BUSINESS COLLEGE

Cramer Corp. issued $20,000,000 of 5-year, 9% bonds at a market (effective) interest rate of 10%, receiving cash of $19,227,757. Interest on the bonds is payable semiannually. Required: Journalize the entry to record the first semiannual interest payment, and the amortization of the bond discount, using the interest method? Round your answers to the nearest dollar amount. Refer to the Chart of Accounts for exact wording of account titles.

Answers

Answer 1

Answer:

Answer:

The journal entry is as follows:

Interest expense $961,388.00

Discount on issue of bond $61,388.00

Cash $900,000.00

Explanation:

In order to prepare the journal entry we have to calculate first the interest expense and the cash.

Therefore, Interest expense= ($19,227,757×10%×6/12)=$961,388.00

Cash=$20,000,000×9%×6/12= $900,000

By difference then, the discount on bond payable=$961,388-$900,000

=$61,388.

Hence, the journal entry is as follows:

Interest expense $961,388.00

Discount on issue of bond $61,388.00

Cash $900,000.00

Related Questions

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An unfavorable flexible budget variance for variable expenses would indicate that: Group of answer choices the expenses of the company were less than what they had planned. more units were actually sold than the company had originally budgeted to sell. actual variable expenses were higher than the flexible budget variable expenses. fewer units were actually sold than the company had anticipated.

Answers

Answer:

actual variable expenses were higher than the flexible budget variable expenses.

Explanation:

A flexible budget projects budget data (revenue and expenses) based on various or multiple levels of business activities, such as production sales.

Also, a flexible budget variance gives the difference between the output resulting from a flexible budget and the actual outputs.

A variance can either be favorable or unfavorable. An unfavorable flexible budget variance for variable expenses would indicate actual variable expenses were higher than the flexible budget variable expenses.

Hence, If a company's actual net income is lower than it's planned, the variance is said to be unfavorable. Thus, higher costs and expenses would result in a unfavorable variance while higher revenues result in a favorable variance.

A quantity variance and price variance can be used to measure the direct materials flexible budget variance.

A client has an options account that is qualified to buy options and sell covered calls. The client calls his representative, telling him that he wants to sell naked calls in the account. Which statement is TRUE about this?A. The representative can do this without taking any further action
B. The "Special Statement for Uncovered Options Writers" must be provided before executing the transaction
C. The "Options Disclosure Document" must be provided before executing the transaction
D. The representative must open a separate options account for the customer and segregate the resulting naked options positions

Answers

Answer:

The correct answer is letter "B": The "Special Statement for Uncovered Options Writers" must be provided before executing the transaction.

Explanation:

A naked call is a type of strategy options traders use when writing a call option without owning the underlying assets. For this to be possible, the trader must sign an options agreement and the Registered Options Principal (ROP) must approve the account so the trader can write naked options.

Before proceeding the "Special Statement for Uncovered Options Writers" must be provided.

<11{1[2(06)06]}> Reporter: A new campaign finance reform bill being considered by Congress would limit the amount of campaign contributions that political candidates can receive. However, a survey of candidates running for mayor, governor, and senate seats shows that not one of them favors the bill. Clearly, there is no desire among politicians to limit campaign contributions. Which one of the following points out the flaw in the reporter’s argument above?

Answers

Answer:

d) The views of candidates currently running for office do not necessarily represent the views of all politicians.

Explanation:

The reporter simply transferred the conclusion onto the whole politician cohort. Since only the candidates who are running for high-stake political positions were included in the survey, that does not necessarily mean that all the politicians that exist think the new limit is bad.

To add up, the percentage of politicians that are also the candidates for high positions is significantly smaller than the number of all politicians.

who bears the greatest risk of loss of value if a firm should fail? group of answer choices bondholders common stockholders all of the above bear equal risk of loss. preferred stockholders

Answers

Common stockholders bear the greatest risk of loss of value if a firm should fail.

There are two sorts of shareholders in a company: common shareholders and preferred shareholders. They are the owners of common stocks, as their name implies, in a corporation. These individuals enjoy voting rights over matters concerning the company.

A person who has acquired at least one common share of a corporation is referred to as a common shareholder. Common shareholders have entitled to declared common dividends as well as a vote on corporate matters. In the event of bankruptcy, common shareholders are compensated last, following preferred shareholders and debtholders.

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A company manufactures hair dryers. It buys some of the components, but it makes the heating element, which it can produce at the rate of 860 per day. Hair dryers are assembled daily, 251 days a year, at a rate of 330 per day. Because of the disparity between the production and usage rates, the heating elements are periodically produced in batches of 2,300 units. a. Approximately how many batches of heating elements are produced annually? (Round your answer to 2 decimal places.) Number of batches
b. If production on a batch begins when there is no inventory of heating elements on hand, how much inventory will be on hand 2 days later? Number of inventory
c.What is the average inventory of elements, assuming each production cycle begins when there are none on hand? (Do not round intermediate calculations. Round your answer to the nearest whole number.) Average inventory
d. The same equipment that is used to make the heating elements could also be used to make a component for another of the firm’s products. That job would require 3 days, including setup. Setup time for making a batch of the heating elements is a half day. Is there enough time to do this job between production of batches of heating elements?

i. No
ii. Yes

Answers

Answer:

(a) 93.85 batches of heating elements are produced annually

(b) 1725

(d) Yes

Explanation:

(a) Daily production rate is 860 units

Annual (251 days) production rate is = 251×860 = 215860 units

In a batch, 2300 units are produced

215860 units are produced in (215860 ÷ 2300) = 93.85 batches

(b) In 251 days, 93.85 batches are produced

In 2 days, (93.85×2)÷251 is produced = 0.75 batch

1 batch = 2300 units

0.75 batch = 0.75×2300=1725 units

1 batch is produced in 2/0.75days

Average= (2300×0.75)÷2= 863

Final answer:

The company produces approximately 93.85 batches of heating elements annually, has an inventory of 1,060 units two days after production, and maintains an average inventory of 1,150 units. Furthermore, there is enough time to produce other products between batches of heating element production.

Explanation:

To solve this problem, we first need to understand the company's production and consumption rates of the heating elements for their hair dryers.

a. The company produces elements at a rate of 860 per day and runs 251 days per year. Thus, they produce around 215,860 elements annually. As they produce elements in batches of 2,300, the number of batches produced annually will be 215,860 divided by 2,300, which is approximately 93.85. So, the company produces about 93.85 batches of heating elements annually.

b. Two days after the production of a batch, the company will have produced 2 * 860 = 1,720 elements but used 2 * 330 = 660, thus having an inventory of 1,060 units.

c. To calculate the average inventory, we take the sum of the maximum and minimum inventory (2,300 and 0, respectively) and divide by 2, leading to an average inventory of 1,150 units.

d. The time between production of batches of heating elements is the total quantity in a batch divided by the net increase per day (860-330). This equals 2,300/(860-330) approximately 4.8 days. Given that the other product takes 3 days to make, including setup, there is enough time to produce it between batches of heating elements.

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Jensen Enterprises paid $900 in dividends and $920 in interest this past year. Common stock increased by $1,200 and retained earnings decreased by $306. What is the net income for the year?