Question

In: Finance

You are the new controller for Moonlight Bay Resorts. The company CFO has asked you to...

You are the new controller for Moonlight Bay Resorts. The company CFO has asked you to determine the company’s interest expense for the year ended December 31, 2018. Your accounting group provided you the following information on the company's debt: (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.)

  1. On July 1, 2018, Moonlight Bay issued bonds with a face amount of $2,300,000. The bonds mature in 15 years and interest of 11% is payable semiannually on June 30 and December 31. The bonds were issued at a price to yield investors 12%. Moonlight Bay records interest at the effective rate.
  2. At December 31, 2017, Moonlight Bay had a 10% installment note payable to Third Mercantile Bank with a balance of $670,000. The annual payment is $145,000, payable each June 30.
  3. On January 1, 2018, Moonlight Bay leased a building under a finance lease calling for four annual lease payments of $70,000 beginning January 1, 2018. Moonlight Bay’s incremental borrowing rate on the date of the lease was 10% and the lessor’s implicit rate, which was known by Moonlight Bay, was 9%.


Required:
Calculate interest expense for the year ended December 31, 2018.

Solutions

Expert Solution


Related Solutions

You are the new controller for Moonlight Bay Resorts. The company CFO has asked you to...
You are the new controller for Moonlight Bay Resorts. The company CFO has asked you to determine the company’s interest expense for the year ended December 31, 2021. Your accounting group provided you the following information on the company's debt: (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.) On July 1, 2021, Moonlight Bay issued bonds with a face amount of $2,400,000....
You are the new controller for Moonlight Bay Resorts. The company CFO has asked you to...
You are the new controller for Moonlight Bay Resorts. The company CFO has asked you to determine the company’s interest expense for the year ended December 31, 2021. Your accounting group provided you the following information on the company's debt: (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.) On July 1, 2021, Moonlight Bay issued bonds with a face amount of $2,400,000....
You are the new controller for Moonlight Bay Resorts. The company CFO has asked you to...
You are the new controller for Moonlight Bay Resorts. The company CFO has asked you to determine the company’s interest expense for the year ended December 31, 2018. Your accounting group provided you the following information on the company's debt: (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.) On July 1, 2018, Moonlight Bay issued bonds with a face amount of $2,500,000....
You are the new controller for Moonlight Bay Resorts. The company CFO has asked you to...
You are the new controller for Moonlight Bay Resorts. The company CFO has asked you to determine the company’s interest expense for the year ended December 31, 2021. Your accounting group provided you the following information on the company's debt: (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.) On July 1, 2021, Moonlight Bay issued bonds with a face amount of $2,200,000....
1. You are the new controller for Moonlight Bay Resorts. The company CFO has asked you...
1. You are the new controller for Moonlight Bay Resorts. The company CFO has asked you to determine the company’s interest expense for the year ended December 31, 2018. Your accounting group provided you the following information on the company's debt: (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.) On July 1, 2018, Moonlight Bay issued bonds with a face amount of...
You are the new controller for Banana, Inc.. The company CFO has asked you to develop...
You are the new controller for Banana, Inc.. The company CFO has asked you to develop the appropriate worksheets and then journal entries to support several lease contracts as applied based on the new lease regulations. Your accounting group provided you the following information regarding the lease: On January 2, 2019, another of Banana’s subsidiaries, Apple, entered into an operating lease for four years, with semi-annual lease payments as follows:  payments 1 and 2 = $22,500; payments 3 and 4 =...
You are the new controller for Banana, Inc..  The company CFO has asked you to develop the...
You are the new controller for Banana, Inc..  The company CFO has asked you to develop the appropriate worksheets and then journal entries to support several lease contracts as applied based on the new lease regulations.  Your accounting group provided you the following information regarding the lease: On January 2, 2019, Banana’s subsidiary, Cream, entered into an equipment lease for four years, with semi-annual payments, for a machine that had an eight (8) year life and a fair value of $420,000.  The payments...
You are the new controller for Banana, Inc.. The company CFO has asked you to develop...
You are the new controller for Banana, Inc.. The company CFO has asked you to develop the appropriate worksheets and then journal entries to support several lease contracts as applied based on the new lease regulations. Your accounting group provided you the following information regarding the lease: On January 2, 2018, Banana leased equipment, with a fair value of $675,000, under a capital lease calling for seven annual lease payments of $110,000 beginning January 2, 2018, and continuing each December...
Assuming that you are the controller for a publicly traded company, your CFO has asked you...
Assuming that you are the controller for a publicly traded company, your CFO has asked you to prepare a presentation for the accounting department personnel and the public auditors about the importance of the SOX Act and the requirements and responsibilities that the Act establishes for the auditors in charge of an annual audit. After the presentation, the CFO wants all accounting personnel and public accounting auditors to understand the regulations and guidelines established by the SOX Act and also...
Assuming that you are the controller for a publicly traded company, your CFO has asked you...
Assuming that you are the controller for a publicly traded company, your CFO has asked you to prepare a presentation for the accounting department personnel and the public auditors about the importance of the SOX Act and the requirements and responsibilities that the Act establishes for the auditors in charge of an annual audit. After the presentation, the CFO wants all accounting personnel and public accounting auditors to understand the regulations and guidelines established by the SOX Act and also...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT