On July 1, Year 1, Danzer Industries Inc. issued $40,000,000 of 10-year, 7% bonds at a market (effective) interest rate of 8%, receiving cash of $37,282,062. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year. Required: 1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, Year 1. 2. Journalize the entries to record the following:* a. The first semiannual interest payment on December 31, Year 1, and the amortization of the bond discount, using the straight-line method. (Round to the nearest dollar.) b. The interest payment on June 30, Year 2, and the amortization of the bond discount, using the straight-line method. (Round to the nearest dollar.) 3. Determine the total interest expense for Year 1. 4. Will the bond proceeds always be less than the face amount of the bonds when the contract rate is less than the market rate of interest? 5. Compute the price of $37,282,062 received for the bonds by using the present value tables. (Round to the nearest dollar.) *Refer to the Chart of Accounts for exact wording of account titles.

You took a 30-year $750k mortgage that charges 3% interest per year. What percent of the mortgage had you paid off at midpoint, i.e., after making your 180th monthly payment?

Mullineaux Co. issued 11-year bonds one year ago at a coupon rate of 8.6 percent. The bonds make semiannual payments. If the YTM on these bonds is 7.5 percent, what is the current bond price?

Given the following information:

Other information:

• The manufacturer uses FIFO.
• All Variable costs are direct costs

Required:

1. Prepare an income statement for the Current Year based on Variable Costing.

2. Prepare an income statement for the Current Year based on Absorption Costing.

3. Reconcile the difference in Net Income between Variable Costing and Absorption Costing for the current year.

4. Near the very end of the fiscal year, the production manager noted that if Net Income increases by $200 they will get a big bonus. How can the production manager increase Net income using Absorption costing even though no additional units will be produced?

Rayburn Corporation has a building that it bought during year 0 for $850,000. It sold the building in year 5. During the time it held the building Rayburn depreciated it by $100,000.

What is the amount and character of the gain or loss Rayburn will recognize on the sale in each of the following alternative situations? (Loss amounts should be indicated by a minus sign. Enter NA if a situation is not applicable. Leave no answer blank. Enter zero if applicable.)

a. Rayburn receives $840,000.

Total Gain/(Loss) Recognized:

§1231 gain/loss:

b. Rayburn receives $900,000.

Total Gain/(Loss) Recognized:

§1231 gain/loss:

c. Rayburn receives $700,000.

Total Gain/(Loss) Recognized:

§1231 gain/loss:

On 3/5 this year, Dog Corporation placed in service 5 year property costing $22,000. What is the maximum depreciation available for the year assuming the company elected additional first-year depreciation but did NOT elect §179 expensing?

Real Estate Finance:

A proposed investment will return a seven-year income stream with first year income of $1,750,000 growing at 6% per year.

There is no terminal value.

What is the IRR on the investment if that income stream is purchased for $6,500,000? (Assume annual compounding.)

Suppose the government borrows $20 billion more next year than this year.

a. Use a supply-and-demand diagram to analyse this policy. Does the interest rate rise or fall? (5%)

b. What happens to investment? To private saving? To public saving? To national saving? Compare the size of the changes to the $20 billion of extra government borrowing. (5%)

c. Suppose households believe that greater government borrowing today implies higher taxes to pay off the government debt in the future. What does this belief do to private saving and the supply of loanable funds today? Does it increase or decrease the effects that you discussed in parts (a) and (b)? (5%)

Sage Inc. experienced the following transactions for Year 1, its first year of operations:

1. Issued common stock for $120,000 cash.
2. Purchased $200,000 of merchandise on account.
3. Sold merchandise that cost $154,000 for $306,000 on account.
4. Collected $274,000 cash from accounts receivable.
5. Paid $180,000 on accounts payable.
6. Paid $56,000 of salaries expense for the year.
7. Paid other operating expenses of $72,000.
8. Sage adjusted the accounts using the following information from an accounts receivable aging schedule:

c. What is the net realizable value of the accounts receivable at December 31, Year 1?