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Serggg [28]
2 years ago
9

On January 2, 20X4, West Co. issued 9% bonds in the amount of $500,000, which mature on January 2, 20X24. The bonds were issued

for $469,500 to yield 10%. Interest is payable annually on December 31. West uses the interest method of amortizing bond discount. In its June 30, 20X4, balance sheet, what amount should West report as bonds payable?
Business
1 answer:
ehidna [41]2 years ago
5 0

Answer:

$470,425

Explanation:

The computation of the amount reported as bond payable is shown below:

<u>Particulars  Interest at 4.5% Interest at 5%  Amortized  UnAmortized  CV</u>

<u>                                                                             discount     discount </u>

Starting value                                                                        $30,500  $469,500    

                                                              ($500,000 - $469,500)  

June 30         $22,500         $23,475                $975        $29,525  $470,425

  ($500,000 × 4.5%)            ($469500 × 5%)

The six months rate would be the half of the rates given in the question

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If D1 = $1.25, g (which is constant) = 5.5%, and P0 = $40, what is the stock's expected total return for the coming year?
trapecia [35]

Answer:

The expected totar return is: 8,625%

Explanation:

Total return, when measuring performance, is the actual rate of return of an investment or a pool of investments over a given evaluation period. Total return includes interest, capital gains, dividends and distributions realized over a given period of time. Total return is the amount of value an investor earns from a security over a specific period, typically one year.

The formula for the total stock return is the appreciation in the price plus any dividends paid, divided by the original price of the stock.

Total stock return= [(P1-P0)+D]/P0

P0: initial stock price

P1: Ending stock price (Period 1)

D0: dividend

In this case, we do not have P1. So we have to use an alternate version of the Gordon Growth Model. The GGM is mainly applied to value mature companies that are expected to grow at the same rate forever.

​      

P= D1/(r-g)​    

​    

where:

P=Current Stock Price

g=Constant growth rate in perpetuity

expected for the dividends

r=Constant cost of equity capital for that

company (or rate of return)

D1=Value of the next year’s dividends

​    

By moving terms and isolating "r" we achieve the following formula:

r= D1/P+g

r=1,25/40+0,055= 8,625%

3 0
2 years ago
Assume France and Italy decide to specialize and trade according to their comparative advantages, and 20 bushels of grapes are e
Aleks04 [339]

Answer: Yes, it's beneficial

Explanation:

Comparative advantage is the ability of a nation to produce goods at a lower opportunity cost when compared to its trading partners. A comparative advantage allows a firm sell its product at a lower price and make more sales.

In comparative advantage, the nation might not necessarily be the best at producing a particular good but it has a low opportunity cost in the production of the good for other nations to import. Comparative advantage leads to specialisation and enhances economic growth.

For example, if France can produce cheap grapes and Italy can produce cheap tomatoes, France should stop producing tomatoes and Italy should stop producing grapes. France should focus on the production of grapes while Italy should focus on tomato production. This will lead to more income for both economies since there is productive efficiency.

7 0
2 years ago
Read 2 more answers
The 5.3 percent bond of Dominic Cyle Parts has a face value of $1,000, a maturity of 12 years, semiannual interest payments, and
givi [52]

Answer:

$936.17

Explanation:

The current market price of the bond = present value of all coupon received + present value of face value on maturity date

The discount rate in all calculation is YTM (6.12%), and its semiannual rate is 3.06%

Coupon to received semiannual = 5.3%/2*$1000= $26.5

We can either calculate PV manually or use formula PV in excel to calculate present value:

<u>Manually:</u>

PV of  all coupon received semiannual = 26.5/(1+3.06)^1 + 26.5/(1+3.06)^2....+ 26.5/(1+3.06)^24 = $445.9

PV of of face value on maturity date = 1000/(1+6.12%)^12 = $490.27

<u>In excel:</u>

PV of  all coupon received semiannual =  PV(3.06%,24,-$26.5) = $445.9

PV of of face value on maturity date = PV(6.12%,12,-$1000) = 1000/(1+6.12%)^12 = $490.27

The current market price of the bond  = $445.9 + $490.27 = $936.17

Please excel calculation attached

Download xlsx
7 0
2 years ago
Pharoah Company assembled the following information in completing its March bank reconciliation: Balance per bank $23700 Outstan
Natasha2012 [34]

Answer:

Pharaoh will reduce its cash balance by $1,130

None of the answer options was correct, maybe something was missing in the question like notes collected or other NSF checks.

Explanation:

Pharaoh Company's bank reconciliation:

balance per bank account   $23,700

- outstanding checks            ($4,800)

+ deposits in transit                 $7,750

<u>- NSF checks                            ($500) </u>

total                                        $26,150

<u>- cash balance per books    ($27,280)</u>

difference                               ($1,130)

In order to reconcile the bank account, we do not consider any bank service fees because they are already included in the bank balance. What we must consider are the NSF checks that we deposited and thought were good checks, but instead they bounced.

3 0
2 years ago
For each of the following independent situations, indicate the reason for and the type of financial statement audit report that
Nimfa-mama [501]

Answer:

a. Standard inadequate review report

Standard inadequate review report ought to be given right now according to U S GAAP an organization can picked either LIFO or FIFO stock technique for inventories held in U S Also, there doesn't appear to be any issue in utilizing a non-GAAP strategy for inventories held in remote activities  

b. Standard unfit review report  

As the lawful insight has guaranteed that the body of evidence against S Software has no merit, it would have no impact on the fiscal summaries of the organization. In this manner, no disclosure is required comparable to the case  

c. Unfit report remembering an illustrative section for change for bookkeeping head  

The change in bookkeeping treatment a the auxiliary is because of limitations on repatriation of income put on all outside claimed organizations in Panama Therefore, it is adequate and no compelling reason to qualify the report However, a logical section ought to be added to the report clarifying the adjustment in bookkeeping head  

d. Inadequate report including

lanatory paragaph for change in bookkeeping head  

e. Standard inadequate review report  

As the adjustment in the administration lives for deterioration purposes on automobiles is legitimized, a standard inadequate review report ought to be given  

f. Standard unfit review report  

Right now, blunder was accidental and the administration fittingly remedied the mistake before the finish of field work Therefore, a standard inadequate review report ought to be given  

g. Qualified review report including a disclaimer of feeling.  

Right now, examiner possesses 10 percent of the organization's stock Therefore, the reviewer will be not viewed as free as there is an irreconcilable circumstance Thus, a certified review report including a disclaimer of conclusion ought to be given  

h. Adverse review report  

It is obvious from the survey of credit portfolio that there would be a significant increase in the advance misfortune save Al, writedown of the advances will place the customer into infringement of the state's capital requirements Therefore, plainly a going-concern issue to However, the customer is refining to make changes in accordance with disclose the conceivable going concern issue in the notes to the fiscal reports In such case, the evaluator should give an unfriendly review.

4 0
2 years ago
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