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FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Unconsolidated subsidiaries, joint ventures, and operating leases are all examples of O convertible stated rate financing. O sinking fund carrying value. O debt-to-equity maturity value. O secured loan amortization. O off-balance-sheet financing. On July 1, Joseph Han signed a 30-year home mortgage contract in the amount of $300,000. The interest rate on the mortgage is 12.00% compounded monthly making the monthly payments $3,085.84. The first payment is due on July 31 and the second payment is due on August 31.What is the amount of INTEREST EXPENSE in August, the second month? O $3,000.00 O $85.84 O $86.70 O $2,999.14 8 Which ONE of the following labels matches with this bond description: "A bond that can be exchanged for shares of common stock, at the option of the bondholder"? O Registered O Debenture O Callable O Secured O Convertible 9 On January 1 of Year 1, Lily Company issued a $100,000, 14%, 10-year bond. Interest is paid A semi-annually each June 30 and December 31, so the first coupon payment was made on June 30 of Year 1 and the second coupon payment was made on December 31 of Year 1. On the day the bond was issued, the market interest rate on bonds with the same degree of riskiness was 8% compounded semi-annually. What is the issuance price of these bonds? O $168,218 O $68,218 O $140,771 O $140,260 O $159,378 O $106,000 10 Tarazi Company issued bonds with a coupon rate of 10% and a face amount of $200,000. I The bonds mature in 15 years. The market interest rate for bonds with the same degree of riskiness is 8% compounded annually. These bonds were issued on January 1 of Year 1 at a price of $234,238. Coupon payments are made annually on December 31, so the first coupon payment was made on December 31 of Year 1. As of December 31 of Year 2, the carrying value of the bonds is $231,615. These bonds were retired on December 31 of Year 2, just a few minutes after the second coupon payment was made. The total amount paid to retire these bonds was $250,000. How much gain or loss is recorded when these bonds are retired? O Loss of $18,638 O Loss of $18,385 O Loss of $231,615 O Gain of $18,638 O Gain of $18,385 O Gain of $200,000
Transcribed Image Text:Unconsolidated subsidiaries, joint ventures, and operating leases are all examples of O convertible stated rate financing. O sinking fund carrying value. O debt-to-equity maturity value. O secured loan amortization. O off-balance-sheet financing. On July 1, Joseph Han signed a 30-year home mortgage contract in the amount of $300,000. The interest rate on the mortgage is 12.00% compounded monthly making the monthly payments $3,085.84. The first payment is due on July 31 and the second payment is due on August 31.What is the amount of INTEREST EXPENSE in August, the second month? O $3,000.00 O $85.84 O $86.70 O $2,999.14 8 Which ONE of the following labels matches with this bond description: "A bond that can be exchanged for shares of common stock, at the option of the bondholder"? O Registered O Debenture O Callable O Secured O Convertible 9 On January 1 of Year 1, Lily Company issued a $100,000, 14%, 10-year bond. Interest is paid A semi-annually each June 30 and December 31, so the first coupon payment was made on June 30 of Year 1 and the second coupon payment was made on December 31 of Year 1. On the day the bond was issued, the market interest rate on bonds with the same degree of riskiness was 8% compounded semi-annually. What is the issuance price of these bonds? O $168,218 O $68,218 O $140,771 O $140,260 O $159,378 O $106,000 10 Tarazi Company issued bonds with a coupon rate of 10% and a face amount of $200,000. I The bonds mature in 15 years. The market interest rate for bonds with the same degree of riskiness is 8% compounded annually. These bonds were issued on January 1 of Year 1 at a price of $234,238. Coupon payments are made annually on December 31, so the first coupon payment was made on December 31 of Year 1. As of December 31 of Year 2, the carrying value of the bonds is $231,615. These bonds were retired on December 31 of Year 2, just a few minutes after the second coupon payment was made. The total amount paid to retire these bonds was $250,000. How much gain or loss is recorded when these bonds are retired? O Loss of $18,638 O Loss of $18,385 O Loss of $231,615 O Gain of $18,638 O Gain of $18,385 O Gain of $200,000
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