Answer:
$ 17.50
Explanation:
The intrinsic stock price per share before the IPO can be determined using the company's details before the IPO, in other words, the intrinsic value per share before the initial public offer is the pre-IPO value of the company divided by its number of existing shares which is computed thus:
intrinsic stock price per share before the IPO=LC's intrinsic value of operations/Number of existing shares
LC's intrinsic value of operations= $210 million
Number of existing shares= 12 million
intrinsic stock price per share before the IPO=$210 million/12 million
intrinsic stock price per share before the IPO=$ 17.50
Triptych Food Corp. Income Statement For the Year Ending on December 31 (Millions of dollars) Year 2 Year 1 Net Sales 6,350 5,000 Operating costs except depreciation and amortization 1,120 1,040 Depreciation and amortization 318 200 Total Operating Costs 1,438 1,240 Operating Income (or EBIT) 4,912 3,760 Less: Interest 663 489 Earnings before taxes (EBT) 4,249 3,271 Less: Taxes (25%) 1,062 818 Net Income 3,187 2,453 Calculate the profitability ratios of Triptych Food Corp. in the following table. Convert all calculations to a percentage rounded to two decimal places.
Question Completion:
The following shows Triptych Food Corp.'s income statement for the last two years. The company had assets of $10,575 million in the first year and $16,916 million in the second year. Common equity was equal to $5,625 million in the first year, 100% of earnings were paid out as dividends in the first year, and the firm did not issue new shares in the second year.
Answer:
Triptych Food Corp.
The profitability ratios of Triptych Food Corp.
Year 2 Year 1
Net profit margin 50.19% 49.06%
Return on total assets 18.84% 23.20%
Return on common equity 36.17% 43.61%
Basic earning power 29.04% 35.56%
Explanation:
a) Data and Calculations:
Income Statement For the Year Ending on December 31 (Millions of dollars) Year 2 Year 1
Net Sales $6,350 $5,000
Operating costs except
depreciation and amortization 1,120 1,040
Depreciation and amortization 318 200
Total Operating Costs 1,438 1,240
Operating Income (or EBIT) 4,912 3,760
Less: Interest 663 489
Earnings before taxes (EBT) 4,249 3,271
Less: Taxes (25%) 1,062 818
Net Income $3,187 $2,453
Total assets $16,916 $10,575
Common equity $8,812 $5,625
Profitability ratios and formulas:
Net profit margin = Net Income/Sales * 100
Return on total assets = Net Income/Total assets * 100
Return on common equity = Net Income/Common Equity * 100
Basic earning power = EBIT/Total assets * 100
Year 2 Year 1
Net profit margin 50.19% 49.06%
= ($3,187/$6,350 * 100) ($2,453/$5,000 * 100)
Return on total assets 18.84% 23.20%
= ($3,187/$16,916 * 100) ($2,453/$10,575 * 100)
Return on common equity 36.17% 43.61%
= ($3,187/$8,812 * 100) ($2,453/$5,625 * 100)
Basic earning power 29.04% 35.56%
= ($4,912/$16,916 * 100) ($3,760/$10,575 * 100)
explain its pros and cons of three bin system
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3 advantages and disadvantages of using Bin cards
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Advantages of Bin Cards :
(i) There would be less chances of mistakes being made as entries will be made at the same time as goods are received or issued by the person actually handling the materials.
(ii) Control over stock can be more effective, in as much as comparison of the actual quantity in hand at any time with the book balance is possible.
ADVERTISEMENTS:
(iii) Identification of the different items of materials is facilitated by reference to the Bin Card the bin or storage receptacle.
Disadvantages of Bin Cards :
(i) Store records are dispersed over a wide area.
(ii) The cards are liable to be smeared with dirt and grease because of proximity to material and also because of handling materials.
ADVERTISEMENTS:
(iii) People handling materials are not ordinarily suitable for the clerical work involved in writing Bin Cards.
please make my answer as a brainlist answer
Define organizational structures? And explain types of organizational structures?
Answer:
Four main types of structures of the organization are:
Functional Divisional Matrix FlatExplanation:
Functional StructureThis structure consists of employees performing similar tasks or specialties. For example, in the finance department, accountants are grouped and the same applies to marketing departments, operations, and human resources. This structure enables swift decision-making because the group members have similar skills, can communicate easily, and can also improve their ability by learning from each other.
Divisional StructureThis structure groups employees according to the products or projects that meet customer requirements of a certain type. For instance, a catering services restaurant could organize the employees by departments, e.g. weddings or wholesale retail departments, according to which they serve. Employees are split so that their performance is maximized.
Flat StructureThe traditional top-down management system is impeded by a flat organizational structure. There is no concept of the boss, every employee is the boss, which removes bureaucracy and improves direct contact. For example, an employee with an innovative idea or suggestion need not contact every level of senior management to give the person responsible for the idea. The staff can directly communicate on an individual basis.
Matrix StructureA matrix structure has a complex story true as it combines elements from both the functional and the divisional models. It first divides employees according to their specialization, then further separates them into departments according to projects and products. To make this structure a lot of planning and efforts are required but one e achieved increases the productivity of the team, promotes innovation and creativity, and good decision making.
Identify whether or not each of the following scenarios describes a competitive market, along with the correct explanation of why or why not.
a. In a small town, there are two providers of broadband Internet access: a cable company and the phone company. The Internet access offered by both providers is of the same speed.
b. The government has granted a patent to a pharmaceutical company for an experimental AIDS drug. That company is the only firm permitted to sell the drug.
c. Dozens of companies produce plain white socks. Consumers regard plain white socks as identical and don't care who manufactures their socks.
d. In a major metropolitan area, one chain of coffee shops has gained a large market share because customers feel its coffee tastes better than that of its competitors.
Answer:
1. not a competitive market
2. not a competitive market
3. competitive market
4. not a perfectly competitive market
Explanation:
To answer this question, i will first start by explaining what a competitive market is and the assumption of a perfectly competitive market as well
A competitive market is a market that has many producers and buyers of a particular product. The producers are usually in a competition to meet up with the needs of the buyers.
some assumptions of the market:
large sellers/producersidentical or homogenous goodsfree entryno discriminationperfect knowledgea. in this question this is not a competitive market. the reason is simple. It says that there are only two providers of internet. So there are no enough producers or sellers
b. The government has limited entry into this market by giving patent to only one pharmaceutical company.
c. yes this market is competitive since there are many producers of the product and the consumers regard the products as identical or homogenous. this meets with all of the assumptions of a perfectly competitive market.
d. the product here is not homogenous or identical as this is not a perfectly competitive market since buyers would prefer to buy the coffee that tastes better and leave that of the competitors
thank!
If Fees Earned has been credited, it is most likely that:
A. a correcting entry for the overstatement of revenue was recorded. B. a customer paid in advance
C. services were provided.
D. the owner made an investment.
Answer:
C. services were provided.
Explanation:
If Fees Earned has been credited, it is most likely that: "services were provided."
For fees to be earned it means something must have been done in exchange for the fee. Considering this is a business-related issue, then it is correct to conclude that "If Fees Earned has been credited, it is most likely that: services were provided."
Option A is not correct because the overstatement of revenue is not related to the fee warmed being credited.
Option B is not correct, because a payment made in advance does not correlate to a fee earned. Option D is not correct as well, because an investment has nothing to do with a few earned.
Upper Darby Park Department is considering a new capital investment. The following information is available on the investment. The cost of the machine will be $150,000. The annual cost savings if the new machine is acquired will be $40,000. The machine will have a 5-year life, at which time the terminal disposal value is expected to be $20,000. Upper Darby Park Department is assuming no tax consequences. If Upper Darby Park Department has a cost of capital of 10%, which of the following is closest to the net present value of the project?
a. $1,632
b. $12,418
C. $14,060
d. $150,000
Answer:
c.$14,060
Explanation:
I hope my answer is correct
Your goal is to have $10,000 in your bank account by the end of twelve years. If the interest rate remains constant at 9% and you want to make annual identical deposits, what amount will you have to deposit into your account at the end of each year to reach your goal
Answer:
Annual deposit= $496.51
Explanation:
Giving the following information:
Future value (FV)= $10,000
Interest rate (i)= 9%
Number of periods (n)= 12 years
To calculate the annual deposit, we need to use the following formula:
FV= {A*[(1+i)^n-1]}/i
A= annual deposit
Isolating A:
A= (FV*i)/{[(1+i)^n]-1}
A= (10,000*0.09) / [(1.09^12) - 1]
A= $496.51
Sandhill Inc. acquired 10% of the 420,000 shares of common stock of Schuberger Corporation at a total cost of $15 per share on June 17, 2020. On September 3, Schuberger declared and paid a $120,000 dividend. On December 31, Schuberger reported net income of $512,000 for the year. (b) Wen Corporation obtained significant influence over Hunsaker Company by buying 30% of Hunsaker’s 112,000 outstanding shares of common stock at a cost of $18 per share on January 1, 2017. On May 15, Hunsaker declared and paid a cash dividend of $112,000. On December 31, Hunsaker reported net income of $212,000 for the year.
Required:
Prepare all necessary journal entries for 2017 for (a) Edelman and (b) Wen.
Answer:Please see explantion colmn for answers
Explanation:
A) Journal entry for Edelman
Date Account Titles and explanation Debit Credit
June 17 Stock investment $630,000
Cash $630,000
Calculation
Stock Investment =420,000 x $15 x 10% = $630,000
Date Account Titles and explanation Debit Credit
Sept 3 Cash $12,000
Dividend revenue $12,000
Calculation
Dividend revenue =$120,000 x 10% =$12,000
Date Account Titles and explanation Debit Credit
Dec 31 Stock investment $51,200
Investment revenue $51,200
Calculation
Investment Revenue =(512,000 x 10%) = 51,200
B) Journal entry for Wen
Date Account Titles and explanation Debit Credit
Jan 1 Stock investment $604,800
Cash $604,800
Calculation
Stock Investment =112,000 x $18 x 30% = $604,800
Date Account Titles and explanation Debit Credit
May 15 Cash $33,600
Dividend revenue $33,600
Calculation
Dividend revenue =112,000 x 30% = $33,600
Date Account Titles and explanation Debit Credit
Dec 31 Stock investment $63,600
Investment revenue $63,600
Calculation
Stock Investment =212,000 x 30% = $63,600
Edison's Lights makes light bulbs. The company is currently producing well below its full capacity. Lamp Land has approached Edison's Lights with an offer to buy 20,000 light bulbs at $0.75 each. Edison;s Lights sells its light bulbs wholesale for $0.85 each; the average cost per unit is $0.83, of which $0.12 is fixed costs. If Edison's Lights were to accept Lamp Land's offer, what would be the increase in Edison's Lights' operating profits?
Answer:
the increase in Edison's Lights' operating profits would be $400
Explanation:
Analysis of the effects of Accepting Lamp Land's offer
Sales (20,000 x $0.75) $15,000
Less Incremental Costs :
Variable Cost (20,000 x $0.73) ($14,600)
Operating Profit $400
thus
If Edison's Lights were to accept Lamp Land's offer, the increase in Edison's Lights' operating profits would be $400
Based on the various costs to make the light bulb, Edison's lights would see an increase in operating profits of $800.
How would Edison's Lights see this profit?The fixed costs would be the same throughout production so should be deducted:
= Average cost - fixed cost
= 0.83 - 0.12
= $0.71
The variable cost of making the bulb is $0.71 which means that the profit made on every bulb if sold at $0.75 would be:
= 0.75 - 0.71
= $0.04
The total profit would be:
= 20,000 bulbs x 0.04
= $800
Find out more on operating profits at https://brainly.com/question/14366117.
If a company has a quick ratio of 1.25 times, current assets of $25,000 and inventory of $5,000, the current liabilities balance is equal to sign and comma, as applicable) (round to the nearest dollar and include the dollar
Answer:
$16,000
Explanation:
Calculation to determine what the current liabilities balance is equal to
Using this formula
Quick Ratio = Current Assets - Inventory / Current Liabilities
Let plug in the formula
1.25 = ($25,000 - $5000) / Current Liabilities
1.25Current Liabilities = ($25,000 - $5000)
Current Liabilities = $20,000 / 1.25
Current Liabilities =$16,000
Therefore the current liabilities balance is equal to $16,000
The balance in the Prepaid Insurance account after the adjusting entries have been recorded represents the: A. cost of the insurance expired during the period B. value of the insurance prepayment that remains to benefit future periods C. cash paid for insurance of current and future periods D. amount owed for insurance at the end of the accounting period
Answer:
B.value of insurance prepayed
Firm K is planning on merging with Firm L. Firm K currently has 5,500 shares of stock outstanding at a market price of $28 a share. Firm L has 500 shares outstanding at a price of $16 a share. The merger will create $600 of synergy. Firm K plans to offer a sufficient number of its shares to acquire Firm L at an acquisition cost of $8,200. How many total shares will be outstanding in the merged firm
Answer:
5,792 shares
Explanation:
Value of share of K = $28
Increase in value of share due to synergy = $600 / 5,500 shares
Increase in value of share due to synergy = $0.11
New share value = $28 + $0.11
New share value = $28.11
Number of shares to be issued = $8,200 / $28.11
Number of shares to be issued = 291.71
New shares of Firm K = 5,500 shares + 291.71 shares
New shares of Firm K = 5791.71 shares
New shares of Firm K = 5,792 shares
The amount of the estimated average income for a proposed investment of $73,000 in a fixed asset, giving effect to depreciation (straight-line method), with a useful life of four years, no residual value, and an expected total income yield of $30,300, is a.$6,200 b.$30,300 c.$7,575 d.$18,250
Answer: $7,575
Explanation:
Based on the information given in the question, the amount of the estimated average income for a proposed investment will be calculated as:
= Expected total income yield / Number of years
= $30300/4
= $7,575
Therefore, the amount of the estimated average income for the proposed investment is $7575.
At the fourth and final resource, one operator handles the product. No quality problems exist at this step and the processing time is 12 minutes per unit. For every unit of demand, how many units have to flow through the second step in the process
Answer:
2.25 units.
Explanation:
Processing time is 5 minutes per unit for step 1. The total capacity is 60 minutes then no. of units produced can be;
60 / 5 = 12 units per hour.
For second step processing time is 4 minutes per unit. There is 0.85 unit of product is scrapped. Then no. of units produced per hour can be ;
60 / 4 = 15 units per hour.
After scrap the net product units per hour will be;
15 units * [1 - 0.85] = 2.25 units per hour.
Pronghorn Company has the following account balances: Sales Revenue $233,600, Sales Discounts $3,400, Cost of Goods Sold $1114,800, and inventory $43,400.
Answer:
i can't make an answer for you, but i can ask if my rephrasing of the question makes sense.
Explanation:
Cost of Goods sold is 1,113,800 $
Do you think Hollywood and record companies have a right to alter or mandate changes to audio/video technology including TV's, TIVO, gaming consoles, DVR's, PC's, phones and IPODS, in order to insure or enforce copyright law?
Answer:
Yes
Explanation:
I think Hollywood and record companies have a right to mandate changes in order to insure or enforce copyright law.
This is because Copyright law sets out to protect ownership of an original creative work by preventing unauthorized usage of the work. The creative work can be in the form of ideas, artwork, book or other forms of media. hence Hollywood and record companies have a right to enforce copyright laws by mandating changes to audio or video technology .
Padre holds 100 percent of the outstanding shares of Sonora. On January 1, 2013, Padre transferred equipment to Sonora for $112,000. The equipment had cost $147,000 originally but had a $57,000 book value and five-year remaining life at the date of transfer. Depreciation expense is computed according to the straight-line method with no salvage value.
Consolidated financial statements for 2015 currently are being prepared. What worksheet entries are needed in connection with the consolidation of this asset? Assume that the parent applies the partial equity method. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
prepare journal entry TA
Prepare entry ED
Answer:
Journal Entry TA
Date Account Titles Debit Credit
Retained Earnings $33,000
Equipment $35,000
($147,000 - $112000)
Accumulated Depreciation $68,000
[(147000-57000)+(57000/5*2)-(112000/5*2)]
Journal Entry ED
Date Account Titles Debit Credit
Accumulated Depreciation $11000
[(112000-57000)/5]
Depreciation expense $11,000
Morrison Company manufactures two products: digital cameras and video cameras. The company uses an activity-based costing system. The annual production and sales volume of digital cameras is 10,000 units and of video cameras is 8,000 units. Direct costs for the digital cameras are $122; for the video cameras, direct costs are $153.
For overhead costs, there are three activity cost pools with the following expected activities and estimated total costs:
Activity Cost Pool Estimated Cost Expected Activity Digital Cameras Expected Activity Video Cameras Total
Activity 1$30,000 100 500 600
Activity 2 $45,000 600 300 900
Activity 3 $96,600 400 2,000 2,400
Refer to Morrison Company. Using ABC, the total cost per digital camera is approximately:
Please show calculations!
Answer:
"$127.11 per unit" is the correct approach.
Explanation:
The activity cost as per the questions will be:
Activity 1:
= [tex]\frac{30,000}{600}[/tex]
= [tex]50[/tex] ($)
Activity 2:
= [tex]\frac{45000}{900}[/tex]
= [tex]50[/tex] ($)
Activity 3:
= [tex]\frac{96600}{2400}[/tex]
= [tex]40.25[/tex] ($)
Now,
The overhead cost for digital cameras will be:
= [tex](50\times 100)+(50\times 600)+(40.25\times 400)[/tex]
= [tex]5000+30000+16.100[/tex]
= [tex]51100[/tex] ($)
Per unit overhead cost will be:
= [tex]\frac{51100}{10000}[/tex]
= [tex]5.11[/tex] ($)
hence,
The total cost will be:
= [tex]Direct \ costs+Indirect \ costs[/tex]
= [tex]122+5.11[/tex]
= [tex]127.11 \ per \ unit[/tex] ($)
Using an order of magnitude analysis, estimate the total textbook expenditures incurred by all engineering majors at National University per year
Answer:
The total textbook expenditure would amount to $175,000 per year
Explanation:
National University is providing text books free of cost to all the engineering students to encourage professional studies. Very few students are pursuing engineering studies. For this purpose university management has decided to give free of cost books to students who select engineering majors. The total expenditure would be:
Cost of Printing Books $110,000
Transportation of the Books to different Campuses $25,000
Distribution Campaign Expense $40,000
Total expenditure amounts to $175,000
Which competitive strategy best utilizes Country Comfort's core competencies (which include a large and efficient network of obtaining and processing quality coffee beans)
Answer:
I don't know the answer to this
Which medium when sending a negative employment message lets you control the message and avoid confrontation?
Face-to-face
Email
Phone
Social media
Answer:
En mi opinión personal sería cara a cara. Por qué así se puede expresar lo que uno quiere decir y en los otros no.
Explanation:
Espero ayudarte suerte
Monopoly in the competitive environment a. is enjoyed by few organizations as sole suppliers of a good or service. b. is typical of public utilities -- even more so now than twenty years ago. c. cannot be achieved temporarily even through the use of patents and similar legal devices. d. is the logical extension of a firm's control of its production and labor resources. e. is, all in all, the most common type of competition in the U.S. market.
Answer:
b
Explanation:
and services.
An example of a monopoly is a utility company
A natural monopoly occurs due to the high start-up costs or a large economies of scale.
Natural monopolies are usually the only company providing a service in a particular region
Because the demand curve for a monopoly is downward sloping, marginal revenue is less than price. As prices fall, more units of the product are bought.
In a monopoly When the average cost is falling, the marginal cost lies below the average cost. If the government sets price to be equal to marginal cost, which lies below the average cost, the monopoly would incur losses.
Task 2: Record the listed transactions of Nikea Inc. for the first quarter (January to March) in
a journal.
a) 01-02-2015 issued capital stock: $20,000
b) 01-30-2015 paid the monthly rent: $5,000
c) 02-02-2015 purchased supplies on account: $1,500
d) 02-10-2015 paid a creditor on account: $1,000
e) 03-03-2015 earned sales commissions: $25,000
f) 03-30-2015 paid automobile expenses for the month: $4,500
g) 03-30-2015 paid office salaries: $8,000
h) 03-31-2015 determined the cost of supplies used: $1,500
i) 03-31-2015 paid cash dividends: $1,500
Answer and Explanation:
The journal entries are shown below:
a. Cash Dr $20,000
To Capital $20,000
(being the issuance of the capital stock is recorded)
b. Rent Dr $5,000
To cash $5,000
(being the rent paid is recorded)
c. Supplies dr $1,500
To Account payable $1,500
(being the supplies purchased on account is recorded)
d. Account payable Dr $1,000
To cash $1,000
(being the amount paid is recorded)
e. Cash Dr $25,000
To sales commission $25,000
(being the sales commission earned is recorded)
f. Automobile expense $4,500
To Cash $4,500
(being cash paid is recorded)
g. Office salaries Dr $8,000
To cash $8,000
(being cash paid is recorded)
h Supplies expense $1,500
To supplies $1,500
(being supplies expense is recorded)
g. Dividend payable $1,500
To Cash $1,500
(being dividend paid is recorded)
A project has an initial cost of $89,800, a life of 7 years, and equal annual cash inflows. The required return is 8.2 percent. According to the profitability index decision rule, what is the minimum annual cash flow necessary to accept the project?
Beyer Company is considering the purchase of an asset for $190,000. It is expected to produce the following net cash flows. The cash flows occur evenly within each year. Year 1 Year 2 Year 3 Year 4 Year 5 Total Net cash flows $ 50,000 $ 31,000 $ 60,000 $ 140,000 $ 30,000 $ 311,000 Compute the payback period for this investment. (Cumulative net cash outflows must be entered with a minus sign. Round your Payback Period answer to 2 decimal place.)
Answer:
3.35 years
Explanation:
Computation of the payback period for this investment
Year Cash Inflow (outflow) Cumulative Net Cash Inflow (Outflow)
0 ($ 190,000) -
1 $ 50,000 $ 50,000
2 $ 31,000 $ 81,000
3 $ 60,000 $ 141,000
4 $ 140,000 $ 281,000
5 $ 30,000 $ 311,000
Payback period= 3.35 Years
OR
Payback period = 3 years + ($190,000 - $141,000)/$140,000
Payback period= 3 years + ($49,000/$140,000)
Payback period= 3 years + 0.35
Payback period= 3.35 years
Therefore the payback period for this investment is 3.35 years
Which of the following key factors, based on the case study, contributed to Euro Disney’s disappointing performance during its first year of operation? Group of answer choices lack of sufficient budget for marketing and promotional activities not enough training for personnel bad weather in the summer months SRC and a lack of understanding of the target market
Answer:
Lack of understanding of the target market.
Explanation:
Euro Disney's was not able to perform according their set targets. In the first year the performance of the Euro Disney was very poor because there was lack of understanding of target market, cultural issues between the two nations and their business approaches were completely different from each other.
A company uses the weighted average method for inventory costing . At the beginning of a period the production department had units in beginning Work in Process inventory which were 33 % complete the department completed and transferred 168,000 units . At the end of the period units were in the ending Work in Process inventory and are 68 % complete . Compute the number of equivalent units produced by the department .
Answer
a. 178,200 units
Explanation:
Comple question "A company uses the weighted average method for inventory costing. During a period, a production department had 54,000 units in beginning goods in process inventory which were 33% complete; the department completed and transferred 168,000 units. At the end of the period, 15,000 units were in the ending goods in process inventory and are 68% complete. Compute the number of equivalent units produced by the department. 178,200. 186,320. 183,000. 168,000. 114,000."
Calculation of Equivalent Unit (as per Weighted Method)
Unit % of Completion Equ. Unit
Unit Completed & Transferred Out 168,000 100% 168,000
Closing WIP 15,000 68% 10,200
Total Equivalent Unit 178,200
The following information is available from the current period financial statements: Net income $150,000 Depreciation expense 28,000 Increase in accounts receivable 16,000 Decrease in accounts payable 21,000 The net cash flow from operating activities using the indirect method is Group of answer choices $141,000 $173,000 $117,000 $215,000
Answer:
$141,000
Explanation:
Given the above information, the net cash flow is computed as shown below
= Net income + Depreciation expense - Increase in accounts receivables - Decrease in accounts payable
= $150,000 + $28,000 - $16,000 - $21,000
= $141,000
Therefore, the net cash flow from operating activities using the indirect method is $141,000
To an economist, money is a synonym for which of the following? Question 10 options: income credit wealth salary none of the above
Answer:
None of the above
Explanation:
To an economist, money has the following characteristics
1. It is a means of exchange
2. It is regarded as a unit of account
3. Money can also be defined as a store of value.
Therefore to an economist, money is not synonymous with income, wealth, credit and salary.
So the last option answers the question.
On January 1, 2019, XYZ Co. issued 2-year bonds with a face value of $10,000 and a stated interest rate of 10%, payable semiannually on June 30 and December 31. The bonds were sold to yield (Market Int.) 8%, at a selling price of $10,363. The interest expense recognized for the year 2019 is
Answer:
Your answer is given below:
Explanation:
When bond is issued on yield to market at price of $10,179, interest is charged on outstanding amount of $10,179 of 9%.
So interest charged on June 30 is 9% for 6 months on $10,179
Interest expense=$10,179*9%*6/12
Interest expense for 6 months =$458
Cash paid for interest is however at stated interest rate of 10% on $10,000 for 6 months=$10,000*10%*6/12
Cash paid=$500
Difference of interest paid and interest expense is debited to bonds payable balance so bonds payable balance outstanding is reduced.
Bonds payable outstanding reduced=$500-$458
=$42
Bonds payable outstanding balance as on june 30=$10,179-$42
=$10,137
Now interest for last 6 months in 2019 is charged on $10,137 at 9%
Interest expense from June 30 to December 31=$10,137*9%*6/12
Interest expense=$456
Total interest expense for 2019=$456+458
=$914
So,total interest expense charged for 2019=$914