On October 1, Eder Fabrication borrowed $66 million and issued a nine-month, 8% promissory note. Interest was payable at maturity. Prepare the journal entry for the issuance of the note and the appropriate adjusting entry for the note at December 31, the end of the reporting period. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars.)
Answers
Answer:
Explanation:
The adjusting entries are shown below:
1. Cash A/c Dr $66,000,000
To Short term notes payable A/c $66,000,000
(Being issue of short term note payable is recorded)
2. Interest expense A/c Dr $1,320,000
To Interest payable A/c $1,320,000
(Being interest is recorded)
The interest amount is computed below:
= Principal × rate of interest × number of months ÷ (total number of months in a year)
= $66,000,000 × 8% × ( 3 months ÷ 12 months)
= $1,320,000
The 3 months is calculated from October 1 to December 31
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If Garden Variety Flower Shop uses 750 clay pots a month. The pots are purchased at $2 each. Annual carrying costs per pot are estimated to be 30 percent of cost, and ordering costs are $20 per order. The manager has been using an order size of 1,500 flower pots:
- a. What additional annual cost is the shop incurring by staying with this order size will be: $105.24
- b. What benefit would using the optimal order quantity yield will be 51.63%
a. Additional annual cost
Annual demand (D) =$750 x 12= $9,000
Ordering cost=$20 per order
Annual carrying costs(H)=0.30 ×$2.00 = $0.60
Order Quantity(Q) = 1,500
Find TC for Q
TC=Q÷2×H + D÷Q × S
TC=1,500÷2 × $0.60 + $9,000÷1,500×$20
TC=$450+$120
TC=$570............. (1)
Now find Qo
Qo=√2DS÷H
Qo=√2×$9,000×$20÷0.60
Qo=√600,000
Qo=$774.596
Qo=$774.60 (Approximately)
Find TC for Qo
TC=Q÷2×H + D÷Q ×
TC=774.60÷2 × $0.60 + $9,000÷774.60×$20
TC=$232.38+$232.38
TC=$464.76................(2)
Now let determine the additional annual cost
Additional annual cost=$570-$464.56
Additional annual cost=$105.24
b. Benefit would using the optimal order quantity yield (relative to the order size of 1,500)
Benefit=Qo÷Q
Benefit=$774.60÷1,500×100
Benefit=51.63%
The benefit is that about 51.63% of the storage space would be needed.
Learn more here:
Answer:
Additional cost= $570
Explanation:
Monthly demand = 750
Annual demand (D) = Monthly Demand x Number of months in a year
Annual demand (D) = 750 x 12 = 9,000
Cost (C) = $2.00 each
Annual carrying costs (Cc) = 30 percent of cost
Annual carrying costs (Cc) = 30% of $2.00 = $0.60
Ordering costs (Co) = $20
Current order quantity (Q1) = 1,500
Solution:
(a) Current cost is calculated as,
Current cost = Annual carrying costs + Annual ordering costs
Current cost = [(Quantity / 2) x Carrying cost] + [(Annual demand / Current Quantity) x Ordering cost]
Current cost = [(1500 / 2) x $0.60] + [(9000 / 1500) x $20]
Current cost = $450 + $120
Current cost = $570
Answers
Answer and Explanation:
The Journal entry is shown below:-
a. Bad Debt Expense Dr, $36,800 ($40,000 – $3,200)
To Allowance for Doubtful Accounts $36,800
(Being the bad debt expense is recorded)
For recording this we debited the bad debt expense as it increased the expenses and at the same time it reduced the assets so the allowance for doubtful accounts is credited
b. Bad Debt Expense Dr, $40,730 ($40,000 + $730)
To Allowance for Doubtful Accounts $40,730
For recording this we debited the bad debt expense as it increased the expenses and at the same time it reduced the assets so the allowance for doubtful accounts is credited
Answers
Answer:
Fixed Cost = $24,000 Variable cost = $5
Explanation:
You have to use the High-Low method
From the table you got, you pick the higher and the lowest unit sold
and calculate the diference between them:
Now 14,400 Units generates a cost of 72,000 Dividing we get the variable component
Then we calculate for the fixed cost:
Fixed Cost = 24,000
Answers
Answer:
A is the correct option.
Explanation:
Lease payment is similar to rent which is dictated under the contract between the two parties, which grants participants the legal right for using the real estate holding computers, software and other assets for a specified period of time. The time period for paying lease payment can range a monthly basis to long lengths of 100 years or more. The lease payment is decided by factors such as assets' value, discount rates, and the lessee's credit score.
Answers
Answer:
Option A is the right answer.
Explanation:
Bonds seems to be debt security during which the lender is obliged to pay compensation at regular time intervals as well as pay the money back the balance of the shareholder at intellectual ability.
- Option B: The raising of new bonds diminishes underlying ownership within the company. Incorrect issuance of new equities diminishes the company's current ownership.
- Option C: Debenture bonds attached leverage on the assets guaranteed. Incorrect debentures represent short term loans.
- Option D: Bonds focuses on providing funding for equities. Incorrect since debt funding is provided by Bonds.
So that alternative A would be the appropriate choice.
Bonds are like IOUS with a promise to repay the amount borrowed, with interest, on a certain date. Thus, option A is correct.
Bonds appear to be a type of financial instrument where the lender is required to provide periodical payments of compensation as well as to reimburse the shareholder for their remaining amount at the investor's intellectual discretion.
An Iou-like financial obligation is a bond. By purchasing corporate bonds, investors are making a loan to the corporation issuing the connection. Bonds usually provide investors with a fixed rate of interest that is paid over a specified period of time at periodic times. In general, bonds are a less risky investment. Therefore, option A is correct.
Learn more about Bonds, here:
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Answers
Answer and Explanation:
The journal entries are shown below:
1. On July 1 2019
Machinery Dr $67,000
Fixture & Fittings Dr $68,000
Vehicles Dr $35,000
Current assets Dr $12,000
Goodwill Dr $28,000
To Current liabilities $18,000
To Share Capital (80,000 × $1 ) $80,000
To Paid in capital in excess of par 112,000 {80,000 × ($2.40 - $1)}
(Being the acquisition is recorded)
For recording this we debited all assets as it increased the values of assets and credited the liabilities and stockholder equity as it also increased
2. On July 1 2019
Paid in capital in excess of par $1,600
To Cash $1,600
(Being the share issuance cost is recorded)
For recording this we debited the paid in capital as it reduced the stockholder equity and credited the cash as it reduced the assets
Working notes:
For goodwill amount
= Purchase consideration - net identifiable assets
= $192,000 - $164,000
= $28,000
The net identifiable asset come from
= $67,000 + $68,000 + $35,000 + $12,000 - $18,000
= $164,000