Kinston Industries issued $4,000,000 in commercial paper which matures in six months and received $3,876,000. Calculate the effective annual rate that Kinston is paying.
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Kinston Industries issued $4,000,000 in commercial paper which matures in six months and received $3,876,000. Calculate the effective annual rate that Kinston is paying.
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- The following transactions apply to Walnut Enterprises for Year 1, its first year of operations: Received $50,000 cash from the issue of a short-term note with a 6 percent interest rate and a one-year maturity. The note was made on April 1, Year 1. Received $130,000 cash plus applicable sales tax from performing services. The services are subject to a sales tax rate of 6 percent. Paid $62,000 cash for other operating expenses during the year. Paid the sales tax due on $110,000 of the service revenue for the year. Sales tax on the balance of the revenue is not due until Year 2. Recognized the accrued interest at December 31, Year 1. The following transactions apply to Walnut Enterprises for Year 2: Paid the balance of the sales tax due for Year 1. Received $201,000 cash plus applicable sales tax from performing services. The services are subject to a sales tax rate of 6 percent. Repaid the principal of the note and applicable interest on April 1, Year 2. Paid $102,500 of other…ABC Company provides extended service contracts on equipment sold through major retailers. The standard contract is for three years. During 2021, ABC Company provided 2,000 such warranty contracts at an average price of P810 each. Related to these contracts, the company spent P200,000 servicing the contracts during the current year and expects to spend P600,00 more in the future. The net profit for 2021 related to the extended service contract is?Accounts receivable in the amount of $658,000 were assigned to the Fast Finance Company by Sunland, Inc., as security for a loan of $564,000. The finance company assessed a 4% finance charge on the face amount of the loan, and the note bears interest at 8% per year.During the first month, Sunland collected $366,600 on assigned accounts. This amount was remitted to the finance company along with one month's interest on the note.Make all the entries for Sunland Inc. associated with the transfer of the accounts receivable, the loan, and the remittance to the finance company. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g. 5,275.) Account Titles and Explanation Debit Credit (To record the transfer of the accounts receivable.) (To record the loan amount…
- Valley Spa purchased $11,200 in plumbing components from Tubman Co. Valley Spa Studios signed a 90-day, 7% promissory note for $11,200. If the note is dishonored, what is the amount due on the note? (Use 360 days a year.)Bon Nebo Co. sold 11,500 annual subscriptions of Bjorn for $60 during December 20Y5. These new subscribers will receive monthly issues, beginning in January 20Y6. In addition, the business had taxable income of $436,000 during the first calendar quarter of 20Y6. The federal tax rate is 40%. A quarterly tax payment will be made on April 12, 20Y6. Prepare the “Current liabilities” section of the balance sheet for Bon Nebo Co. on March 31, 20Y6. Bon Nebo Co.Current Liabilities Section of Balance SheetMarch 31, 20Y6 Line Item Description Amount Current liabilities: Advances on magazine subscriptions $Advances on magazine subscriptions Federal income taxes payable Federal income taxes payable Total current liabilities $Total current liabilitiesDuring Year 1, Ashkar Company ordered a machine on January 1 at an invoice price of $24,000. On the date of delivery. January 2, the company paid $8,000 on the machine, with the balance on credit at 11 percent interest due in six months. On January 3, it paid $800 for freight on the machine. On January 5, Ashkar paid installation costs relating to the machine amounting to $2,200. On July 1, the company paid the balance due on the machine plus the interest. On December 31 (the end of the accounting period), Ashkar recorded depreciation on the machine using the straight-line method with an estimated useful life of 10 years and an estimated residual value of $3,800. 3. Compute the depreciation expense to be reported for Year 1. Depreciation expense
- A firm enters into an 8-year contract for materials that cost $90,000 initially and $30,000/yr beginning at the end of the 4th year. The company decides to make a lump sum payment at the end of year 2 to pay off the remainder of the contract. What lump sum is necessary at 8% interest?Stella Corp. has the following liabilities: $30,000 salaries payable, $70,000 accounts payable, $180,000 notes payable (to be made in 10 equal annual payments), and warranty payable $22,000 (all of Stella's products come with a 90-day manufacturer warranty). The total current liabilities is:Scrimiger Paints wants to upgrade its machinery and on September 20 takes out a loan from the bank in the amount of $670,000. The terms of the loan are 3.8% annual interest rate and payable in 8 months. Interest is due in equal payments each month. A. Compute the interest expense due each month. If required, round final answer to two decimal places. B. Show the journal entry to recognize the interest payment on October 20, and the entry for payment of the short-term note and final interest payment on May 20. If required, round final answers to two decimal places. If an amount box does not require an entry, leave it blank. Oct. 20 May 20
- Grouper Ltd. manufactures a line of amplifiers that carry a three-year warranty against defects. Based on experience, the estimated warranty costs related to dollar sales are as follows: first year after sale-3% of sales; second year after sale-4% of sales; and third year after sale-5% of sales. Sales and actual warranty expenditures for the first three years of business were: Sales Warranty Expenditures 2021 $870,000 $17,100 2022 1,010,000 48,400 2023 1,041,000 80,000 (a) Calculate the amount that Grouper should report as warranty expense on its 2023 income statement and as a warranty liability on its December 31, 2023 SFP using the assurance-type warranty (expense-based approach). Assume that all sales are made evenly throughout each year and that warranty expenditures are also evenly spaced according to the rates above. Warranty expense $ Warranty liability $The following transactions apply to Walnut Enterprises for Year 1, its first year of operations: Received $50,000 cash from the issue of a short-term note with a 6 percent interest rate and a one-year maturity. The note was made on April 1, Year 1. Received $130,000 cash plus applicable sales tax from performing services. The services are subject to a sales tax rate of 6 percent. Paid $62,000 cash for other operating expenses during the year. Paid the sales tax due on $110,000 of the service revenue for the year. Sales tax on the balance of the revenue is not due until Year 2. Recognized the accrued interest at December 31, Year 1. The following transactions apply to Walnut Enterprises for Year 2: Paid the balance of the sales tax due for Year 1. Received $201,000 cash plus applicable sales tax from performing services. The services are subject to a sales tax rate of 6 percent. Repaid the principal of the note and applicable interest on April 1, Year 2. Paid $102,500 of other…LCD Industries purchased a supply of electronic components from Entel Corporation on November 1, 2021. In payment for the $25.2 million purchase, LCD issued a 1-year installment note to be paid in equal monthly payments at the end of each month. The payments include interest at the rate of 18%.(FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)Required:1. & 2. Prepare the journal entries for LCD’s purchase of the components on November 1, 2021 and the first installment payment on November 30, 2021.3. What is the amount of interest expense that LCD will report in its income statement for the year ended December 31, 2021?
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