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On July 1, 2008 bonds of 4,000,000 face value of 13%, 20 year bonds are issued to yield 11%. Interest is paid semiannually on January 1 and July 1 and the effective interest method is used. Required: 1. All entries from the issuance date through 12-31-09. Assume reversing entries are used. 2. The proper balance sheet presentation for the bonds payable at 12/31/09. 3. Answers to the following questions: a. What amount of interest expense will be reported for 2009? b. Will the bond interest expense reported in 2009 be the same as, greater than, or less than the amount that would be reported if the straight line method of amortization were used? c. Determine the total cost of borrowing over the life of the bond. d. Will total bond interest expense for the life of the bond be greater than, or less than the amount that would be reported if the straight line method of amortization were used? Note: To calculate the price of the bond you will need PV factors for 5.5% for 40 semi-annual periods. You can easily figure them out either using the formulas underlying the PV factors in the ch. 6 tables or doing the PV calc in excel. But to make your life a little easier, here are the factors: The single sum factor is 0.11746314 and the ordinary annuity factor is 16.0461247 Given the length of the bond and it being semiannual interest, it would be useful to put together an excel sheet to do the effective interest amtz chart and see if things work out after 40 rows.
Darron Co. was formed on January 1, 2011 as a wholly owned foreign subsidiary of a U.S. corporation. Darron's functional currency was the stickle (§). The following transactions and events occurred during 2011:
If the investor holds the bond until it matures and collects the $1,000 par value from the Treasury and his marginal tax rate is 28 percent, what will his after-tax yield to maturity be?
Required-What unit values should Herman use for each of its products when applying the LCM rule to ending inventory?
Which of the following is an internal control activity that could prevent a paid disbursement voucher from being presented for payment a second time?
The amount of overhead cost that the company applied to work in process for October was:
Under the economic entity concept, which of the following statements is true?
What is the amount of Citradoria Corporation's allowable deduction for charitable contributions for the current year?
Lark Corporation is a calendar year taxpayer. At the beginning of the current year, Lark has accumulated E & P of $330,000. The corporation incurs a deficit in current E & P of $460,000 that accrues ratably throughout the year. On June 30, Lark di..
Transfer title of their personal home to Barbara. They purchased the house in 1998 and their basis today is $400,000. The fair market value of the house is $500,000. The house is subject to a 25-year, $250,000 mortgage.
ACCT212 Project 2: Financial Statement Analysis-YUM! Brands, Inc. Description: Using the financial statements for YUM! Brands, Inc. located in Appendix A of your Textbook, you will calculate Vertical and Horizontal Analysis and the Financial Ratios ..
Computing equivalent production
For 2010, Skresso Co. reported $3.64 of earnings per share of common stock. During 20011 the firm had a 4% common stock dividend.
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