Assets decrease and owners equity decreases

Assignment Help Financial Management
Reference no: EM13804327

On July 1, 2012, Watson Company received a $20,000 promissory note for services from Jeffs Company. The annual interest rate is 5%. Principal and interest are paid in cash at the maturity date of June 30, 2013. The effect on Watson's financial statements on July 1, 2012 is as follows.

Assets increase; owners' equity increases.

Assets decrease and owners' equity decreases.

Assets decrease.

No net change in assets.

Reference no: EM13804327

Questions Cloud

Calculate implied annual interest rate on futures contract : A Treasury bond futures contract settles at 105'8. What is the present value of the futures contract in dollars? Calculate the implied annual interest rate on the futures contract? Calculate the new value of the futures contract if interest rates inc..
What would your pre-tax net profit be : Suppose you believe that Johnson Company's stock price is going to increase from its current level of $22.50 sometime during the next 5 months. For $310.25 you can buy a 5-month call option giving you the right to buy 100 shares at a price of $25 per..
Capital budgeting-using discounted cash flow method : In evaluating long-term capital budgeting decisions using the discounted cash flow method, the net present value calculation that produces a negative (less than $0) amount is interpreted correctly in only one of the following. A definite signal to in..
Assets decrease and owners equity decreases : On July 1, 2012, Watson Company received a $20,000 promissory note for services from Jeffs Company. The annual interest rate is 5%. Principal and interest are paid in cash at the maturity date of June 30, 2013. Assets decrease and owners' equity decr..
Assets decrease and owners equity decreases : On July 1, 2012, Watson Company received a $20,000 promissory note for services from Jeffs Company. The annual interest rate is 5%. Principal and interest are paid in cash at the maturity date of June 30, 2013. Assets decrease and owners' equity decr..
What is their yield to maturity : Quigley Inc.'s bonds currently sell for $1,080 and have a par value of $1,000. They pay a $100 annual coupon and have a 15-year maturity, but they can be called in 5 years at $1,125. What is their yield to maturity (YTM)?
What is the expected return on the portfolio after purchase : Your portfolio is diversified. It has an expected return of 10.0% and a beta of .95. You want to add 500 shares of Company D's at $40 a share to your portfolio.  Company D's has an expected return of 9.0% and a beta of .75. The total value of the inv..
Implementation of a pro-active ethics program is expected : The implementation of a pro-active ethics program is expected to result in
The NPV of the Collinsville Plant : The average unlevered beta of publicly traded Sodium Chlorate businesses is 0.94. Assume zero debt beta. The target capital structure that is appropriate for Collinsville plant is 35% debt and 65% equity. Assume a risk-free rate of 9.5% and market ri..

Reviews

Write a Review

Financial Management Questions & Answers

  The prices of both bonds will remain unchanged

You are considering two bonds. Bond A has a 9% annual coupon while Bond B has a 6% annual coupon. Both bonds have a 7% yield to maturity, and the YTM is expected to remain constant. The prices of both bonds will remain unchanged.

  Weighted-average interest rate used interest capitalization

Hanson Company is constructing a building. Construction began on February 1 and was completed on December 31. Expenditures were $1,824,000 on March 1, $1,212,000 on June 1, and $3,057,100 on December 31.

  Calculate the after tax cash flows

Suppose your company needs to raise $45 million and you want to issue 30-year bonds for this purpose. Assume the required return on your bond issue will be 6 percent, and you’re evaluating two issue alternatives: A 6 percent semi-annual coupon bond a..

  Weighted average contribution margin per unit for lambardi

Lambardi Company sells 3 types of bags. Bag A sells for $17 and has variable cost of $9.00 per unit. Bag B sells for $12 and has variable cost of $12.00 per unit. What is the weighted average contribution margin per unit for Lambardi?­­­­­­­­­­

  What was the cash flow to stockholders for the year

The December 31, 2013, balance sheet of Schism, Inc., showed $153,000 in the common stock account and $2,780,000 in the additional paid-in surplus account. The December 31, 2014, balance sheet showed $163,000 and $3,080,000 in the same two accounts, ..

  Criticisms applies to net present value analysis

Which one of these criticisms applies to net present value analysis?

  Long-term debt and equity financing

Miletkov company's total assets fluctuate between $320000 and $410000, while its fixed assets remain constant at 260000. If the firm follows a maturity matching, or moderate, working capital financing policy, what is the likely level of its long-term..

  Current liability-long term liability-owners equity account

Classify the following accounts by listing whether they are a current asset, property plant and equipment, current liability, long term liability or owners equity account:

  Mccormick corporation issued note

McCormick Corporation issued a 4-year, $63,000, 5% note to Greenbush Company on January 1, 2014, and received a computer that normally sells for $49,605. The note requires annual interest payments each December 31. The market rate of interest for a n..

  Expected annual cash flows thereafter

Juanita has an opportunity to invest in her friend's clothing store. The initial investment is $10,700 and the expected annual cash flows thereafter are as follows: {$400; $500; $1,000; $2,000; $2,000; $4,000; $4,000}. What is Juanita's IRR on this i..

  Associated with the clean-up of an environmental site

Assume that you are attempting to fund a $50,000,000 liability associated with the clean-up of an environmental site that will be due in seven years.  If you don't meet the liability you will be out of business.  You have an amount of money to invest..

  Show the preset value of the present collection experience

Using NPV calculation, show the preset value of the present collection experience and calculate the NPV of the proposed 2/10, net-30 terms.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd