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Benson Industries, Inc. issued $5,000,000 of 8% debentures on May 1, 2004 and received cash totaling $4,436,315. The bonds pay interest semiannually on May 1 and November 1. The maturity date on these bonds is November 1, 2012. The firm uses the effective interest method of amortizing discounts and premiums. The bonds were sold to yield an effective interest rate of 10%.
Instructions
Calculate the total dollar amount of discount or premium amortization during the first year (5/1/04 through 4/30/05) these bonds were outstanding. (Show computations and round to the nearest dollar.)
A machine which cost $300,000 is acquired on October 1, 2012. Its estimated salvage value is $30,000, and its expected life is eight years.
Cindy Lore, his accountant, says that more information is needed to determine the firm's financial well being. Analyze the situation and determine who is correct and support your position.
On February 1, 2011, Charo Mendez purchased 6% bonds issued by CR Utilities at a cost of $30,000, which is their par value. The bonds pay interest semiannually on July 31 and January 31. For 2011, prepare entries to record Mendez's July 31 receipt..
The CEO of your company has requested that you prepare a written presentation to be given at the next board of directors meeting regarding the continuing impact that the information age has on financial accounting.
Larry Byrd, Inc., spent $68,000 in attorney fees while developing the trade name of its new product, the Mean Bean Machine. Prepare the journal entries to record the $68,000 expenditure and the first year's amortization, using an 8-year life.
During 1st year of operations Klump Corporation had the following transactions pertaining to its common stock.
Calculate the predetermined overhead rate using direct labor costs as the allocation base. Calculate the predetermined overhead rate using machine hours as the allocation base. Which of the allocation bases is preferred? Why?
Wilson Wonders' bonds have 12 years remaining to maturity. Interest is paid annually, the bonds have a $1,000 par value, and the coupon interest rate is 10%. The bonds sell at a price of $850. What is their yield to maturity?
A company with $800,000 in operating assets is considering the purchase of a machine that costs $75,000 and which is expected to reduce operating costs by $20,000 each year. The payback period for this machine in years is closest to:
There is also a 40% chance of average demand with cash flows of $30 million per year as well as a 30% chance of low demand with cash flows of only $15 million per year. What is the expected NPV?
So what is the effect of a bargain purchase option on accounting for a capital-lease transaction by a lessee?
How can you explain the diverse opinions? What policies or procedures, if any, should CBU develop to avoid such problems in the future? Your response should also include a Biblical perspective.
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