On January 1, Year 1, Hanover Corporation issued bonds with a $57,750 face value, a stated rate of interest of 8%, and a 5-year term to maturity. The bonds were issued at 97. Hanover uses the straight-line method to amortize bond discounts and premiums. Interest is payable in cash on December 31 each year. The journal entry used to record the issuance of the bond and the receipt of cash would be:
Answers
Answer:
January 1, Year 1 Cash $56017.5 Dr
Discount on Bonds Payable $1732.5 Dr
Bonds Payable $57750 Cr
Explanation:
The value of bonds which are issued at par is denoted by 100. If the bonds are issued at anything above 100 denomination, this means that the bonds are issued at a premium and if the denoted figure is less than 100, like in this question it is 97, the bonds are issued at a discount.
The cash received on the issuance of this bond will be 97% of the face value of the bond and the 3% will be the discount on the issuance of these bonds.
Thus, the cash received is = 57750 * 97% = $56017.5
The discount on Bonds Payable = 57750 - 56017.5 = $1732.5
The journal entry to record the bond issuance and the receipt of cash would be:
Date Account title Debit Credit
Year 1 Cash $56,017.5
Discount on Bonds Payable $1, 732.5 Dr
Bonds Payable $57, 750 Cr
How to make the journal entry?
Since the bonds were issued at 97, this means they were issued at a discount. The discount on bonds payable is the difference between the face value and the issue price.
Issue Price = $57,750 x 97%
= $56,017.50
Bond Discount = $57,750 - $56,017.50
= $1,732.50
The journal entry to record the issuance of the bonds on January 1, Year 1, would include:
Debit Cash for the amount received ($56,017.50).
Debit Discount on Bonds Payable for the discount amount ($1,732.50).
Credit Bonds Payable for the face value of the bonds ($57,750).
This entry reflects the receipt of cash and the creation of a liability for the face value of the bonds. The discount account represents the additional interest expense that will be recognized over the life of the bonds.
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Answers
Answer:
Following are the responses to the given points:
Explanation:
For point a:
The fund would have been less dangerous for sales and profitability. Each reason would be that growth funds only appreciate investment returns. And on the other side, the growth and economy grew yield gains in term both of equity investment returns or dividend/interest payments, that result throughout the investor's reduced risk.
For point b:
High-quality bond funds are far less dangerous. The reason for this is the investment income is subject to risk and depends on the financial performance of the firm and many other external factors, including that of the country's macroeconomic scenario. Besides that, equity investment dividends aren't guaranteed. That bondholders benefit from the strong business credibility as well as the loan repayments on the investments are assured, independent of the company earnings performance.
For point c:
Its municipalities with such a good return would be less harmful. That reason is that such bonds are provided by public authorities (such as municipalities). Even so, these devices cannot obtain a reputation for credit mostly on market. Consequently, until investing in such securities, it is important to take into account credit scores (assigned to such bonds).
For point d:
The equilibrium fund is much less risky. It is because balanced funds participate in various types of financial securities like assets and liabilities. It helps balance the risk linked to stock market fluctuations with fixed liability returns. In contrast, foreign money invests mainly in foreign share trading and is thus exposed to market volatility and rapid share price fluctuations.
Adjusted Trial Balance
December 31, 2014
Debit Credit
Cash $2,660
Accounts Receivable 2,140
Supplies 1,850
Equipment 15,900
Accumulated Depreciation-Equipment $ 3,975
Accounts Payable 3,310
Unearned Service Revenue 3,205
Common Stock 10,000
Retained Earnings 4,510
Dividends 1,000
Service Revenue 4,300
Supplies Expense 410
Depreciation Expense 2,420
Rent Expense 2,920
$29,300 $29,300
Using the information from the adjusted trial balance, you are to prepare for the month ending December 31:
1. An income statement.
2. A balance sheet.
3. A retained earnings statement.
Answers
Answer:
1.
Income Statement
$
Service Revenue 4,300
Less :Supplies Expense 410
Gross Income 3,890
Less :Depreciation Expense 2,420
Less :Rent Expense (2,920)
Net Loss 1,450
2.
Balance Sheet
Assets $
Non-Current Asset
Equipment (15,900-3,975) 11,925
Current Asset $
Cash 2,660
Accounts Receivable 2,140
Supplies 1,850
6,650
Total Asset 18,575
Common Stock 10,000
Retained Earnings 2,060
Liabilities
Current Liabilities $
Unearned Service Revenue 3,205
Accounts Payable 3,310
6,515
Total Equity and Liability 18,575
3.
Retained Earning Statement $
Retained Earning (at beginning) 4,510
Dividend Paid (1,000)
Net Loss for the year (1,450)
Retained Earning (at Ending) 2,060
Explanation:
1.
Income statement shows the profit or loss for the period by deducting all the expenses from the revenue. The net value from here transferred to retained earning in the balance sheet.
2.
Balance sheet shows the financial position of the company. It contains assets, equity and liabilities balance.
3.
Statement of retained earning shows the balance of retained earnings and adjust all the payments made to shareholders in the form of dividend and net profit or loss for the period.
Final answer:
The income statement shows a net loss of $1,450. The retained earnings statement is $2,060 after accounting for the net loss and dividends. The balance sheet shows a total of $18,575 in assets, $6,515 in liabilities, and $12,060 in stockholders equity.
Explanation:
We will first need to prepare the income statement, followed by the retained earnings statement, and finally the balance sheet.
1. Income Statement
Service Revenue: $4,300
Less Expenses:
Supplies Expense: $410
Depreciation Expense: $2,420
Rent Expense: $2,920
Total Expense: $5,750
Net Income (Service Revenue - Total Expense): -$1,450
2. Retained Earnings statement
Beginning Retained Earnings: $4,510
Add: Net Income: -$1,450
Less: Dividends: $1,000
Ending Retained Earnings: $2,060
3. Balance Sheet
Assets:
Cash: $2,660
Accounts Receivable: $2,140
Supplies: $1,850
Equipment: $15,900
Less: Accumulated Depreciation: $3,975
Total Assets: $18,575
Liabilities:
Accounts Payable: $3,310
Unearned Service Revenue: $3,205
Total Liabilities: $6,515
Stockholders Equity:
Common Stock: $10,000
Retained Earnings: $2,060
Total Stockholders Equity: $12,060
Total Liabilities and Stockholders Equity: $18,575
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b. decrease in exports in the economy.
c. increase in imports in the economy.
d. leakage in spending in the economy.
Answers
Answer:
d. leakage in spending in the economy.
Explanation:
In the economy firms spend money on labour, input, and business expansion. While in the personal household there is spending on food, rent, and other expenses.
When money is taken out of this cycle and not used for a particular purpose then it is considered to be a leakage.
Leakages include taxes savings and imports.
Savings occurs when an individual has excess income and decides to reserve some for a future use. This fund does not have a particular use in the economy so it is considered to be a leakage.
Answer:
D. Leakage in spending in the economy.
Explanation:
It is observed that if consumers have a rise in their wages, they tend to benefit and this helps the economic situation of the said country or nation as seen in some economies of the world lately. Also alteration in interest rates can have different consumer effects which ranges from spending habits depending on a number of factors to other habits that may end up boosting the economy also current rate levels, expected future rate changes, confidence of the consumer, and the overall health of the economy.
Answers
Answer:
These revenues correspond to the portion of the related companies that do not consolidate in the Financial Statement because there is a minimum participation or there is no control over them (Example: They have control with the 51% of participation). However, if they have a minimal portion this means that there is a minority participation, the portion of the gain that corresponds to it is recorded in the financial statements.
Answers
Answer:
The Expected Earning for the college graduates is 40,000
Explanation:
The Expected Earning for a college alum with a four year college education in financial matters is determined as weighted normal all things considered, utilizing likelihood of every result as its weight.
Although the Expected Earning is;
Expected Earning = (25% × 30,000) + (50% × 40,000) + (25% × 50,000)
Expected Earning = 0.25 × 30,000 + 0.5 × 40,000 + 0.25 × 50,000
Expected Earning = 7500 + 20,000 + 12,500
Expected Earning = 40,000
Answers
Answer:
The correct answer is b. Total revenue will fall.
Explanation:
The equation for the price elasticity of demand (PED) is ε =
where Q represents the quantity, P represents the price and d represents variation.
If the demand for a product is highly elastic, mathematically it means that the PED in absolute value is greater than 1.
|ε| > ⇒ |ε| > 1
Economically that means that the quantity demanded of that product will decrease more than proportionally to the increase in price of that same product. In other words, the company will experience that a increase in price of its product raises the revenue for each unit sold, but given that the PED is highly elastice an increase in price reduces the number of units actually sold to the extent the company's total revenue actually falls.