Answer:
440
Explanation:
Calculation to determine the change in government spending needed to reach full employment.
At Y=6000,
C=300+0.64Y
C=300+0.64*6000
C=300+3840
C=4140
Second step
Imports=0.08*Y=0.08*6000
Imports=480
Aggregate expenditure=4140+800+700+400-480
Aggregate expenditure=5560
Full employment G=6000-5560
Full employment G=440
New G=700+440
New G=1140
Y=300+0.64Y+800+1140+400-0.08Y
Y=2640+0.56Y
Y=2640/0.44
Y=6000
Therefore the change in government spending needed to reach full employment must Increase by 440.
On whom the trade bill drawn ?
The bill of exchange is drawn by the seller of the goods and is accepted by the buyer.
Your friend Lorenzo is trying to decide on a career path. He has narrowed down his search to two choices. Before he selects a major, he wants to know more about the two careers and the skills needed for each profession. What advice would you give Lorenzo
Answer:
Interview someone in each of your chosen fields.
Explanation:
In the context, my friend Lorenzo wants advice from me regarding career choices. He has somehow researched and narrowed down the choices to two choices. Lorenzo wants to know more about the major and the skills required for each of the profession.
I would suggest him to interview someone experience person in this field and get insights from him. It will provide Lorenzo a better understanding of the major selection and it will also create a blueprints of the future paths.
Suppose that France and Denmark both produce oil and olives. Frances’s opportunity cost of producing a crate of olives is 4 barrels of oil, while Denmark’s opportunity cost of producing a crate of olives is 7 barrels of oil.
By comparing the opportunity cost of producing olives in the two countries, you can tell that _______has a comparative advantage in the production of olives and ______has a comparative advantage in the production of oil.
Suppose that France and Denmark consider trading olives and oil with each other. France can gain from specialization and trade as long as it receives more than _____ of oil for each crate of olives it exports to Denmark. Similarly, Denmark can gain from trade as long as it receives more than _____ of olives for each barrel of oil it exports to France.
Based on your answer to the last question, which of the following terms of trade (that is, price of olives in terms of oil) would allow both Denmark and France to gain from trade?
A__ 6 barrels of oil per crate of olives
B__ 3 barrels of oil per crate of olives
C__ 5 barrels of oil per crate of olives
D__ 8 barrels of oil per crate of olives
Answer: See explanation
Explanation:
Based on the information given in the question, one can deduce that while (France) has a comparative advantage in the production of olives, it should be noted that on the other hand, (Denmark) has a comparative advantage in the production of oil.
If France and Denmark consider trading olives and oil with each other, then France can gain from specialization and trade as long as it receives more than (4) of oil for each crate of olives it exports to Denmark while on the other hand, Denmark can gain from trade as long as it gets more than (1/7) crate of olives for each barrel of oil it exports to France.
The terms of trade that would allow both Denmark and France to gain from trade include:
• 6 barrels of oil per crate of olives.
• 5 barrels of oil per crate of olives.
Oceanic, a venture capital firm, has the opportunity to invest in one of two firms that are in the process of globalizing. Macmillan, an air-conditioner manufacturer, faces intense pressure from its home market. Rent a Swag, a dog-toy manufacturer, has encountered little competition in its country of origin. In which company should Oceanic invest?
a. Macmillan, because air conditioners cost more to ship than dog toys do
b. Macmillan, because firms that face stiff competition at home tend to do better abroad
c. Rent a Swag, because firms that face little or no competition at home tend to do better abroad
d. Rent a Swag, because dog toys cost less to ship than air conditioners do
Answer: B. Macmillan, because firms that face stiff competition at home tend to do better abroad
Explanation:
Following the information given, it can be deduced that Oceanic should invest in Macmillan, because firms that face stiff competition at home tend to do better abroad.
The fact that Macmillan, which is an air-conditioner manufacturer, faces intense pressure from its home market will have resulted in the company making quality sure conditioners in order to sustain the pressure and have an edge over its local competitors. Therefore, the company will do better abroad as a result of this.
The correct option is B.
The two most important goals for government policy involve a trade-off between __________ and __________. A. big government; small government. B. taxation; government spending. C. direct regulation; indirect regulation. D. equity; efficiency.
Answer:
D
Explanation:
"Rogue Corp. has sales of $4,250,000; the firm's cost of goods sold is $2,500,000; and its total operating expenses are $600,000. The firm's interest expense is $250,000, and the corporate tax rate is 40%. What is Rogue's tax liability"
Answer:
$360,000
Explanation:
Calculation to determine Rogue's tax liability
Step 1 is to calculate the gross profit
Using this formula
Gross profit=Sales - Cost of Goods Sold
Let plug in the formula
Gross profit=$4,250,000-$2,500,000
Gross profit=$1,750,000
Step 2 is to calculate operating income
Using this formula
Operating income=Gross Profit -Total operating expenses
Let plug in the formula
Operating income=$1,750,000-$600,000
Operating income=$1,150,000
Step 3 is to calculate the EBT
Using this formula
EBT=Operating income - Interest expense
Let plug in the formula
EBT=$1,150,000-$250,000
EBT=$900,000
Now let calculate the Tax liability
Using this formula
Tax liability=EBT x Corp Tax
Let plug in the formula
Tax liability=$900,000*$40%
Tax Liability=$360,000
Therefore Rogue's tax liability is $360,000
Sandia Corporation manufactures metal toolboxes. It adds all materials at the beginning of the manufacturing process. The company has provided the following information:
Beginning work in process (30% complete) 80,000
Direct materials $80,000
Conversion cost 190,000
Total cost of beginning work in process $270,000
Number of units started 152,000
Number of units completed and transferred to finished goods ?
Ending work in process (50% complete) 68,000
Current period costs
Direct materials $180,000
Conversion cost 314,000
Total current period costs $494,000
Required:
a. Reconcile the number of physical units worked on during the period.
b. Calculate the cost per equivalent unit.
Answer:
The solution to these questions can be defined as follows:
Explanation:
For point a:
[tex]Physical \ units\ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ Physical\ units[/tex]
[tex]Beginning\ units\ \ \ \ \ \ \ \ \ \ \ \ 80000\ \ \ \ \ \ \ \ \ \ \ \ Units\ completed \ \ \ \ \ \ \ \ \ \ \ \ 164000\\\\Units \ started\ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ 152000\ \ \ \ \ \ \ \ \ \ \ \ Ending\ units\ \ \ \ \ \ \ \ \ \ \ \ \ \ 68000\\\\Total\ units\ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ 232000\ \ \ \ \ \ \ \ \ \ \ \ Total \ units \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ 232000\\\\[/tex]
For point b:
[tex]Equivalent\ units[/tex]
[tex]Physical\ units \ \ \ \ \ \ \ \ \ \ Direct \ materials\ \ \ \ \ \ \ \ \ Conversion[/tex] [tex]Units \ completed\ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ 164000\ \ \ \ \ \ \ \ \ \ \ \ 164000\ \ \ \ \ \ \ \ \ \ \ \ 164000 \\\\Ending \ inventory\ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ 68000\ \ \ \ \ \ \ \ \ \ \ \ 68000\ \ \ \ \ \ \ \ \ \ \ \ 34000\\\\Total \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ 232000 \ \ \ \ \ \ \ \ \ \ \ \ 232000\ \ \ \ \ \ \ \ \ \ \ \ 198000[/tex]
In January, Dieker Company requisitions raw materials for production as follows: Job 1 $970, Job 2 $1,700, Job 3 $790, and general factory use $660. Prepare a summary journal entry to record raw materials used. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Answer:
Dr Work in Process Inventory $3460
Cr Manufacturing Overhead $660
Cr Raw materials Inventory $2,800
Explanation:
Preparation of a summary journal entry to record raw materials used.
Based on the information given the summary journal entry to record raw materials used will be:
Dr Work in Process Inventory $3460
($970+$1700+$790)
Cr Manufacturing Overhead $660
Cr Raw materials Inventory $2,800
($3460-$660)
(To record raw materials used)
XYZ produces a single product and has provided the following data for its most recent month of operations:
Number of units produced 6,400
Variable costs per unit:
Direct materials $72
Direct labor $80
Variable manufacturing overhead $10
Variable selling and administrative expense $12
Fixed costs:
Fixed manufacturing overhead $224,000
Fixed selling and administrative expense $288,000
There were no beginning or ending inventories. The absorption costing unit product cost was: ____________-
Answer: $197
Explanation:
With absorption costing, the fixed manufacturing costs are absorbed by the products which means that the product cost will include fixed costs related to manufacturing.
The absorption costing unit product cost is therefore:
= Direct materials + Direct Labor + Variable manufacturing overhead + Fixed manufacturing Overhead per unit
Fixed manufacturing overhead per unit is:
= 224,000 / 6,400 units
= $35 per unit
Absorption cost unit product cost = 72 + 80 + 10 + 35
= $197
A company has a degree of operating leverage of 2.5. If sales increase by 10%, then profits will: Multiple choice question. increase by 25% increase by 10% decrease by 10% decrease by 25%
Answer:
. increase by 25% increase
Explanation:
The degree of operating leverage (DOL) measures the sensitivity of a company's operating income or profits to changes in the demand
DOL = percentage change in operating income or profits / percentage change in units sold
2.5 = percentage change in operating income / 10%
percentage change in operating income = 10% x 2.5 = 25%
profits will increase by 25%
Recher Corporation uses part Q89 in one of its products. The company's Accounting Department reports the following costs of producing the 8,900 units of the part that are needed every year.
Per Unit
Direct materials $8.20
Direct labor $4.60
Variable overhead $9.10
Supervisor's salary $3.40
Depreciation of special equipment $2.90
Allocated general overhead $1.60
An outside supplier has offered to make the part and sell it to the company for $28.00 each. If this offer is accepted, the supervisor's salary and all of the variable costs, including direct labor, can be avoided. The special equipment used to make the part was purchased many years ago and has no salvage value or other use. The allocated general overhead represents fixed costs of the entire company. If the outside supplier's offer were accepted, only $4,600 of these allocated general overhead costs would be avoided. In addition, the space used to produce part Q89 could be used to make more of one of the company's other products, generating an additional segment margin of $17,800 per year for that product.
Required:
Prepare a report that shows the financial impact.
Answer:
Recher Corporation
Differential Analysis:
Make Buy Difference
Total variable costs $225,170 $249,200 ($24,030)
General overhead 4,600 4,600
Additional segment margin (17,800) 17,800
Total costs $229,770 $231,400 ($1,630)
Recher should continue making the part. It will incur $1,630 additional cost to buy it from the outside supplier than making it in-house.
Explanation:
a) Data and Calculations:
Annual units of Q89 required = 8,900
Per Unit
Direct materials $8.20
Direct labor $4.60
Variable overhead $9.10
Supervisor's salary $3.40
Depreciation of special equipment $2.90
Allocated general overhead $1.60
Relevant costs:
Direct materials $8.20
Direct labor $4.60
Variable overhead $9.10
Supervisor's salary $3.40
Variable costs per unit $25.30
Total variable costs $225,170 (8,900 * $25.30)
Avoidable general overhead 4,600
Total avoidable production costs = $229,770
Cost of purchasing from outside supplier = $249,200 (8,900 * $28.00)
less additional segment margin 17,800
Net avoidable purchase costs $231,400
An effective minimum wage law can be expected to clear the market for unskilled workers. increase employment for some affected workers. increase the number of firms in those industries where the law is effective. reduce the hours worked for some unskilled workers. all of the above
Answer:
all of the above
Explanation:
The law related to the effective minimum wage could be predicted for non-skilled workers market, it raised the employment for some workers that are impacted, the number of firms should be increased, it decreased the non-skilled workers hours
So all of the above options is correct as it included all
Is scented candle harmful to dogs?
Answer:
Scented candles are not harmful to dogs for normal use, but high concentrations in a confined space for a long time would have an impact on the dog's sense of smell.
Because the candles you use will cause a lot of burnt smoke which is harmful to dogs. And aromatherapy ingredients contain a lot of chemical substances. If the windows are opened, it will be ok, if not the more chemical substances accumulate, the more it will be harmful to dogs, or even to the health of people.
Here are several ways to avoid the harm caused by aromatherapy to dogs:
Do not ignite the two types of aromatherapy in a short time or at the same time, to avoid the two types of aromatherapy, which are mutually ineffective and produce toxic gas.
Try not to light candles in a closed bedroom when you sleep.
Keep air circulation.
Keep all kinds of aromatherapy out of reach of dogs.
Use Home Lights scented candles in the right way.
Explanation:
https://hlcandles.com/
On December 31, the trial balance of Cubico Company included the following accounts with debit balances: Prepaid Advertising $1,500 Advertising Expense 5,400 If it is determined that the cost of advertising applicable to future periods is $3,300, the correct adjusting entry would:_____.
A. Debit Advertising Expense $1,800; credit Prepaid Advertising $1,800.
B. Debit Prepaid Advertising $1,800; credit Advertising Expense $1,800.
C. Debit Prepaid Advertising $3,300; credit Advertising Expense $3,300.
D. Debit Advertising Expense $3,300; credit Prepaid Advertising $3,300.
Answer:
Cubico Company
The correct adjusting entry would be:
B. Debit Prepaid Advertising $1,800; credit Advertising Expense $1,800.
Explanation:
a) Data and Calculations:
Debit balances on December 31:
repaid Advertising $1,500
Advertising Expense 5,400
Determined future advertising cost = $3,300
The correct adjusting entry would be:
B. Debit Prepaid Advertising $1,800; credit Advertising Expense $1,800.
This will increase the prepaid advertising by $1,800 to $3,300 ($1,500 + $1,800) and reduce the advertising expense by $1,800 to $3,600 ($5,400 - $1,800).
A small business owner visits his bank to ask for a loan. The owner states that she can repay a loan at $1,500 per month for the next 3 years and then $500 per month for three years after that. If the bank is charging customers 10 percent APR, how much would it be willing to lend the business owner?
Answer:
The bank will be willing to lend $ 28,800 to the business owner.
Explanation:
Given that a small business owner visits his bank to ask for a loan, and the owner states that she can repay a loan at $ 1,500 per month for the next 3 years and then $ 500 per month for three years after that, since the bank is charging customers 10 percent APR, to determine how much the business owner would be willing to lend the following calculation must be performed:
1500 x 12 x 3 + 500 x 12 x 3 = X
18000 x 3 + 6000 x 3 = X
54000 + 18000 = X
72000 = X
10 x 6 = 60
100 - 60 = 40
100 = 72000
40 = X
40 x 72000/100 = X
28800 = X
Therefore, the bank will be willing to lend $ 28,800 to the business owner.
The Wood Valley Dairy makes cheese to supply to stores in its area. The dairy can make 250 pounds of cheese per day (365 days per year), and the demand at area stores is 180 pounds per day. Each time the dairy makes cheese, it costs $125 to set up the production process. The annual cost of carrying a pound of cheese in a refrigerated storage area is $12. Determine the optimal order size and the minimum total annual inventory cost.
Answer: 1. 1170 units
2. $14039
Explanation:
The optimal order size will be:
= ✓2AO/C
where,
A = Annual demand = 180 × 365 days = 65,700
O = Ordering cost = 125
C = Carrying cost = 12
EOQ = ✓(2AO/C)
= ✓(2 × 65700 × 125/12)
= ✓ 1368750
= 1170 units
Therefore, the optimal order size is 1170 units.
2. The minimum total annual inventory cost will be calculated as:
C = (Q /2)(H) +(D/Q)(S)
where,
Q = 1170 pounds
H = holding cost = $12
D = annual demand = 65,700
S =set up cost = $125
Therefore, the minimum total annual inventory cost will be:
C = (Q /2)(H) +(D/Q)(S)
C = {(1170) /2] × 12} + {(65,700 /1170) × 125}
= 7020 +7019
= 14,039
Therefore, the minimum total annual inventory cost is $14,039.
odson Company manufactures a product with a standard direct labor cost of 2.3 hours of labor per unit at $10.60 per hour. Last month, 170 units were produced using 90 hours at $11.60 per hour. What was the company's labor quantity variance
Answer:
Direct labor time (efficiency) variance= $3,190.6 favorable
Explanation:
To calculate the direct labor quantity variance, we need to use the following formula:
Direct labor time (efficiency) variance= (Standard Quantity - Actual Quantity)*standard rate
Direct labor time (efficiency) variance= (391 - 90)*10.6
Direct labor time (efficiency) variance= $3,190.6 favorable
Standard quantity= 2.3*170= 391
Fixed costs can be defined as costs thatGroup of answer choicesvary inversely with production.vary in proportion with production.are incurred only when production is large enough.are incurred even if nothing is produced.
Answer: are incurred even if nothing is produced.
Explanation:
Fixed costs are referred to as the cost that doesn't vary with the production level. Even if the company doesn't produce anything, the fixed cost will still be incurred.
The fixed cost is different from the variable cost which is the cost that varies along with production. Examples of fixed cost include salaries, rental lease payments, salaries, etc.
Examples of cash equivalents include all of the following EXCEPT U.S. Treasury bills. notes issued by major corporations. money market funds. long-term notes receivable.
Answer:
long-term notes receivable.
Explanation:
Cash equivalents can be regarded as total cash value that is available on hand, this encompass items that has similarities with cash and must be regarded as current assets. cash or cash equivalents of a company can be seen at top line of the balance sheet.
Examples of cash equivalents are;
✓Treasury bills
✓notes issued by major corporations. ✓money market funds.
How many BTU's are in a ton
Answer:
12.000
Explanation:
Because 1 ton equals 12,000 BTU.
For example, 48,000 BTU equals 4 tons, and 60,000 BTU equals 5 tons.
Marigold Industries has 8400 equivalent units of production for both materials and for conversion costs. Total manufacturing costs are $123880. Total materials costs are $97000. How much is the conversion cost per unit?a. $12.37. b. $5.10. c. $29.84.d. $17.47.
Answer:
Wow that’s a lot of numbers hold up
Explanation:
A practitioner is engaged to prepare a client's federal income tax return for 20X1 and 20X2. The practitioner files the 20X1 return on the client's behalf and provides copies of the 20X1 return and all related documents to the client. After the 20X2 return is prepared, the client disputes the fees for the 20X2 tax engagement, terminates the relationship, and requests all tax returns and related records. The client has not yet paid for preparation of the 20X2 return. Under IRS Circular No. 230, which records must the practitioner return to the client
Question Completion with Options:
A.) Notes the practitioner took when meeting with the client about the 20X1 and 20X2 tax returns.
B.) The engagement letter executed by the client for preparation of the 20X2 federal income tax return.
C.) An appraisal the practitioner prepared in connection with the 20X1 federal income tax return.
D.) Schedules the practitioner prepared, which the client needs to file in its 20X2 federal income tax return.
Answer:
Under IRS Circular No. 230, the records the practitioner must return to the client are:
D.) Schedules the practitioner prepared, which the client needs to file in its 20X2 federal income tax return.
Explanation:
Under IRS Circular No. 230, the practitioner must, at the request of a client, promptly return all records to enable the client to comply with his or her Federal tax obligations. However, the practitioner may retain copies of the records returned to the client. This means that the fees dispute does not stop the practitioner from returning records to the client.
When the price of paintings is set at $500, the local art gallery supplies 20 paintings per week. When the price of paintings increases to $750, the gallery supplies 25 paintings. Calculate the price elasticity of supply using the mid-point formula. Instructions: Round your answer to two decimal places. If you are entering a negative number be sure to include a negative sign (-) in front of that number. The price elasticity of supply is: .
Answer:
the price elasticity of supply is 0.555
Explanation:
The computation of the price elasticity of supply is given below:
= Percentage change in quantity supplied ÷ percentage change in price
= (25 - 20) ÷ (25 + 20) ÷ 2 ÷ (750 - 500) ÷ (750 + 500) ÷ 2
= 5 ÷45 ÷ 250 ÷ 125
= 0.555
Hence, the price elasticity of supply is 0.555
The same is relevant
MC Qu. 147 Luker Corporation uses a process... Luker Corporation uses a process costing system. The company had $165,500 of beginning Finished Goods Inventory on October 1. It transferred in $842,000 of units completed during the period. The ending Finished Goods Inventory balance on October 31 was $163,200. The entry to account for the cost of goods manufactured during October is:
Answer:
Debit cost of goods sold $844,300
Credit finished goods inventory $844,300
Explanation:
Based on the information given The Appropriate journal entry to account for the cost of goods manufactured during October is:
Debit cost of goods sold $844,300
Credit finished goods inventory $844,300
($165,500 + $842,000 - $163,200 = $844,300)
(To record cost of goods manufactured)
Notes Receivable differ from Accounts Receivable in that Notes Receivable: A. are generally considered a weaker legal claim B. do not have to be created for every new transaction, so they are used more frequently C. are noncurrent assets D. generally charge interest from the day they are signed to the day they are collected
Answer: D. generally charge interest from the day they are signed to the day they are collected
Explanation:
The notes receivable refers to the written promise that an amount of money will be received at a future date.
It should be noted that such money consist of the principal and the interest accrued. It is written under the current assets section in the balance sheet.
On the other hand, the accounts receivable refers to the payment that a company will receive from the customers who have bought its goods on credit.
While the nite receivable charges interest, the account receivable doesn't. Therefore, notes receivable differ from accounts receivable in that notes receivable generally charge interest from the day they are signed to the day they are collected.
Use the following information: a. Beginning cash balance on March 1, $72,000. b. Cash receipts from sales, $300,000. c. Budgeted cash payments for direct materials, $140,000. d. Budgeted cash payments for direct labor, $80,000. e. Other budgeted cash expenses, $45,000. Cash repayment of bank loan, $20,000.Prepare a cash budget for the month ended on March 31 for Gado Company. The budget should show expected cash receipts and cash payments for the month of March and the balance expected on March 31.
Answer:
the budget of the pines is 8 to them b sqare the 4 in you get 12,500
Explanation:
Answer:
no clue
Explanation:
have a good day:)))
Mary incurred a $20,000 nonbusiness bad debt last year. She also had an $18,000 long-term capital gain last year. Her taxable income for last year was $25,000. During the current year, she unexpectedly collected $12,000 on the debt. How should Mary account for the collection
Answer: $12000 income.
Explanation:
It should be noted that non business bad debts are regarded as short term capital loss. In the question given, the $18000 long-term capital gain will have to be offset against the bad debt of $20000.
In this case, the tax benefit will be $18000, therefore $12000 will be recognized as the income.
A materials requisition slip showed that direct materials requested were $58,000 and indirect materials requested were $9,000. The entry to record the transfer of materials from the storeroom is:___________A) Work In Process Inventory 58,000Raw Materials Inventory 58,000B) Direct Materials 58,000Indirect Materials 9,000Work in Process Inventory 67,000C) Manufacturing Overhead 67,000Raw Materials Inventory 67,000D) Work In Process Inventory 58,000Manufacturing Overhead 9,000Raw Materials Inventory 67,000
Answer:
Work In Process Inventory 58,000Manufacturing Overhead 9,000Raw Materials Inventory 67,000
Explanation:
Account titles and explanation Debit Credit
Work In Process Inventory $58,000
Manufacturing overhead $9,000
Raw Materials Inventory $67,000
Direct Materials from the storeroom is recorded as work in process Inventory and is debited, Also Indirect materials is recorded as manufacturing overheads and debited. This should correspond with a credit to the raw material inventory.
Carter Industries has two divisions: the West Division and the East Division. Information relating to the divisions for the year just ended is as follows: West East Units produced and sold 33,000 43,000 Selling price per unit $ 8 $ 15 Variable costs per unit 4 5 Direct fixed cost 51,000 113,000 Common fixed cost 43,000 43,000 Common fixed expenses have been allocated equally to each of the two divisions. Carter's segment margin for the West Division is:
Answer:
$81,000
Explanation:
Segment margin is derived by deducting all expenses that are directly traceable to the segment and it does not include corporate common expenses.
Particulars Amount
Contribution $132,000 [33,000*(8-4)]
Less: Direct fixed cost ($51,000)
Segment Margin $81,000
So, Carter's segment margin for the West Division is $81,000.
On January 1, Parson Freight Company issues 7.0%, 10-year bonds with a par value of $4,500,000. The bonds pay interest semiannually. The market rate of interest is 8.0% and the bond selling price was $4,194,222. The bond issuance should be recorded as:
Answer: Debit Cash $4,194,222; Debit Discount on bonds payable $305,778; Credit Bonds payable $4,500,000
Explanation:
Based on the information given in the question, the journal entry will be prepared as follows:
Debit Cash $4,194,222
Debit Discount on bonds payable $305,778
Credit Bonds payable $4,500,000
Note that the discount on Bonds Payable was calculated as:
= $4,500,000 - $4,194,222
= $305,778
