During 2017, Kew Company, a service organization, had $200,000 in cash sales and $3,000,000 in credit sales. The accounts receiv

Answer:

Economically speaking, Carl's business outlook is subject to variations in the currency values of the US and China.

Explanation:

• The agreement that Carl plans to propose is sensitive to the fluctuation that occurs if the Chinese Yuan depreciates against the US dollar after he begins selling the bicycle horns, which could result in financial losses for him.
• Thus, whether Carl will gain a profit or suffer a loss hinges entirely on the exchange rates of the two currencies.

Answer:

1. Record the journal entry to log the cash received from bond issuance on July 1, Year 1.

Dr Cash 37,282,062

Dr Discount on bonds payable 2,717,938

    Cr Bonds payable 40,000,000

2. Make the following journal entries:

a. Document the first semiannual interest payment on December 31, Year 1, along with the bond discount amortization, utilizing the straight-line approach. Round to the nearest dollar.

discount on bonds payable = 2,717,938 / 20 coupons = $135,896.90

December 31, Year 1, first coupon payment

Dr Interest expense 1,535,896.90

    Cr Cash 1,400,000

    Cr Discount on bonds payable 135,896.90

b. Capture the interest payment on June 30, Year 2, and the bond discount amortization, again utilizing the straight-line method. Round to the nearest dollar.

June 30, Year 2, second coupon payment

Dr Interest expense 1,535,896.90

    Cr Cash 1,400,000

    Cr Discount on bonds payable 135,896.90

3. Calculate the total interest expense for Year 1.

$1,535,896.90

4. When the bond proceeds are consistently lower than the bond face value if the contract rate is lower than the market rate of interest?

yes, if the market rate exceeds the coupon rate, the bonds will be issued at a discount.

5. (Appendix 1) Calculate the receipt price of $37,282,062 for the bonds by referring to the present value tables found in Appendix A at the conclusion of the textbook. Round to the nearest dollar.

bond price = PV of face value + PV of coupon payments

• PV of face value = $40,000,000 x 0.4564 (PV factor, 4%, 20 periods) = $18,256,000
• PV of coupon payments = $1,400,000 x 13.590 (PV annuity factor, 4%, 20 periods) = $19,026,000

bond's market price = $18,256,000 + $19,026,000 = $37,282,000

Respuesta:

$23,709

Explicación:

Datos proporcionados en la pregunta:

Monto del bono emitido = $700,000

Duración = 5 años

Tasa de interés = 8%

Monto de venta del bono = $728,700

Tasa de interés de mercado = 7%

Ahora,

Intereses pagados = Monto del bono emitido × Tasa de interés

= $700,000 × 0.08

= $56,000

Gasto por intereses = Monto del bono vendido × Tasa de interés de mercado

= $728,700 × 0.07

= $51,009

Prima no amortizada = Monto de venta del bono - Monto del bono emitido

= $728,700 - $700,000

= $28,700

Monto amortizado = Intereses pagados - Gasto por intereses

= $56,000 - $51,009

= $4,991

Balance de la cuenta de primas sobre bonos a pagar inmediatamente después del primer pago de intereses

= prima no amortizada - Monto amortizado

= $28,700 - $4,991

= $23,709

Answer: The average annual arithmetic return is 3.75%.

Explanation:

Year 1 = 10%

Year 2 = 15%

Year 3 = 15%

Year 4 = -25%

Total return = 15%

The arithmetic average annual return is calculated as (Year 1 return + Year 2 return + Year 3 return + Year 4 return) / 4 = 15% / 4 = 3.75%.

Answer:

NPV = negative 37,599

Explanation:

To determine the NPV of the new sewing machine, we subtract the investment from the present value of anticipated cash inflows.

Initial investment = Cost of machine + Training expenses - Salvage value

Initial investment = 2,450,000 + 85,000 - 250,000

Initial investment = 2,285,000

Year                                      DF(9%)   Present Value

1  Cash inflow     390,000  x 0.917      $357,798

2 Cash inflow     400,000  x 0.842    $336,672

3 Cash inflow     411,000   x  0.772     $317,367

4 Cash inflow     426,000  x 0.708     $301,789

5 Cash inflow     334,100  x 0.650     $217,077       (434,100 - 100,000)

6 Cash inflow     435,000  x 0.596    $259,376

7 Cash inflow     436,000 x 0.547     $238,507

7 Salvage value 400,000 x 0.547     $218,814  

Present Value of cash inflow             $2,247,401

Initial investment                                $2,285,000

NPV ($2,247,401 - $2,285,000)          (37,599)    

Conclusion: Hillsong should refrain from acquiring the new machine since the NPV is negative.