Reference no: EM132951419

Question

Case study: As seen in note 11, Rite Aid currently has $6,370,899 in total debt. This number can be reconciled by adding up all of the components of Rite Aid's debt in the balance sheet. Rite Aid's debt consists of its currently maturing portions of debt $51,502, its long term debt less current maturities of $6,185,633, and its lease obligations less current maturities of $133,764.

These three portions of debt add up to $6,370,899 (equal to the total debt reported in the Indebtedness and Credit Agreement section). Rite Aid's currently maturing portions of debt consisting of $51,502 is due within the coming fiscal year. 7.5% Senior secured notes due March 2017 The face value of the 7.5% senior secured note due March 2017 is $500,000. We know this amount is $500,000 as there is no "amortized discount".

Therefore, the face value (principal) of the bond will remain the same each year until maturity; the market rate of 7.5% is equal to the stated rate of 7.5%. The issuance of these notes will cause an increase in assets (Cash) and liabilities (Notes Payable). The recording of interest expense causes a decrease in assets (Cash), an increase in liabilities, and a decrease in net income (through the Interest Expense account). The increase in liabilities occurs due to the decrease in the Discount on Notes Payable account which is a contra liability account. The total rate of interest recorded for fiscal 2009 can be found by dividing total interest expense for the year by the carrying value of the notes payable at the beginning of the year. $39,143 (total interest expense) divided by $405,246 (carrying value at beg. of year = 9.659%. This logically makes sense as the effective (market) rate of 9.659% is higher than the stated rate of 9.375%. This is a staple characteristic of notes issued at a discount.

The issuance of these notes will cause an increase in assets (Cash) and liabilities (Notes Payable). The recording of interest expense causes a decrease in assets (Cash), an increase in liabilities, and a decrease in net income (through the Interest Expense account). The increase in liabilities occurs due to the decrease in the Discount on Notes Payable account which is a contra liability account. The total rate of interest recorded for fiscal 2009 can be found by dividing total interest expense for the year by the carrying value of the notes payable at the beginning of the year. $39,143 (total interest expense) divided by $405,246 (carrying value at beg. of year = 9.659%. This logically makes sense as the effective (market) rate of 9.659% is higher than the stated rate of 9.375%. This is a staple characteristic of notes issued at a discount.

1. List down important cost control techniques____

2. Indication whether the_____ interpretation "Cash" will be qualified or debited when a company pays a bill___?

3. Pardon are assets drawback liabilities______?

4. Lean the three basic rudiments of cost_______

5. Pardon is the main alteration between ___hoarded depreciation and depreciation expense______?

6. List out some _____of the examples for liability accounts____?

7. How to adjust entries into account______?

8. Explain delayed asset with instance______

9. I'm sorry is Bank Reunion____?

10. Pardon is "deposit in shipment"_____?