value is in negative that is -$17,000

Other Questions
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