Riverbed Co. is building a new hockey arena at a cost of $2,750,000. It received a downpayment of $470,000 from local businesses to support the project, and now needs to borrow $2,280,000 to complete the project. It therefore decides to issue $2,280,000 of 10%, 10-year bonds. These bonds were issued on January 1, 2019, and pay interest annually on each January 1. The bonds yield 9%.
A) Prepare the journal entry to record the issuance of the bonds on
January 1, 2019. (Round present value factor
calculations to 5 decimal places, e.g. 1.25124 and the final answer
to 0 decimal places e.g. 58,971. If no entry is required, select
"No Entry" for the account titles and enter 0 for the amounts.
Credit account titles are automatically indented when amount is
entered. Do not indent manually.)
|
Date |
Account Titles and Explanation |
Debit |
Credit |
|
January 1, 2019 |
|||
B) Prepare a bond amortization schedule up to and including January 1, 2023, using the effective interest method. (Round answers to 0 decimal places, e.g. 38,548.)
|
|
|
|
|
Carrying |
||||
| 1/1/19 | $ | $ | $ | $ | ||||
| 1/1/20 | ||||||||
| 1/1/21 | ||||||||
| 1/1/22 | ||||||||
| 1/1/23 |
C) Assume that on July 1, 2022, Riverbed Co. redeems half of the bonds at a cost of $1,222,500 plus accrued interest. Prepare the journal entry to record this redemption. (Round answers to 0 decimal places, e.g. 38,548. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
|
Date |
Account Titles and Explanation |
Debit |
Credit |
|
July 1, 2022 |
|||
|
(To record interest) |
|||
|
July 1, 2022 |
|||
|
(To record reacquisition) |
PLEASE PROVIDE STEPS AND EXPLANATION WITH ANSWERS. THANK YOU!
In: Accounting
In: Accounting
The firm's weighted-average cost of capital is likely to _________________ if debt financing is used to excess.
Select one:
A. increase
B. decrease
C. remain unchanged
D. collapse
In: Finance
Venezuela Co. is building a new hockey arena at a
cost of $8,000,000 . It received a downpayment of $3,000,000 from local
businesses to support the project, and now needs to borrow $5,000,000 to complete the project. It therefore decides to issue $5,000,000 of 10.00% ,10 -year bonds. These bonds were issued on January 1, 2018, and pay interest annually on each January 1. The bonds yield 8.00% .
.
Instructions:
"(a) Prepare the journal entry to record the issuance of the bonds and the related bond issue costs incurred on January 1, 2018."
(b) Prepare a bond amortization schedule up to and including January 1, 2021, using the effective interest method.
(c) Assume that on Jan 2, 2021, Venzuela Co. retires half of the bonds at a cost of $3,215,000 plus accrued interest. Prepare the journal entry to record this retirement.
In: Accounting
In: Economics
In: Finance
In: Finance
A central air conditioning unit was installed at an initial cost of $65,000 and was expected to have a salvage value of $5,000 after a service life of 12 years.
a) What amount had accumulated in a straight-line depreciation reserve at the end of the 5th year?
b) Using double declining balance depreciation, determine the book value at the end of the 9th year.
c) If the equipment was sold in the 6th year for $10,000, what sunk cost would result if sum-of-the-years digit depreciation was being used?
d) Using MACRS, what is the depreciation charge on 7th year, assuming that this is a 10-year class asset?
In: Accounting
You must evaluate the purchase of a proposed piece of equipment. The cost of the equipment is $50,000. The installation and transportation cost of bringing the equipment to its location is $6,000. The equipment falls into the MACRS 3-year class. The project is expected to increase revenues by $80,000 each year and increase operating costs (excluding depreciation) by $30,000 each year. This project leads to an increase in net operating working capital by $10,000. You can salvage the equipment for $10,000 at the end of the project. What is the project's cash flow in Years 1, 2, 3, 4? (use MACRS of 33%, 45%, 15%, 7%). Use the NPV and IRR criteria to evaluate this project. Is this project profitable? Use marginal tax rate of 21% and WACC of 10%.
In: Finance
What is the ratio of cost of a “typical” sonogram vs. MRI for the same region (head, chest, etc.)?
What is sonography— what kind of image does it create and how?
What are two reasons to use a sonography instead of a CT scan?
What are two reasons to use a sonography instead of an MRI? Please give two reasons.
Why are very high frequencies used?
What sort of radiation is involved? Is sonography “perfectly safe”? If not, what are the dangers?
In: Physics