Answer:
a. In August, 2021 a worker was injured in the factory in an accident partially the result of his own negligence. The worker has sued Barkley Co. for $800,000. Counsel believes it is reasonably possible that the outcome of the suit will be unfavorable and that the settlement would cost the company from $250,000 to $500,000.
No liability should be recorded, only included in the footnotes. The liability is not probable, nor the amount can be determined.b. A suit for breach of contract seeking damages of $3,000,000 was filed by an author against Henderson Co. on October 4, 2018. Henderson's legal counsel believes that an unfavorable outcome is probable. A reasonable estimate of the award to the plaintiff is between $1,000,000 and $2,250,000. No amount within this range is a better estimate of potential damages than any other amount.
No liability should be recorded, only included in the footnotes. The liability is probable, but the amount cannot be determined.c. Kroft is involved in a pending court case. Kroft’s lawyers believe it is probable that Kroft will be awarded damages of $1,000,000.
The liability must be recorded since the liability is probable and can be determined.Liability is a type of debt that the business is required to pay at the present time or in any future date.
When is liability accrue?a. The company would not be in condition to accrue the liability of paying injured labor due to his own negligence as the amount is not probably determined.
b. The company would again not have any accrued liability as liability has not yet been incurred.
c. The liability to pay for damages is probable which would be incurred in the future; thus, should be recorded in the accounts of the business.
Learn more about liability contracts here:
https://brainly.com/question/6175964
Pronghorn Corporation purchased machinery on January 1, 2022, at a cost of $276,000. The estimated useful life of the machinery is 4 years, with an estimated salvage value at the end of that period of $32,600. The company is considering different depreciation methods that could be used for financial reporting purposes.
Required:
Prepare separate depreciation schedules for the machinery using the straight-line method, and the declining-balance method using double the straight-line rate.
Answer and Explanation:
The depreciation schedule is as follows:
For straight-line method
Year Depreciable Depreciation Depreciation Accumul Book value
cost rate Expense Depre
2022 $243,400 25% $60,850 $60,850 $215,150
($276,000 - $32,600) (1 ÷ 4) ($276,000 - $60,850)
2023 $243,400 25% $60,850 $121,700 $154,300
2024 $243,400 25% $60,850 $182,550 $93,450
2025 $243,400 25% $60,850 $243,400 $32,600
$243,400
For double declining method
Year Depreciable Depreciation Depreciation Accumul Book value
cost rate Expense Depre
2022 $276,000 50% $138,000 $138,000 $138,000
(1 ÷ 4 × 2)
2022 $138,000 50% $69,000 $207,000 $69,000
2023 $69,000 50% $34,500 $241,500 $34,500
2024 $34,500 $1,900 $243,400 $32,600
$243,400
Suppose GDP is $5.0 trillion, depreciation is $1 trillion, and gross output (GO) is $17.25 trillion. b. What is the dollar value of the economic activity taking place at every stage of production and distribution?
Answer: $17.25 trillion
Explanation:
The dollar value of the economic activity taking place at every stage of production and distribution will simply be the gross value and thus has been given in the question as $17.25 trillion.
It is the value of production activities for a particular economy at every production stage.
Answer:
12.25
17.25
Explanation:
How do firms operating in the formal economy identify and analyze the parts of the informal economy relevant to their strategies
Answer:
Business forms strategy to earn profits. Formal economy restricts business from extra ordinary profits and the business activities are regulated by government.
Explanation:
Formal economy focuses on commercial activities that generate government taxes. In informal economy the businesses are not regulated and taxes are not paid. The competition is distorted in the market and business make unfair profits. Informal economy poses a threat to formal economy system.
Letter 1: You purchased a coffee table from Jones Department Store, 432 West Main, Small Town, CA 93714. When it was delivered, there was a large scratch on the top. You would like to have it replaced. Your invoice number is 0065386.
what is the question???///.
The following selected account balances appeared on the financial statements of Washington Company: Accounts Receivable, January 1 $16,936 Accounts Receivable, December 31 8,878 Accounts Payable, January 1 5,832 Accounts Payable, December 31 8,151 Merchandise Inventory, January 1 6,202 Merchandise Inventory, December 31 14,530 Sales 61,882 Cost of Merchandise Sold 32,077 Washington Company uses the direct method to calculate net cash flow from operating activities. Cash payments for merchandise were
Answer:
the Cash payment to the merchandise is $38,086
Explanation:
The computation of the cash payment for merchandise is shown below:
Cash payment to the merchandise is
= Cost of goods sold + Increase in inventory - Increase in accounts payable
= $32,077 + ($14,530 - $6,202) - ($8,151 - $5,832)
= $32,077 + $8,328 - $2,319
= $38,086
hence, the Cash payment to the merchandise is $38,086
s company recently experienced a major system outage due to the failure of a critical component. During that time period, the company did not register any sales through its online site. Which type of loss did the company experience as a result of lost s
Answer:
Opportunity cost
Explanation:
opportunity cost in microeconomics can be regarded as alternative cost it can be explained as loss in term of potential gain that one incurred from the alternatives when one chose one specific alternative over other alternatives
someone answer this question and give me the right answer please
As far as I remember the four stages or steps in production planning and control are:
Routing, Scheduling, Dispatching, and Follow-up.to me, it seems to be part of the scheduling step.
Good luck on your exam
Consider the relative liquidity of the following assets:
Assets:
1. The funds in a savings account.
2. A share in a publicly-traded company.
3. A $10 bill.
4. Your car.
Arrange the assets in order of their liquidity, from most liquid to least liquid.
Answer:
Liquidity is a measure of how easily an asset can be converted into cash.
In order of most liquid to least, the above are:
1. A $10 Bill
This is already cash so is already as liquid as it will every get.
2. The funds in a savings account.
This can simply be withdrawn from the bank which will then give the customer cash so it is very liquid.
3. A share in a publicly-traded company.
This share would have to be sold first before cash is realized. The share is to a publicly traded company however so this will not be too difficult so this asset is adequately liquid.
4. Your car.
This would need to be sold first and finding a buyer might not be too easy so it is the least liquid of the bunch.
Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over the next 11 years because the firm needs to plow back its earnings to fuel growth. The company will pay a $6 per share dividend in 12 years and will increase the dividend by 5 percent per year thereafter. Required:If the required return on this stock is 12 percent, what is the current share price
Answer:
The answer is "$26".
Explanation:
[tex]\to growth \ rate =5\% \\\\\to required \ rate =12 \%\\\\\to Dividend = \$ 6 \ per \ share \\\\\to share \ price = \frac{1}{(1+0.12)^{11}}\times [\frac{6(1+0.05)}{0.12-0.05}][/tex]
[tex]= \frac{1}{(1.12)^{11}}\times [\frac{6(1.05)}{0.07}]\\\\= \frac{1}{3.47854999} \times [\frac{6(1.05)}{0.07}]\\\\= 0.287476104 \times [\frac{6.3}{0.07}]\\\\= 0.287476104 \times 90\\\\=25.8728494\\\\=26[/tex]
g You have a choice of two investment accounts. Investment A is a 15-year annuity with $1,500 payments at the end of each month and a rate of 6%, compounded monthly. Investment B is a lump-sum investment with an interest rate of 7%, compounded continuously for 15 years. How much money would you need to invest in Investment B today for it to be worth as much as Investment A 15 years from now
Answer:
How much money would you need to invest in Investment B today for it to be worth as much as Investment A 15 years from now
325.266.310,1
Explanation:
n=15*12
n=180
FV=A( 1 + i )^ n -1 / i
FV=1500( 1 + 0,06)^ 180 - 1 / 0,06
FV= 897,395,025.40
PV=FV/(1+I)^ n
=897,395,025.40/ (1+0.07)^ 15
=325.266.310,1
Bonkowski Corporation makes one product and has provided the following information to help prepare the master budget for the next four months of operations: The estimated selling and administrative expense for February is closest to:
Answer:
$107,200
Explanation:
Calculation for the estimated selling and administrative expense for February
Budgeted unit sales 12,000
× Variable selling and administrative expense per unit $3.10 per unit
=Total variable selling and administrative expense $37,200
(12,000×$3.10 per unit)
Add Fixed selling and administrative expenses $70,000 per month
Estimated selling and administrative expense $107,200
($70,000+$37,200)
Therefore The estimated selling and administrative expense for February is closest to:$107,200
is committed to training new employees. assuming the company uses the incremental learning curve method, what is the total labor cost for 4 jobs
Answer:
$19,500
Explanation:
The complete question is: "Each time the Company hires a new employee, it must wait for some period of time before the employee can meet production standards. New employees are paid $150 per hour. Management is unsure of the learning curve in its operation, but it knows the first job by a new employee takes 40 hours and the second and third job take 32 and 28 hours respectively. Assume all jobs to be equal in size. Assuming that the company uses the incremental learning curve method, the total labor cost for 4 units will be closest to?"
The first job takes 40 hours
The next job takes 32 hours.
So, the total hours for first 2 jobs = 40 hours+ 32 hours = 72 hours
Average hours for first 2 jobs = 72 hours / 2 = 36 hours. Learning curve percentage = 36 hours / 40 hours = 0.9 = 90%
So, the average for 4 jobs (double of 2 jobs) shall be 36*90% = 32.40 hours. Hence, Total hours for 4 jobs = 32.40 hours * 4 = 129.60 hours ≅ 130 hours. So, the total labor cost for 4 jobs = 130 hours * $150 per hours = $19,500
Accountants include ________ costs as part of a firm's costs, while economists include ________ costs. Group of answer choices implicit; no implicit explicit and implicit; implicit explicit; no explicit explicit; explicit and implicit
Answer:
Explicit, explicit and implicit
Explanation:
The accounting cost is the cost that generally includes the payment related to the wages, rent, price of the products etc
While on the other hand, the economic cost is the cost that involves both type of cost i.e. explicit and implicit. The implicit cost is generally the opportunity cost
This is the answer but the same is not provided in the given options
The Virginia Company is a manufacturing firm. The following data relate to the month of March: (1) Total manufacturing cost incurred during the month was $100,000, (2) Cost of goods manufactured was $90,000, (3) Factory overhead was $20,000 which is equal to 40% of direct labor costs, ( 4) Work-in-process at the beginning of the month was 80% of work-in-process at the end of the month. Required: Determine direct materials usage during the month. Determine the beginning and ending work-in-process.
Answer:
The Virginia Company
a. Direct materials usage during the month:
= $22,000
b. Beginning work-in-process:
= $8,000
C. Ending work-in-process:
= $10,000
Explanation:
a) Data and Calculations:
Total manufacturing cost incurred during the month was $100,000
Factory overhead = $20,000
Direct labor = $50,000 ($20,000/40%)
Cost of goods manufactured was $90,000
Ending work-in-process = $10,000 ($100,000 - $90,000)
Beginning work-in-process = $8,000 ($10,000 * 80%)
Direct materials = $22,000 ($100,000 - $8,000 - $20,000 - $50,000)
Beginning work-in-process $8,000
Factory overhead 20,000
Direct labor 50,000
Direct materials 22,000
Total manufacturing costs 100,000
less Ending work-in-process 10,000
Cost of goods manufactured 90,000
In each of the following independent cases the company closes its books on December 31.
1. Sanford Co. sells $500,000 of 10% bonds on March 1, 2020. The bonds pay interest on September 1 and March 1. The due date of the bonds is September 1, 2023. The bonds yield 12%. Give entries through December 31, 2021.
2. Titania Co. sells $400,000 of 12% bonds on June 1, 2014. The bonds pay interest on December 1 and June 1. The due date of the bonds is June 1, 2018. The bonds yield 10%. On October 1, 2015, Titania buys back $120,000 worth of bonds for $126,000 (includes accrued interest). Give entries through December 1, 2016.
Required:
For the two cases prepare all of the relevant journal entries from the time of sale until the date indicated.
Answer:
1-Mar-20 :
Cash (Dr.) $472,090
Discount on Bonds Payable (Dr.) $27910
Bonds Payable (Cr.) $500,000
1-Sep-20:
Interest Expense (Dr.) $28,325
Discount on Bonds payable (Dr.) $3,325
Cash (Cr.) $25,000
31-Dec-2020:
Interest Expense (Dr.) $19,017
Discount on Bonds Payable (Cr.) $2,350
Interest payable (Cr.) $16,667
Explanation:
1-Mar-2021:
Interest Expense (Dr.) $9,508
Interest Payable (Dr.) $16,667
Discount on Bonds Payable (Dr.) $1,175
Cash (Cr.) $25,000
1-Sep-21:
Interest Expense (Dr.) $28,736
Discount on Bonds payable (Dr.) $3,736
Cash (Cr.) $25,000
31-Dec-2021:
Interest Expense (Dr.) $19,308
Discount on Bonds Payable (Cr.) $2,641
Interest payable (Cr.) $16,667
Determine which shipping alternative would be most economical to ship 175 boxes of parts when each box has a price of $200 and holding costs are 30 percent of price, given this shipping information: overnight, $340, two-day, $260, six-day, $180. (Round your intermediate calculations to 2 decimal places.)
Answer:
The answer is "2 days".
Explanation:
[tex]\to Units= 175 \\\\\to \text{Unit Price}= \$ 200 \\\\\to \text{Total Ship} =\$ 35000\\\\\to \text{complete shipping costs} = \$ 10500[/tex]
The average cost of alternatives is:
[tex]\to Overnight \ 340 =10500 \times (\frac{1}{365})=28.76+340= 368.726[/tex]
[tex]\to 2-day \ 260 =10500 \times(\frac{2}{365})=57.53+260=317.53[/tex] the lower total cost
[tex]\to 6-day \ 180 =10500 \times(\frac{6}{365})=172.60+180 =352.6[/tex]
There are 3 things to consider to help you gather the information needed: target you audience, determine the purpose and stand out from your competition.
Question 10 options:
True
False
Answer:
True
Explanation:
I'm 50% sure :)
Which of these is the best reason for Nina to monitor her bank account statements online or on her cell phone app?
Answer: D:to know how much money she has for budgeting
Explanation:
The options include:
A:to organize when to pay to bills
B:to determine the exact date she can retire
C:to ensure she's paying her fair share in taxes
D:to know how much money she has for budgeting.
The best reason for Nina to monitor her bank account statements online or on her cell phone app is to know how much money she has for budgeting.
Monitoring ones account online will enable one to know the amount that one has in the account and this can ensure that one makes adequate plans on how to spend the money through budgeting.
Answer:
D: To know how much money she has for budgeting
Explanation:
It just it the answer.
Employees are happier with a relationship-oriented leader.
A. True
B. False
Answer: True
Explanation:
i think its true and im in highs school and senior so its true.
Answer:
false
Explanation:
rate us 1 to 10!!!!!!!!
An airline has a marginal cost per passenger of $20 on a route from Minneapolis to Dallas. At the same time, the typical fare charged is $300. The planes that fly the route are usually full, yet the airline claims it loses money on the route. This loss may occur because
Answer:
The fixed costs are too high. The marginal cost generally represents variable costs and they might be very low, but if the fixed costs are simply too high, they will need to increase the price of the plane tickets in order to break even. The break even formula is calculated by dividing total fixed costs by marginal revenue (selling price - variable costs).
Gas wants to move its sales order system online. Under the proposed system, gas stations and other merchants will use a secure site to check the availability and current price of various products and place an order. Currently, customer service representatives take dealers' orders over the phone; they record the information on a paper form, then manually enter it into the firm's computer system.
Required:
Use a cost-benefit analysis to recommend to Carlton whether Northern
Complete Question:
Northern Gas wants to move its sales order system online. Under the proposed system, gas stations and other merchants will use a secure site to check the availability and current price of various products and place an order. Currently, customer service representatives take dealers' orders over the phone; they record the information on a paper form, then manually enter it into thefirm's computer system.
Cost information
CFO , Kayla Flores believes that dealers will not adopt the new online system unless Northern
Gas provides financial assistance to help them purchase or upgrade their computer network.
Flores estimates this one-time cost at $745,000.
Northern Gas will also have to invest $165,000 in upgrading its own computer hardware. The cost of the software and the consulting fee for installing the system will be $225,000.
The online system will enable Northern
Gas to eliminate 25 clerical positions.
Flores estimates that the benefits of the new system's lower labor costs will have saved the company $1,420,000.
Requirement:
Use a cost-benefit analysis to recommend if Northern Gas should proceed with the online ordering system. Give yourreasons, showing supporting calculations.
Expected benefits
Expected costs
Net benefits (costs)
Answer:
Cost benefit Analysis:
Expected benefits 1,420,000
Expected costs 1,135,000
Net Benefits (Costs) 285,000
Recommendation:
Northern Gas should proceed with the online sales order system to enable its gas stations and other merchants to use a secure site to check the availability and current price of various products and place an order, instead of the manual system of placing orders.
Explanation:
a) Data and Calculations:
Costs of investment in new ordering system:
Computer network upgrade = $745,000
Computer hardware upgrade 165,000
Software and consulting fee 225,000
Total costs = $1,135,000
Benefits:
Savings from elimination of clerical positions = $1,420,000
b) The cost benefit analysis (also known as a benefit cost analysis) that Northern Gas embarks on is a process by which it analyzes its decision to introduce an online sales ordering system and the elimination of manual clerical positions. The cost benefit model identifies the benefits of such a project as well as the associated costs, and subtracts the costs from benefits to determine the net benefit or cost.
Charlie's Chocolates' had stock issuances of $64,000 and dividends of $27,000. The company has revenues of $97,000 and expenses of $71,000. Calculate its net income.
Answer:
$26,000
Explanation:
Revenue for Charlie's chocolate is $97,000
Expenses is $71,000
Therefore the net income can be calculated as follows
= revenue - expenses
= $97,000-$71,000
= $26,000
Hence the net income is $26,000
A good investment will do one or both of which two things?
(Select two answers.)
O Produce employees
O Grow in value
O Produce income
O Create a product
O Increase competition
O Prioritize your goals
Answer:
1.Grow in value
2. Produce income
Explanation:
Investing is engaging in any commercial activity expecting to make profits or generate wealth. An investment is, therefore, an activity that results in wealth or profits.
An investor is a person who undertakes investment activities. They risk their time and money, hoping to profit from the venture. There are active and passive investment tools. Buying stocks, bonds, and other marketable securities are examples of passive investments. Investors buy the investment tool and leave it to appreciate in value or earn dividends. Starting a business is an active investment. Businesses are started to generate income for the owner.
A consultant predicts that there is a 25 percent chance of earning $500,000 and a 75 percent chance of earning $100,000. The expected profit is $200,000. The standard deviation is Group of answer choices $120,000. $160,000. $165,699. $173,205.
Answer:
$173,205
Explanation:
According to the scenario, computation of the given data are as follows:
Given data:
Earning (X1) = $500,000
Chances of X1 (Y1) = 25%
Earning (X2) = $100,000
Chances of X2 (Y2) = 75%
Expected Profit (Z) = $200,000
Formula for solving the problem are as follows:
Standard deviation = [ (X1 - Z)^2 × Y1 + (X2 - Z)^2 × Y2 ]^1/2
By putting the value in the formula, we get
Standard deviation = [ ($500,000 - $200000)^2 × 0.25 + ($100,000 - $200,000)^2 × 0.75 ]^1/2
= [ $22,500,000,000 + $7,500,000,000 ]^1/2
= ($30,000,000,000)^1/2
= $173,205.08 or $173,205
Hence, $173,205 is the correct answer.
Governor Patrick Cote of Vermont is beginning his primary campaign for the presidency and is considering whether or not to accept public funds set aside for primary candidates in the Presidential Election Campaign Fund. Cote is concerned that his primary opponents may forgo revenue from the fund with the hope of raising money beyond its established limits. From which group could Cote solicit funds to maximize donations to his primary campaign, thereby allowing him the option of declining money from the Presidential Election Campaign Fund
Question Completion with Options:
a. Political action committees
b. Professional organizations
c. Corporations
d. Labor unions
Answer:
The group from which Cote could solicit funds to maximize donations to his primary campaign, thereby allowing him the option of declining money from the Presidential Election Campaign Fund is called:
Political action committees
Explanation:
A political action committee is a committee set up primarily to raise funds for the political campaign of a candidate. The committee collects funds from various individuals, better called contributors, and then distributes the funds to candidates who support the same ideals as the contributors. The establishment of a political action committee by supporters of a political aspirant enables the committee to collect funds for distribution to a candidate's political course. The committee is established based on ideology and political interests.
What is the best argument in support of economics as viable social science and in response to Joseph Epstein
Answer:
The best argument in support of economics as viable social science and in response to Joseph Epstein is described below in detail.
Explanation:
Economics is the systematic examination of the possession, use, and replacement of limited resources – often decreased to the science of deficiency. Economics is observed as a social science because it practices scientific techniques to build opinions that can help describe the behavior of people, corporations, and organizations.
Kate DeLeo and Joe Desmond decided to form a partnership on January 1. DeLeo invested $50,000 and Desmond invested $30,000. On December 31, the end of the fiscal year, a net income of $100,000 was earned. Determine the amount of net income that DeLeo and Desmond would receive under each of the following independent assumptions: Net income $fill in the blank 1 Income to be allocated DeLeo Desmond Total a. There is no agreement concerning the distribution of net income. $fill in the blank 2 $fill in the blank 3 $fill in the blank 4 b. Each partner is to receive 10% on their original investment, and the remainder divided equally. $fill in the blank 5 $fill in the blank 6 $fill in the blank 7 c. DeLeo and Desmond are to receive a salary allowance of $35,000 and $45,000 respectively, and the remainder divided equally. $fill in the blank 8 $fill in the blank 9 $fill in the blank 10 d. Each partner is to receive 10% on their original investment, DeLeo and Desmond are to receive a salary allowance of $30,000 and $40,000 respectively, and the remainder divided as follows: 60% to DeLeo and 40% to Desmond
Answer:
A. Profit sharing of Net income for both the Kate Deleo and Joe Desmond will be same because there is no agreement concerning the distribution of net income.
B. both partners will get 46000 each.
C. 10000 will be distributed to both the partners.
D.
60% of 22000 = 13200 paid to Deleo
40% of 22000 = 8800 paid to Desmond
Explanation:
Following are the independent assumptions
A. There is no agreement concerning the distribution of net income.
B. Each partner is to receive 10% on their original investment, and the remainder divided equally.
C. DeLeo and Desmond are to receive a salary allowance of $35,000 and $45,000 respectively, and the remainder divided equally.
D. Each partner is to receive 10% on their original investment, DeLeo and Desmond are to receive a salary allowance of $30,000 and $40,000 respectively, and the remainder divided as follows: 60% to DeLeo and 40% to Desmond.
Solution:
A. Profit sharing of Net income for both the Kate Deleo and Joe Desmond will be same because there is no agreement concerning the distribution of net income.
B.
Kate Deleo Invested = 50,000
Desmond Invested = 30,000
End of Fiscal Year Net Income = 100,000
10% of Kate Investment = 50,000 x 10% = 5000
10% of Desmond Investment = 30,000 x 10% = 3000
Total investment 10% = 8000
So.
Net Income = 100000 - 8000 = 92000
Divide this 92000 in 2 = 96000/2 = 46000
So, Remaining net income is = 46000 each.
Hence, both partners will get 46000 each.
C.
Salary allowance for Kate Deleo = 35000
Salary allowance for Desmond = 45000
Total Salary Allowance = 80000
Net income at the end of fiscal year = 100000
So, subtract the Total Salary Allowance from 100000 and divide the answer into 2.
Remaining = 100000-80000 = 20000
Remaining amount = 20000/2 = 10000
So,
10000 will be distributed to both the partners.
D.
Kate Deleo Invested = 50,000
Desmond Invested = 30,000
End of Fiscal Year Net Income = 100,000
10% of Kate Investment = 50,000 x 10% = 5000
10% of Desmond Investment = 30,000 x 10% = 3000
Total investment 10% = 8000
Salary allowance for Kate Deleo = 30000
Salary allowance for Desmond = 40000
Total Salary Allowance = 70000
Net Income at the end of fiscal year = 100000
Subtract 8000 and 70000 from the net income.
100000-70000-8000 = 22000
Now, Deleo will get 60% of 22000
and Desmond will get 40% of 22000
60% of 22000 = 13200 paid to Deleo
40% of 22000 = 8800 paid to Desmond
Mills Corporation acquired as a long-term investment $250 million of 8% bonds, dated July 1, on July 1, 2021. Company management has classified the bonds as an available-for-sale investment. The market interest rate (yield) was 6% for bonds of similar risk and maturity. Mills paid $290 million for the bonds. The company will receive interest semiannually on June 30 and December 31. As a result of changing market conditions, the fair value of the bonds at December 31, 2021, was $270 million.
Required:
a. Prepare the journal entry to record Mills'investment in the bonds on July 1, 2021 and interest on December 31, 2021, at the effective market) rate.
b. At what amount will Mills report its investment in the December 31, 2021, balance sheet?
c. Suppose Moody's bond rating agency upgraded the risk rating of the bonds, and Mills decided to sell the investment on January 2 2022 for $300 million. Prepare the journal entry to record the sale.
Answer:
A. 07.01.2021
Dr Investment in Bonds A/c 250
Dr Premium on Bond Investment A/c 40
Cr Cash 290
12.31.2021
Dr Cash 10
Cr Premium on Bonds 1.3
Cr Interest Revenue 8.7
B. $251.3
C. Jan-02
Dr Fair Value Adjustment 30
Cr Unrealised Gain or loss 30
Jan-02
Dr Cash 300
Cr Premium on Bonds A/c 38.7
Cr Gain On sale of Investment or Profit on sale of Investments 11.3
Cr Investment in Bonds A/c 250
Explanation:
a. Preparation of the journal entry to record Mills'investment in the bonds on July 1, 2021 and interest on December 31, 2021, at the effective market) rate.
07.01.2021
Dr Investment in Bonds A/c 250
Dr Premium on Bond Investment A/c 40
(290-250)
Cr Cash 290
(Being To record investments in Bonds)
12.31.2021
Dr Cash 10
[(8%/2)* 250] semiannually
Cr Premium on Bonds 1.3
(10-8.7)
Cr Interest Revenue 8.7
[(6%/2)* 290] semiannually
(Being To record Interest)
b. Calculation for At what amount will Mills report its investment in the December 31, 2021, balance sheet
Book Value 290
Add:Premium on Bonds ( -40+1.3) -38.7
Amount to be reported 251.3
(290-38.7)
Therefore the Amount to be reported in Balance sheet will be Book Value of the amount of 251.3
c. Preparation of the journal entry to record the sale.
Jan-02
Dr Fair Value Adjustment 30
Cr Unrealised Gain or loss 30
(300-270)
Jan-02
Dr Cash 300
Cr Premium on Bonds A/c 38.7
(40-1.3)
Cr Gain On sale of Investment or Profit on sale of Investments 11.3
[300-(250+38.7)]
Cr Investment in Bonds A/c 250
(Being To record the sale)
Company XYZ has decided to raise $20 million in capital by issuing 500,000 new shares of common stock in a rights offering. Currently, there are 1.5 million shares outstanding. What will each current shareholder have to provide to purchase one share of this new offering?
a) $13.33 plus 0.33 rights
b) $13.33 plus 3 rights
c) $40.00 plus 0.33 rights
d) $40.00 plus 3 rights
