Check No. 5904 is correctly drawn for $2,090 to pay for computer equipment; however, the recordkeeper misread the amount and ent
ered it in the accounting records with a debit to Computer Equipment and a credit to Cash of $2,060. The NSF check shown in the statement was originally received from a customer, S. Nilson, in payment of her account. Its return has not yet been recorded by the company. The credit memorandum (CM) is from the collection of a $1,500 note for Chavez Company by the bank. The bank deducted a $15 collection expense. The collection and expense are not yet recorded. 2. Prepare journal entries to adjust the book balance of cash to the reconciled balance. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your answers to 2 decimal places.)
1 answer:
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Answer:
a) Total book value = $85,000,000
b)Market value of debt = $27,650,000
c)After tax cost of debt = 2.74%
Explanation:
As per the data given in the question,
a) Debt = $50,000,000
Zero coupon bond = $35,000,000
Total book value = $50,000,000+$35,000,000
= $85,000,000
b) Market value of debt = $50,000,000×104%
=$52,000,000
Market value of zero coupon bond = $35,000,000×79%
=$27,650,000
Total market value = $52,000,000+$27,650,000
= $79,650,000
c) Market value weights for debt = 0.65
Market value weights for Zero coupon bond = 0.35
After tax cost for Debt ( By using financial calculator )
( 0.01857 ×2 × (1-24%)) = 2.82%
After tax cost for Zero coupon bond ( By using financial calculator )
( 0.01698 ×2 × (1-24%)) = 2.58%
Weighted cost for debt ( Weight × Cost )= 1.84%
Weighted cost for zero coupon bond ( Weight × Cost ) = 0.90%
After tax cost of debt = 1.84%+0.90%
=2.74%
