Washington inc. issued $705,000 of 6%, 20-year bonds at 98 on January 1, 2009. Through January 1, 2017, Washington amortized $8,200 of the bond discount. On January 1, 2017. Washington Inc. retired the bonds at 102 (after making the interest payment on that date). What is the gain or loss that Washington Inc. would report for the retirement of this bond?
Answers
Answer:
$20,000
Explanation:
Bond discount at the issuance of bond:
= Worth of Bonds issued - [(Worth of Bonds issued ÷ 100) × Issue price]
= 705,000 - [($705,000 ÷ 100) × 98]
= $705,000 - $690,900
= $14,100
Bond Payable = $705,000
Unamortized bond discount:
= Bond discount at the issuance of bond - Amortized amount
= $14,100 - $8,200
= $5,900
Redemption Value of Bond = Retired price of bonds × 7,050
= 102 × 7,050
= $719,100
Loss on retirement on Bond:
= Redemption Value of Bond - (Worth of Bonds issued - Unamortized bond discount)
= 719,100 - (705,000 - 5,900)
= 719,100 - 699,100
= $20,000
Final answer:
When Washington Inc. retired the bonds, they would report a gain of $19,300.
Explanation:
When Washington Inc. retired the bonds on January 1, 2017, the gain or loss that they would report can be calculated as follows:
- Calculate the carrying value of the bonds on the retirement date: $705,000 - $8,200 = $696,800.
- Compare the carrying value to the cash received from the retirement:
If the cash received is higher than the carrying value, there is a gain. If the cash received is lower than the carrying value, there is a loss.
In this case, Washington Inc. retired the bonds at 102, which means they received $716,100. Since $716,100 is higher than the carrying value ($696,800), Washington Inc. would report a gain of $716,100 - $696,800 = $19,300 for the retirement of the bond.
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Related Questions
Corporate governance Aa Aa The management of Badger Corp. controls 58% of the company's stock. The firm did not meet any of its quarterly sales projections for the last year. Some of the firm's institutional investors are worried that the firm's poor performance is partly because management has not been focused on maximizing shareholder wealth. Which of the following measures would the institutional investors most likely want to see implemented?O They would want to change the corporate bylaws so that one-third of the board seats are filled each year and each director serves a three-year term. O They would want to change the corporate charter to allow cumulative voting instead of noncumulative voting. O They would want to ensure that the company's CEO is also the chairperson of the board of directors.
During 2016, Ayayai Corporation spent $144,000 in research and development costs. As a result, a new product called the New Age Piano was patented. The patent was obtained on October 1, 2016, and had a legal life of 20 years and a useful life of 10 years. Legal costs of $17,400 related to the patent were incurred as of October 1, 2016. Prepare all journal entries required in 2016 and 2017 as a result of the transactions above. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
The use of accelerated depreciation:____.a. discourages investment in plant and equipment. b. increases expenses and decreases cash flow.c. initially decreases the firm's taxes. d. initially increases the firm's profits.
I sell bottled water that costs me $1 to produce. I mark each bottle up by $2. What is my margin on price
Answers
Answer:
1. $67,500
2. $69,500
3. $69,500
Explanation:
1. The computation of bad debt expense is shown below:-
Bad debt expense = Credit sales × Debt percentage
= $4,500,000 × 1.5%
= $67,500
2. The computation of receivable written off is shown below:-
receivable written off = Allowance Beginning balance + bad debt expense - Allowance ending balance
= $42,000 + $67,500 - $40,000
= $69,500
3. The computation of bad debt expense be for 2013 is shown below:-
= receivable written off
= $69,500
Answers
Answer:
A
Explanation:
the sales price increase and because the variable cost are the same the contribution margin will increase, which lead to think the BEP is lower.
But, because the fixed cost also increase we cannot determinate where the new BEP Will be higher or lower. The fixed cost could increase so much that nulifies the increase in the contribution margin or even be higher enought that the BEP goes higher.
So Option A is the only true statment.
Answers
Final answer:
The question asks to identify a problem in the liabilities section of a balance sheet, specifically in the payroll information, and suggest a solution. Possible issues could be inaccurate payroll calculations or inconsistencies between records. A possible solution could be auditing the payroll and implementing regular checks.
Explanation:
The question asks you to review the liabilities section of the balance sheet for a company named Rings and Things with a focus on the payroll information. It's important to note that without specific details from the balance sheet and payroll information, a precise issue can't be identified. However, typical problems in this area could include inaccurate payroll calculations or discrepancies between the balance sheet and payroll records.
A solution to these issues could involve auditing the payroll procedures to identify and rectify any errors or inconsistencies. Furthermore, regular checks and audits could be implemented to prevent these types of issues from occurring in the future. It’s fundamental that Janet and Omar ensure all records are meticulous and accurate to maintain a healthy balance sheet.
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Answer:
Explanation:
Most of the liability costs are coming from payroll, the individual salesperson. This employee only worked for 20 hours during April, and yet still makes an income of $1000 dollars. This means they have an hourly rate of $50 an hour, which is way more than the standard employee should be making. I would recommend Janet and Omar to decrease the hourly rate to something more standard, like minimum wage. This would decrease their liability costs by more than 50% because California's minimum wage rate is only about $12-13.
Answers
Answer:
$66,000
Explanation:
The computation of the total implicit cost per year is shown below:
= Given up salary + investment amount × interest rate on investment in the economy
= $60,000 + $100,000 × 6%
= $60,000 + $6,000
= $66,000
We simply added the given up salary and investment amount after considering the interest rate on investment so that the accurate amount could come
Answers
Answers
Answer:
C = 1.75Q + 4,990
variable 1.75
fixed component 4,990
Explanation:
High-Low method:
we subtract the highest level of activity with the lowest one:
24,398 units generates 42,696 cost
with this information we can solve for variable cost.
42,696 / 24,398 = 1.75
Now we calcualte the fixed cost:
TC = variable x Q + fixed cost
82,620 = 1.75 (44,360) + fixed cost
82,620 - 77630 = 4990
the formula will be:
C = 1.75Q + 4,990
Answer: variable 1.75
fixed component 4,990
Explanation: subtract the highest level of activity from the lowest one
44,360-19,962=24,398
82,620-39,924=42,696
then do 42,696 / 24,398 = 1.75
Now for fixed cost:
82,620 = 1.75 (44,360)
82,620 - 77630 = 4990