Answer: $1,193,838.80
Explanation:
The price of a bond is the sum of the present value of the coupon payments and the face value at maturity.
= Present value of coupon payments + Present value of face value at maturity
First adjust the variables for semi-annual:
Number of periods = 5 * 2 = 10 semi annual periods
Coupon payment = 8% * 1,100,000 * 1/2 years = $44,000
Yield = 6% / 2 = 3%
Present value of coupon payments:
The coupon payments are constant so are an annuity:
= Annuity * Present value of an annuity factor, 10 periods, 3%
= 44,000 * 8.5302
= $375,328.80
Present value of face value
= 1,100,000 * Present value of 1, 3%, 10 periods
= 1,100,000 * 0.7441
= $818,510
Selling price:
= 375,328.80 + 818,510
= $1,193,838.80
What is probability and non probability sampling?
Explanation:
I hope this will help you.
Which feature prevents a company from uilizing the private assets of its shareholders for the payment of its leabiities?
Answer: Limited Liability
Explanation: Business owners' liability for debts is restricted to the amount they put into the business.
Able, Baker, and Charlie are the only three stocks in an index. The stocks sell for $90, $200, and $108, respectively. If Baker undergoes a 2-for-1 stock split, what is the new divisor for the price-weighted index
Answer:
2.25
Explanation:
Divisor = (Sum of prices after split) * Number of stocks / Sum of prices before split
Divisor = ($90 + $200/2 + $108) * 3 / $90 + $200 + $108
Divisor = $298*3 / $398
Divisor = $894 / $398
Divisor = 2.246231155778894
Divisor = 2.25
So, the new divisor for the price-weighted index is 2.25.
If a sales increase is forecasted, how will it affect expenses on the pro forma income statement if market conditions are expected to remain stable? There will be no effect on expenses. Expenses will decrease. It depends on the type of product being sold. Expenses will increase.
Answer:
Expenses will increase.
Explanation:
In this method, the revenue should be rised according to the forecasting method also the expense contains the similar percentage of revenue that was for the previous periods
So in the case when the revenue is increased so the expense should also be increased with the real terms
Therefore the last option is correct
Qualcomm (QCOM) is expected to generate annual earnings per share of $3.70 and is currently trading for $62.64. Assuming that investors require a return of 13% for QCOM stock, what is the approximate fractional amount of the current stock price reflected in PVGO
Answer: 0.55
Explanation:
Based on the information given, the approximate fractional amount of the current stock price reflected in PVGO will be calculated thus;
Earning per share, EPS = $3.70
Price per share, P= $62.64
Rate of return, k = 13%
Therefore,
PVGO = Price per share - (Earnings per share/Rate of return)
PVGO = P-EPS/k
= 62.64 - 3.70/13%
= 62.64- 28.46
= $34.18
Since it's to be represented as a fraction, this Will be:
= 34.18/62.64
= 0.55
Based upon the following data for a business with a periodic inventory system, determine the cost of merchandise sold for August. Merchandise inventory, August 1 $ 96,610 Merchandise inventory, August 31 100,530 Purchases 254,660 Purchases returns and allowances 13,340 Purchases discounts 6,320 Freight in 4,070Cost of Merchandise Sold for August = ______.
Answer:
Cost of merchandise = $235150
Explanation:
Below is the calculations:
Cost of merchandise = Opening inventory - ending inventory + purchases - purchase return - purchase discount + freight
Now plug the value in the above formula:
Cost of merchandise = 96610 - 100530 + 254660 - 13340 - 6320 +4070
Cost of merchandise = $235150
An economy consists of three workers: Carlos, Felix, and Larry. Each works 10 hours a day and can produce two services: mowing lawns and washing cars. In an hour, Carlos can either mow 1 lawn or wash 1 car; Felix can either mow 1 lawn or wash 2 cars; and Larry can either mow 2 lawns or wash 1 car.
For each of the scenarios listed in the following table, determine how many lawns will be mowed and how many cars will be washed per day and enter these values into the corresponding row.
Scenario Lawns Mowed Cars Washed
All three spend all their time mowing lawns. (A)
All three spend all their time washing cars. (B)
All three spend half their time on each activity. (C)
Carlos spends half his time on each activity, while Felix only washes cars and Larry only mows lawns. (D)
Answer:
D
Explanation:
When the company assigns factory labor costs to jobs, the direct labor cost is debited to Factory Labor. Manufacturing Overhead. Work in Process Inventory. Direct Labor.
Answer: work in process inventory
Explanation:
The direct labor costs refers to the costs that is incurred by a company which has to do with the payment to the employees involved in the production activities of the company.
When a company assigns factory labor costs to jobs, then the direct labor cost is debited to the work in process inventory.
Select the correct answer.
Why does an organization prepare a Balance Sheet?
A.
to reveal what the organization owns and owes at a point in time
B.
to reveal how well the company utilizes its cash
C.
to calculate retained earnings for a given accounting period
D.
to calculate gross profit for a given accounting period
Answer:
d
Explanation:
to calculate gross profit for a given accounting period
The following information is available for Carter Corporation: Materials inventory decreased $4,000. Materials inventory on December 31 was 50% of materials inventory on January 1. Beginning work in process inventory was $145,000. Ending finished goods inventory was $65,000. Purchases of direct materials were $154,700. Direct materials used were 2.5 times the cost of direct labor. Total manufacturing costs incurred were $246,400, which is 80% of cost of goods manufactured and $156,000 less than cost of goods sold. Note to students: The answers are not necessarily calculated in alphabetical order. a. Compute finished goods inventory on January 1.
Answer: $159,400
Explanation:
Finished goods inventory on January 1 is:
= Cost of goods sold + Ending finished goods inventory - Cost of goods manufactured
Cost of goods sold = Manufacturing cost + 156,000
= 246,400 + 156,000
= $402,400
Cost of goods manufactured = Manufacturing costs / 80%
= 246,400 / 80%
= $308,000
Finished goods inventory = 402,400 + 65,000 - 308,000
= $159,400
Based on the information given the finished goods inventory on January 1 is $159,400.
Cost of goods sold = 246,400 + $156,000
Cost of goods sold= $402,400
Cost of goods manufactured = 246,400 /.80
Cost of goods manufactured = $308,000
Finished goods inventory=Cost of goods sold+ Ending finished goods inventory-Cost of goods manufactured
Finished goods inventory =$402,400 + $65,000 - $308,000
Finished goods inventory= $159,400
Inconclusion the finished goods inventory on January 1 is $159,400.
Learn more about finished goods here:https://brainly.com/question/9322470
Price of beni’s house increased from 100,000 to 200,000 in the last decade. Cost of living quadrupled ( increased 4 times as much). What can you say about Beni’s house?
Answer:
Answer to type following question is as follows;
Explanation:
Real value = Nominal value / Inflation
Beni's house has gone up in value from 100,000 to 200,000 dollars in the previous ten years. The cost of living has quadrupled (raised fourfold). The home is now less expensive because, if it had appreciated at the same pace as all other products and services, it would have been four times more expensive ($400,000), but rather it is $200,000.
what is the meaning of Neccesity
Answer:h
Explanation:
the fact of being required or indispensable.
"the necessity of providing parental guidance should be apparent"
the process of deciding what should be done, how and when it should be done and who should do it is known as
Answer:
Planning.
Explanation:
Management involves the control, planning and organization of the affairs of a business firm.
Basically, the management of an organization is saddled with the responsibility of planning, organizing, controlling and staffing within the organization.
The four (4) main management activities are;
I. Organizing
II. Controlling
III. Motivating.
IV. Planning.
Planning can be defined as the process of developing organizational objectives and translating them into action plans or courses of action.
This ultimately implies that, planning is a strategic technique used by organizations to make an aggregate plan for its manufacturing (production) process typically ahead of time, in order to have an idea of the level of goods that are to be produced and what resources are required so as to reduce the total cost of production to its barest minimum.
This ultimately implies that, planning is a strategic process which typically involves deciding what should be done, how and when it should be done and who should do it.
Hilda owes a significant amount of debt to a doctor's office, and they hired a collection agency to take up those claims. The collection agency calls frequently, sometimes as late as 1 a.m. or 2 a.m. on weekdays. In this case, the collection agency ____________________.
Answer: c. is violating the Fair Debt Collection Practices Act.
Explanation:
A person being in debt does not mean that they will lose their rights. They are still citizens and certain rights will be protected and these are shown in the Fair Debt Collection Practices Act.
One of the requirements of this Act is that debt collectors do not call between the hours 9pm and 8am as these hours are unreasonable to disturb people at. In calling Hilda at 1 am or 2 am therefore, this collection agency is in violation of the Act and can be sanctioned.
Determine if the research is deductive or inductive: - If because of analysis of data collected, one infers that the problem of turnover can be minimized by three important factors: (i) flexible work hours; (ii) recognition of superior performance of workers through suitable merit pay raises; and (iii) enriching certain types of jobs. If a manager observes that people residing at distances beyond 50 miles from the workplace remain absent more frequently than those he knows to reside close by, and infers thereby that distance is a factor in absenteeism. Fares spent some time reviewing the literature on child behavior and focused particularly on theoretical explanations for gender differences he might expect to find in his upcoming study of children.
Answer:
1. Deductive
2. Inductive
3. Deductive
Explanation:
Deductive research is a form of reasoning that stems from existing theories that can be tested. Data is collected to test a theory and the results are analyzed. The first and third scenarios are deductive research works because there are existing theories or data that can be worked on. In the first instance, data on issues of turnover already exist. In the third scenario, there were theories to explain gender differences.
Inductive research proposes a theory after observation. This is applicable in the second instance where the manager proposes the theory that relates distance to absenteeism after close observation.
On June 15, Oakley Inc. sells inventory on account to Sunglass Hut (SH) for $4,500, terms 4/10, n/30. On June 20, SH returns to Oakley inventory that SH had purchased for $1,000. On June 24, SH completely fulfills its obligation to Oakley by making a cash payment. What is the amount of cash paid by SH to Oakley
Answer: $3360
Explanation:
Based on the information given in the question, the amount of cash paid by SH to Oakley will be calculated as thus:
SH will be entitled to a discount of 4% since the payment was made within the discount period, therefore, the discount that is applicable will be:
= $4500 - $1000
= $3,500
Therefore, the amount of cash payment that is made by SH to Oakley will be:
= $3,500 - (4% × $3,500)
= $3500 - (0.04 × $3500)
= $3500 - $140
= $3360
Therefore, the amount of cash paid by SH to Oakley is $3360.
Belltone Company made the following expenditures related to its 10-year-old manufacturing facility: 1. The heating system was replaced at a cost of $210,000. The cost of the old system was not known. The company accounts for improvements as reductions of accumulated depreciation. 2. A new wing was added at a cost of $790,000. The new wing substantially increases the productive capacity of the plant. 3. Annual building maintenance was performed at a cost of $16,500. 4. All of the equipment on the assembly line in the plant was rearranged at a cost of $44,000. The re-arrangement clearly increases the productive capacity of the plant.Required: Prepare journal entries to record each of the above expenditures.
Answer:
S/N Journal Entries Debit Credit
1 Accumulated depreciation-Building $210,000
Cash $210,000
2 Building $790,000
Cash $790,000
3 Maintenance expense $16,500
Cash $16,500
4 Equipment $44,000
Cash $44,000
Travis and Andrea were divorced in 2017. Their only marital property consisted of a personal residence (fair market value of $400,000, cost of $200,000), and publicly traded stocks (fair market value of $800,000, cost basis of $500,000). Under the terms of the divorce agreement, Andrea received the personal residence and Travis received the stocks. In addition, Andrea was to receive $50,000 for eight years. I. If the $50,000 annual payments are to be made to Andrea or her estate (if she dies before the end of the eight years), the payments will qualify as alimony. II. Andrea has a taxable gain from an exchange of her one-half interest in the stocks for Travis' one-half interest in the house and cash. III. If Travis sells the stocks for $900,000, he must recognize a $400,000 gain. a.I, II, and III are true. b.Only III is true. c.Only I and II are true. d.Only I and III are true.
Answer: B. b.Only III is true.
Explanation:
It should be noted that in order to qualify as an alimony, then the cash payments have to stop when the payer dies.
It should be noted that the $50,000 annual payments that are to be made to Andrea or her estate if she dies before the end of the eight years doesn't qualify as alimony.
Therefore, the correct option will be that If Travis sells the stocks for $900,000, he must recognize a $400,000 gain.
Therefore, only III is correct.
Prior to June 30, a company has never had any treasury stock transactions. A company repurchased 100 shares of its $1 par common stock on June 30 for $40 per share. On July 20, it reissued 50 of these shares at $46 per share. On August 1, it reissued 20 of the shares at $38 per share. What is the journal entry necessary to record the repurchase of stock on June 30?A. Debit Common Stock $2,300; credit Cash $2,300.
B. Debit Common Stock $20; debit Treasury Stock $2,290; credit Cash $2,300.
C. Debit Common Stock $2,300; credit Treasury Stock $2,000; credit Paid-In Capital, Treasury Stock $300.
D. Debit Cash $2,300; credit Paid-in Capital, Treasury Stock $300; credit Treasury Stock $2,000.
E. Debit Cash $2,300; credit Treasury Stock $2,300.
Answer:
When shares are repurchased, they are recorded at the cost price in the books which means that they will be recorded at:
= 100 * 40
= $4,000
Cash will then be credited because assets are credited when they reduce.
Treasury stock will be debited to show that Equity is reducing.
Date Account Title Debit Credit
June, 30 Treasury Stock $4,000
Cash $4,000
A trial balance is a(n) (list/balance/chart)
of accounts and their balances at a point in time and is used to confirm that the sum of debit account balances equals the sum of
account balances. Use one word for each blank.
Answer:
- List; credit
"A trial balance is a(n) list of accounts and their balances at a point in time and is used to confirm that the sum of debit account balances equals the sum of credit account balances."
Explanation:
'Trial Balance' is described as the 'statement of the balances of all nominal accounts in a double-entry ledger.' It is primarily made with the aim to examine the equality in the debit, as well as, credit balances. As per the accounting rules, the total value of the debits must be equal to the total of credit values. Any difference or discrepancy in the balance signals that an error has been made in the calculation or making the entries and certain transactions are missed out. Thus, the correct words would be 'list and credit.'
Suppose Siam Traders has the following results related to cash flows for 2020:
Net Income of $7,200,000
Increase in Accounts Payable of $600,000
Increase in Accounts Receivable of $100,000
Decrease in Debt of $700,000
Depreciation Expenses of $2,000,000
Dividends Paid of $500,000
Decrease in Inventory of $1,000,000
Purchases of Property, Plant, & Equipment of $8,300,000
Other Adjustments from Financing Activities of -$100,000
Other Adjustments from Investing Activities of $400,000
Other Adjustments from Operating Activities of -$200,000
Requried:
Create a statement of cash flows with amounts in thousands.
Answer:
Siam Traders
Siam Traders
Statement of Cash Flows (in thousands)
Operating Activities:
Net Income $7,200
Non-cash adjustment:
Depreciation Expenses $2,000
Increase in Accounts Receivable ($100)
Decrease in Inventory $1,000
Increase in Accounts Payable $600
Other Adjustments from Operating Activities ($200)
Net cash from operating activities $10,500
Investing Activities:
Purchases of Property, Plant, & Equipment ($8,300)
Other Adjustments from Investing Activities $400
Net cash from investing activities ($7,900)
Financing Activities:
Decrease in Debt ($700)
Dividends Paid ($500)
Other Adjustments from Financing Activities of ($100)
Net cash from financing activities ($1,300)
Net cash flows $1,300
Explanation:
a) Data and Calculations:
Net Income of $7,200,000
Increase in Accounts Payable of $600,000
Increase in Accounts Receivable of $100,000
Decrease in Debt of $700,000
Depreciation Expenses of $2,000,000
Dividends Paid of $500,000
Decrease in Inventory of $1,000,000
Purchases of Property, Plant, & Equipment of $8,300,000
Other Adjustments from Financing Activities of -$100,000
Other Adjustments from Investing Activities of $400,000
Other Adjustments from Operating Activities of -$200,000
Operating Activities:
Net Income of $7,200,000
Depreciation Expenses of $2,000,000
Increase in Accounts Receivable of $100,000
Decrease in Inventory of $1,000,000
Increase in Accounts Payable of $600,000
Other Adjustments from Operating Activities of -$200,000
Investing Activities:
Purchases of Property, Plant, & Equipment of $8,300,000
Other Adjustments from Investing Activities of $400,000
Financing Activities:
Decrease in Debt of $700,000
Dividends Paid of $500,000
Other Adjustments from Financing Activities of -$100,000
epartments have estimated annual factory overhead costs of $256,000 and $480,000, respectively. The Fabrication Dept. expects 25,000 machine hours this year. The Assembly Dept. expects $592,000 DL cost this year. Calculate the factory overhead cost that will be charged to each unit of the two products using multiple production dept. factory overhead rates (round to nearest $0.00).
Answer:
Factory overhead cost charged to each unit:
Fabrication Assembly
Factory overhead rates $10.24 $0.81
Machine hours per unit 5
Direct labor cost per unit $118.40
Factory overhead cost per unit $51.20 $95.90
Explanation:
a) Data and Calculations:
Fabrication Assembly
Annual overhead costs $256,000 $480,000
Expected machine hours 25,000 0
Expected direct labor costs 0 $592,000
Overhead rates $10.24 $0.81
($256,000/25,000) ($480,000/$592,000)
Assuming number of units produced = 5,000
Each unit will consume 5 (25,000/5,000) $118.40 ($592,000/5,000)
machine hours direct labor cost
Overhead cost per unit = $51.20 $95.90
($10.24 * 5) ($118.40 * $0.81)
Park Co is considering an investment that requires immediate payment of $28.245 and provides expected cash inflows of 59,300 annually for four years. Assume Park Co requires a 7% return on its investments.
What is the net present value of this investment?
Answer:
The net present value of this investment is $3,256.06.
Explanation:
Note: There two errors in the figures provided in this question. They are they therefore fixed before answering this question as follows:
Park Co is considering an investment that requires immediate payment of $28,245 and provides expected cash inflows of $9,300 annually for four years. Assume Park Co requires a 7% return on its investments.
What is the net present value of this investment?
The explanation of the answer is now provided as follows:
The present value (PV) of the annual expected cash inflows of $9,300 can be calculated using the formula for calculating the present value of an ordinary annuity as follows:
PV of the annual expected cash inflows = Annual expected cash inflows * ((1 - (1 / (1 + rate of returns))^number of years) / rate of returns) = $9,300 * ((1 - (1 / (1 + 0.07))^4) / 0.07) = $31,501.06
Net present value = PV of the annual expected cash inflows – Required immediate payment for the investment = $31,501.06 - $28,245 = $3,256.06
Therefore, the net present value of this investment is $3,256.06.
Discretionary fiscal policy will stabilize the economy most when Group of answer choices deficits are incurred during recessions and surpluses during inflations. deficits are incurred during inflations and surpluses during recessions budget surpluses are continuously incurred. the budget is balanced each year.
Answer:
deficits are incurred during recessions and surpluses during inflations
Explanation:
Discretionary fiscal policies are deliberate steps taken by the government to stimulate the economy in order to cause the economy to move to full employment and price stability more quickly than it might otherwise.
Discretionary fiscal policies can either be expansionary or contractionary
Expansionary fiscal policy is when the government increases the money supply in the economy either by increasing spending or cutting taxes. These policies are carried out in a recession when the government wants to increase total spending
Contractionary fiscal policies is when the government reduces the money supply in the economy either by reducing spending or increasing taxes . These policies are carried out in periods of inflation when the government wants to reduce money supply in the economy
Neubart Company owns 100% of the outstanding shares of two European subsidiaries, which operate largely independently and operate in a different industry than Neubart. The subsidiaries' earnings typically are reinvested in their home country. In consolidating the subsidiaries financial statements with those of the U.S. parent, the subsidiaries' financial statement numbers should be:________ a) remeasured using the current rate method. b) remeasured using the temporal method. c) translated using the current rate method. d) translated using the temporal method.
Answer: c) translated using the current rate method.
Explanation:
It should be noted that the translation method is utilized when the financial statements of a subsidiary unit are being expressed in the functional currency of the parent company.
Following the question given above, in consolidating the subsidiaries financial statements with those of the U.S. parent, the subsidiaries' financial statement numbers should be translated using the current rate method.
Therefore, the correct option is C.
Create the following budgets for each quarter in the year with the data provided below. Each budget will show results for each quarter and a total for the year.
1. Sales budget
2. Cash collections budget
3. Cash budget Data
a. The budgeted unit sales are 500 units, 700 units, 800 units, and 1,000 units for quarters 1-4, respectively. The budgeted selling price for the year is $50 per unit.
b. All sales are on credit. 50% percent of all credit sales are collected in the quarter of the sale, 35% are collected in the next quarter, and the remainder is collected in the quarter after. The following data is provided to complete the cash collections budget:
1. Q1 cash collection from prior year Q4 sales: $9,000
2. Q1 cash collection from prior year Q3 sales: $2,000
3. Q2 cash collection from prior year Q4 sales: $1,000
c. The company plans to maintain a minimum cash balance at the end of each quarter of $60,000. If the cash balance is below $60,000, the company will borrow money from the bank to arrive at a $60,000 balance. All borrowings take place on the first day of the quarter and have a 12-month maturity, an interest rate of 2.5% per quarter, and interest paid quarterly. The following data is provided to complete the cash budget:
1. Beginning cash balance: $70,000
2. Q1 cash disbursement: $26,000
3. Q2 cash disbursement: $41,250
4. Q3 cash disbursement: $34.000
5. Q4 cash disbursement: $38.000
Answer:
1. Sales Budget:
Quarter 1 Quarter 2 Quarter 3 Quarter 4 Total
Budgeted unit sales 500 700 800 1,000 3,000
Sales revenue $25,000 $35,000 $40,000 $50,000 $150,000
2. Cash collections budget:
Quarter 1 Quarter 2 Quarter 3 Quarter 4 Total
50% sales quarter $12,500 $17,500 $20,000 $25,000 $75,000
35% next quarter 9,000 8,750 12,250 14,000 44,000
15% quarter after 2,000 1,000 3,750 5,250 12,000
Total collections $23,500 $27,250 $36,000 $44,250 $131,000
3. Cash budget data:
Quarter 1 Quarter 2 Quarter 3 Quarter 4 Total
Beginning balance $70,000 $67,500 $60,325 $62,150 $70,000
Total collections $23,500 $27,250 $36,000 $44,250 $131,000
Bank borrowing 0 7,000 0 0 7,000
Total cash available $93,500 $101,750 $96,325 $106,400 $208,000
Cash disbursement $26,000 $41,250 $34,000 $38,000 $139,250
Interest expense 0 175 175 175 525
Ending balance $67,500 $60,325 $62,150 $68,225 $68,225
Minimum cash 60,000 60,000 60,000 60,000 60,000
Excess (Deficit) $7,500 $325 $2,150 $8,225 $8,225
Explanation:
a) Data and Calculations:
Budgeted selling price per unit = $50
Quarter 1 Quarter 2 Quarter 3 Quarter 4 Total
Budgeted unit sales 500 700 800 1,000 3,000
Sales revenue $25,000 $35,000 $40,000 $50,000 $150,000
Cash collections:
50% sales quarter $12,500 $17,500 $20,000 $25,000 $75,000
35% next quarter 9,000 8,750 12,250 14,000 44,000
15% quarter after 2,000 1,000 3,750 5,250 12,000
Total collections $23,500 $27,250 $36,000 $44,250 $131,000
Minimum cash balance at the end of each quarter = $60,000
Interest rate for borrowing to reach minimum cash requirement = 2.5% per quarter
1. Beginning cash balance: $70,000
2. Q1 cash disbursement: $26,000
3. Q2 cash disbursement: $41,250
4. Q3 cash disbursement: $34.000
5. Q4 cash disbursement: $38.000
Molly sells bracelets to Jean's Place, a boutique store. Molly is scheduled to deliver 100 bracelets on July 1. On June 15, Jean, the owner of Jean's Place calls Molly and says "I might not be able to pay for your bracelets." Molly does not deliver the bracelets on July 1. Jean can probably recover from Molly for breach of contract. Group of answer choices True False
Answer: False
Explanation:
The contract is such that Molly agreed to bring bracelets if Jean would pay for said bracelets.
The terms of the contract therefore are that Jean would pay and Molly would deliver. Jean then calls Molly and says that they will be unable to pay which means that they are not going to be able to hold up their responsibilities in the contract.
Molly has the right to then cancel the contract because the other party will not be able to perform their obligations and face no repercussion for it.
The Federal Reserve's tool for changing the money supply is the__________ (open market operation or reserve requirement or discont rate) In order to decrease the number of dollars in the U.S. economy the money supply, the Federal Reserve will_________( buy or sell) government bonds.
Answer:
Open market operations; sell
Explanation:
Open market operations; sell
Central bank (Federal bank) use the open market operation that encompasses the increase and decrease of reserve requirement, discount rate, etc. It also includes the selling of government bonds when Fed wants to decrease the money supply in the economy and it buys back when it wants to increase the money supply in the economy.
Jamar Co. sold its headquarters building at a gain, and simultaneously leased back the building. The lease was reported as a finance lease. At the time of the sale, the gain should be reported as
Answer:
a deferred gain
Explanation:
Deferred gain occurs when the recipient of the proceeds or profits from a transaction do not collect it all upfront. Some of the gain is not collected now but deferred to some future time.
It is referred to as unrealised revenue and is represented on the balance sheet as a liability.
In the given scenario Jamar Co. sold its headquarters building at a gain, and simultaneously leased back the building. This means not all the gains from the sale are received now.
So this is a deferred gain.
Item 2 On July 1 of the current calendar year, Plum Co. paid $8,000 cash for management services to be performed over a two-year period beginning July 1. Plum follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. The adjusting entry on December 31 of the current year for Plum would include:
Answer:
- July 1st - December 31st (6 months)
- Here, $8,000 is paid for 2 years (24 months)
So, expenses for 6 month = $8,000 * 6/24 = $2,000
Date Journal Entry Debit Credit
Expense $2,000
Prepaid expense $2,000
(To record the expense)
