On January 1, 2016, Learned, Inc., issued $70 million face amount of 20-year, 14% stated rate bonds when market interest rates were 16%. The bonds pay interest semi-annually each June 30 and December 31 and mature on December 31, 2035.
REQUIRED:
A) Using the present value tables, calculate the proceeds (issue price) of Learned, Inc.’s bonds on January 1, 2016, assuming that the bonds were sold to provide a market rate of return to the investor.
B) Assume instead that the proceeds were $72,400,000. Use the horizontal model (or write the journal entry) to record the payment of semi-annual interest and the related premium amortization on June 30, 2016, assuming that the premium of $2,400,000 is amortized on a straight-line basis.
C) If the premium in PART B were amortized using the compound interest method, would interests expense for the year ended December 31, 2016 be more than, less than, or equal to the interest expense reported using the straightline method of premium amortization? Explain.
D) In reality, the difference between the stated interest rate and the market rate would be substantially less than 2% . The dramatic difference in the problem was designed so that you could use present value tables to answer PART A. What causes the stated rate to be different from the market rate, and why is the difference likely to be much less than depicted in the problem?

Answer:

A) $61,654,600

B) June 30, 2016, first coupon payment

Dr Interest expense 4,840,000

Dr Premium on bonds payable 60,000

    Cr Cash 4,900,000

C) If you use the effective interest rate, the bond premium is higher, so the actual interest expense would be lower:

June 30, 2016, first coupon payment

Dr Interest expense 4,756,406

Dr Premium on bonds payable 143,594

    Cr Cash 4,900,000

D) The actual difference between the coupon rate and the effective interest rate (with a $72,400,000 issue price) = 14% (coupon rate) - 13.93% = 0.07%.

The bond's issue price is generally determined by the market rate, but sometimes a company might believe that the interest rate applicable to them is actually different. A company might under estimate the riskiness of their operations, but the market doesn't. Generally the market rate is correct. So any variation in the coupon rate is due to a mistake by the firm. Usually companies do not make huge mistakes, if they miss on the coupon rate it generally is not significant.

Explanation:

issued $70 million face amount of 20-year, 14% stated rate bonds when market interest rates were 16%. The bonds pay interest semi-annually each June 30 and December 31, each coupon = $4,900,000

bonds market price = PV of maturity value + PV of coupons

if instead the issue price was $72,400,000 (resulting in a $2,400,000 premium), then the premium would be amortized by $2,400,000 / 40 = $60,000 during each coupon payment

if the effective interest method, (not the compound interest method), was used to amortize bond premium, then we first need to calculate the effective interest rate:

$72,400,000 - $70,000,000 = $2,400,000 / 40 = $60,000

$4,900,000 + $60,000 = $4,960,000 / {($72,400,000 + $70,000,000) / 2} = 0.0696629

bond premium discount using effective interest rate = ($72,400,000 x 0.0696629) - $4,900,000 = $5,043,594 - $4,900,000 = $143,594

The trial balance of Rachel Company at the end of its fiscal year, August 31, 2017, includes these accounts: Inventory $29,200; Purchases $144,000; Sales Revenue $190,000; Freight-In $8,000; Sales Returns and Allowances $3,000; Freight-Out $1,000; and Purchases Returns and Allowances $5,000. The ending inventory is $25,000. Prepare a cost of goods sold section for the year ending August 31.

Suppose all individuals are​ identical, and their monthly demand for Internet access from a certain leading provider can be represented as p​ = 5 minusone half q where p is price in​ $ per hour and q is hours per month. The firm faces a constant marginal cost of​ $1. If the firm will charge a monthly access fee plus a per hour​ rate, the monthly access fee will equal A. ​$5. B. ​$16. C. ​$1. D. ​$8.

Matt Winne​, Inc. issued $ 1 comma 000 comma 000 of 9​%, nine​-year bonds payable on January​ 1, 2018. The market interest rate at the date of issuance was 6​%, and the bonds pay interest semiannually.
1) How much cash did the company receive upon issuance of the bonds​ payable?
2) Prepare an amortization table for the bond using the​effective-interest method, through the first two interest payments.​ (Round to the nearest​ dollar.)
3) Journalize the issuance of the bonds on January​ 1, 2018​, and the first and second payments of the semiannual interest amount and amortization of the bonds on June​ 30, 2018​, and December​ 31, 2018. Explanations are not required. ​
4) Journalize the payment of the first semiannual interest amount and amortization of the bond on June​ 30, 2018
5) Journalize the payment of the second semiannual interest amount and amortization of the bond on December​ 31, 2018.​

The following costs are budgeted for Harlow Corporation for next year: The costs above are based on a level of activity of 20,000 units. Assuming that this activity is within the relevant range, what would total cost per unit be for Harlow if the level of activity was only 18,000 units?

You have an investment that in today's dollars returns 12% of your investment in year 1, 18% in year 2, 11% in year 3, and the remainder in year 4. Rounded to two places, what is the Duration of this investment

Completed Per Day

Flower Beds Weeded


Bags of Leaves Raked


Samantha

4


8


Adam

5


25



Samantha and Adam own a gardening business together. They each pull weeds from flower beds and rake up leaves for their neighbors. If each decides to specialize in what they are best at, Samantha will


a.weed and Adam will rake because these are the goods each has a comparative advantage in.


b.rake and Adam will weed because these are the goods each has a comparative advantage in.


c.weed and Adam will rake because these are the goods each has an absolute advantage in.


d.rake and Adam will weed because these are the goods each has an absolute advantage in.

The University of Michigan football stadium, built in 1927, is the largest college stadium in America, with a seating capacity of 110,500 fans. Assume the stadium sells out all six home games before the season begins, and the athletic department collects $86.19 million in ticket sales. Required: 1. What is the average price per season ticket and average price per individual game ticket sold

You have learned from your training materials that the integration-responsiveness framework juxtaposes the opposing pressures for cost reductions and local responsiveness to derive four different strategies to gain and sustain competitive advantage when competing globally. Which of these four strategies has HP adopted?

Southland Company is preparing a cash budget for August. The company has $17,000 cash at the beginning of August and anticipates $120,800 in cash receipts and $134,500 in cash payments during August. Southland Company wants to maintain a minimum cash balance of $10,000. To maintain the minimum cash balance of $10,000, the company must borrow:

An investor wishes to buy a new issue of U.S. Government agency bonds. You recommend that the customer purchase Federal Home Loan Bank bonds with a 20 year maturity. An investor who purchases the new issue of Federal Home Loan Bank bonds can expect to pay:

Due to the adoption of a just in time assembly line system, NWC is expected to decrease. Inventory is expected to decrease from $254600 to $143072 while accounts payable will also decrease by $26648. What is the cash flow impact for the change in net working capital to be included in the initial investment

The Digby company will sell 100 units (x1000) of capacity from their Daft product line. Each unit of capacity is worth $6 plus $4 per automation rating. The Digby company will sell the capacity for 35% off. How much do they receive when the capacity is sold

Zisk Co. purchases raw materials on account. Budgeted purchase amounts are April, $80,000; May, $110,000; and June, $120,000. Payments are made as follows: 70 % in the month of purchase and 30 % in the month after purchase. The March 31 balance of accounts payable is $22,000 Prepare a schedule of budgeted cash payments for April, May, and June.
April May June
Current month purchases 70%
Ending accounts payable 30 %
Total purchases
ZISK CO.
Schedule of Cash Payments For April, May, and June
Аpril May June
Cash payments for
Current month purchases
Prior month purchases
Budgeted cash payments for materials

Discount-Mart issues $19 million in bonds on January 1, 2021. The bonds have a seven-year term and pay interest semiannually on June 30 and December 31 each year. Below is a partial bond amortization schedule for the bonds: Date Cash Paid Interest Expense Increase in Carrying Value Carrying Value 01/01/2021 $ 17,233,953 06/30/2021 $ 950,000 $ 1,034,037 $ 84,037 17,317,990 12/31/2021 950,000 1,039,079 89,079 17,407,069 06/30/2022 950,000 1,044,424 94,424 17,501,493 12/31/2022 950,000 1,050,090 100,090 17,601,583 What is the market annual rate of interest on the bonds

A small business produces a single product and reports the following​ data: Sales price $ 8.50 per unit Variable cost $ 5.30 per unit Fixed cost $ 21 comma 000 per month Volume 10 comma 000 units per month The company believes that the volume will go up to 13 comma 000 units if the company reduces its sales price to $ 7.25. How would this change affect operating​ income?

Suppose Nike's managers were considering expanding into producing sports beverages. Why might the company decide to do this under the Nike brand name? The cost of producing sports beverages along with its current products under the Nike brand name is less than the cost of producing sports beverages under a new brand name plus the cost of producing Nike's current products under the Nike brand name. The cost of producing sports beverages along with its current products under the Nike brand name is greater than the cost of producing sports beverages separately under a new brand name plus the cost of producing Nike's current products under the Nike brand name.

A mutual fund had NAV per share of $19.00 on January 1, 2016. On December 31 of the same year, the fund's NAV was $19.14. Income distributions were $0.57, and the fund had capital gain distributions of $1.12. Without considering taxes and transactions costs, what rate of return did an investor receive on the fund last year

Homeowners enjoy many benefits, including a federal tax deduction for state and local property taxes paid. Fishers, Indiana, was voted one of the top 100 best places to live in 2017 by Money magazine. With population of 86,357, a median home price of $236,167, and estimated property taxes at 10.6 mills, how much does the average homeowner pay in property taxes?

When Sandra and Charles Givens were divorced, the court ordered a division of property and awarded Sandra $65,000. The award was a judgment against Charles, who failed to pay it. Sandra asked the court to find Charles in contempt. Their lawyers had a conference with the judge, and they agreed that Charles would pay $2500 immediately and $300 per month until the judgment was paid in full. Charles alleged that the new payment schedule was a binding contract, because Sandra had accepted his offer of payments. Was it a contract

In union terms, a direct strike occurs:

a. when an organized body of workers withholds its labor to force the employer to comply with its demands.
b. when union members and their supporters refuse to buy products from a company being struck.
c. when workers who have no particular grievance of their own and who may or may not have the same employer decide to strike in support of others.
d. when people refuse to patronize companies that handle products of struck companies.

If your employer offers a retirement plan, don’t participate in it. Don’t bother to set target dates for achieving your financial goals. Pay credit card balances in full each month. Start saving early in life and save throughout your life.

One advantage of the direct organizational plan is that it:________.
A. Results in more formal messages.
B. Positions the major news first.
C. Presents key topic sentences before subsequent ideas.
D. Arranges supporting details in order of priority.
E. Gives reasons up front to prepare the reader for negative news.

A company currently pays a dividend of $3.4 per share (D0 = $3.4). It is estimated that the company's dividend will grow at a rate of 17% per year for the next 2 years, and then at a constant rate of 5% thereafter. The company's stock has a beta of 1.3, the risk-free rate is 6.5%, and the market risk premium is 1.5%. What is your estimate of the stock's current price? Do not round intermediate calculations. Round your answer to the nearest cent.

Jacquie Inc. reports the following annual cost data for its single product.
Normal production and sales level 70,000 units
Sales price $ 57.00 per unit
Direct materials $ 10.00 per unit
Direct labor $ 7.50 per unit
Variable overhead $ 12.00 per unit
Fixed overhead $ 1,050,000 in total
Complete the below table using absorption costing. (Round cost per unit answers to 2 decimal place.)
Production volume
Cost of goods sold: 72000 units 104000 units
Cost of goods sold per unit
Number of units sold
Total cost of goods sold
Jacquie Inc.
Income statement through gross margin
Sales volume
72000 units 72000 units
If Jacquie increases its production to 104000 units, while sales remain at the current 72000 unit level, by how much would the company?

Shrinkage at Walmart In 2015, the world’s largest retailer, Walmart, announced a quarterly increase in sales that was accompanied by an increase in expenses that reduced its hoped-for profit. In discussing the higher expenses, the company mentioned "shrinkage" three times in its written press release and 13 times in its conference call with financial analysts. The company attributed a significant part of its increased shrinkage to shoplifting and outright theft, including one instance in which a team of thieves pushed a shopping cart full of electronics out a back door and loaded them into a waiting car. To combat these problems, which are unfortunately common in retailing, the company announced it was restarting a training program for employees that helps them learn how to spot shoplifters and fellow employees who are pilfering, along with adding staff to areas of the store that contain high-value or easy-to-steal items. They also plan to start checking customers’ receipts at store exits. In addition to these measures, however, the company also reported that a sizable portion of the shrinkage results from difficulties encountered in managing inventory flow throughout the company’s distribution network and its stores. When warehouses and store backrooms become overstocked with inventory, it can be difficult to determine which items should be discounted and moved to the store’s shelves. In recent years, Walmart has increased its sales of grocery and food items, which can be damaged more easily than its other inventory and for which failure to monitor expiration dates can be costly. To deal with these backroom inventory management issues, the company has added employees to staff those areas. Walmart’s U.S. supply chain includes more than 100 distribution centers from which the company makes deliveries to its more than 5000 stores and Sam’s Club locations using its fleet of more than 6000 trucks. Managing the flow of inventory from the company’s suppliers through its distribution centers and into its retail outlets is a mammoth task and, as discussed in this chapter, the company has made attempts to use technology in new and creative ways to address these challenges in the past.
REQUIRED
Q1) Become familiar with RFID technology and its potential uses in Walmart’s supply chain using the information presented in this chapter and information you obtain through the Web Links, your favorite search engine, and your library. In about 200 words, outline the advantages Walmart might gain by using RFID in its retail stores. As you draft your answer, be sure to consider the nature of the stores’ backroom environments, which include metal shelving. Also consider Walmart’s possible use of RFID and other technologies as an alternative or addition to the increased staffing levels the company has announced for its retail stores. As you draft your answer, be sure to consider the nature of the stores’ backroom environments, which include metal shelving. Also consider Walmart’s possible use of RFID and other technologies as an alternative or addition to the increased staffing levels the company has announced for its backroom inventory storage areas.
Q2) In about 100 words, discuss the advantages Walmart might gain if it were to use RFID tracking technologies in all of its retail stores to manage every single item as opposed to using either case-level RFID or tracking only part of each store’s inventory at the item level.

Ratio proficiency McDougal​ Printing, Inc., had sales totaling $ 41 comma 000 comma 000 in fiscal year 2019. Some ratios for the company are listed below. Use this information to determine the dollar values of various income statement and balance sheet accounts as requested. Assume a​ 365-day year. Calculate values for the​ following: a. Gross profits b. Cost of goods sold c. Operating profits d. Operating expenses e. Earnings available for common stockholders f. Total assets g. Total common stock equity h. Accounts receivable

On March 1, Sather Co. sold merchandise to Boone Co. on account, $28,400, terms 2/15, n/30. The cost of the merchandise sold is $19,500. The merchandise was paid for on March 14. Assume all discounts are taken.Required:Journalize the entries for Sather Co. and Boone Co. for the sale, purchase, and payment of amount due. Refer to the appropriate company’s Chart of Accounts for exact wording of account titles.CHART OF ACCOUNTSSummit Co.General LedgerASSETS110 Cash121 Accounts Receivable-Beartooth Co.125 Notes Receivable130 Merchandise Inventory131 Estimated Returns Inventory140 Office Supplies141 Store Supplies142 Prepaid Insurance180 Land192 Store Equipment193 Accumulated Depreciation-Store Equipment194 Office Equipment195 Accumulated Depreciation-Office EquipmentLIABILITIES210 Accounts Payable216 Salaries Payable218 Sales Tax Payable219 Customers Refunds Payable221 Notes PayableEQUITY310 Owner, Capital311 Owner, Drawing312 Income Summary REVENUE410 Sales610 Interest RevenueEXPENSES510 Cost of Merchandise Sold521 Delivery Expense522 Advertising Expense524 Depreciation Expense-Store Equipment525 Depreciation Expense-Office Equipment526 Salaries Expense531 Rent Expense533 Insurance Expense534 Store Supplies Expense535 Office Supplies Expense536 Credit Card Expense539 Miscellaneous Expense710 Interest ExpenseCHART OF ACCOUNTSBeartooth Co.General LedgerASSETS110 Cash120 Accounts Receivable125 Notes Receivable130 Merchandise Inventory131 Estimated Returns Inventory140 Office Supplies141 Store Supplies142 Prepaid Insurance180 Land192 Store Equipment193 Accumulated Depreciation-Store Equipment194 Office Equipment195 Accumulated Depreciation-Office EquipmentLIABILITIES211 Accounts Payable-Summit Co.216 Salaries Payable218 Sales Tax Payable219 Customers Refunds Payable221 Notes PayableEQUITY310 Owner, Capital311 Owner, Drawing312 Income Summary REVENUE410 Sales610 Interest RevenueEXPENSES510 Cost of Merchandise Sold521 Delivery Expense522 Advertising Expense524 Depreciation Expense-Store Equipment525 Depreciation Expense-Office Equipment526 Salaries Expense531 Rent Expense533 Insurance Expense534 Store Supplies Expense535 Office Supplies Expense536 Credit Card Expense539 Miscellaneous Expense710 Interest Expense

Assume that HotLap, Inc., a manufacturer of laptop computers, is considering a merger with SassyChips, a leading producer of computer chips. HotLap believes such a merger would benefit their business by giving them a guaranteed steady supply of the chips they need to make their laptops, and more control over the way those chips are designed. If this merger occurs, it would be an example of:____________.
1. contract manufacturing.
2. a vertical merger.
3. a conglomerate merger.
4. a franchise arrangement.
5. a horizontal merger.
6. a leveraged buyout.

Expenses include all of the following except: Multiple Choice making a payment on account. using supplies. paying for electricity used during the current period. paying wages for production workers for work performed during the current period.

Gideon Company uses the allowance method of accounting for uncollectible accounts. On May 3, the Gideon Company wrote off the $2,900 uncollectible account of its customer, A. Hopkins. The entry or entries Gideon makes to record the write off of the account on May 3 is: