Determine whether each of the following events results in an inflow or outflow of cash. For those
Question:
Determine whether each of the following events results in an inflow or outflow of cash. For those that affect cash, state whether the inflow or outflow would be considered an operating, investing, or financing cash flow under GAAP.
Required:
1. A bond with a face value of $1,000,000 is issued for $960,000.
2. At year-end, $45,000 accrued interest payable is recorded and $1,000 of the bond discount is amortized.
3. Early in the second year, the accrued interest recorded in requirement (2) is paid.
4. The debt matures at the end of the fifth year.
Step by Step Answer:
Req 1 Results in a 960000 financing c...View the full answer
Financial Accounting
ISBN: 9781264229734
11th Edition
Authors: Robert Libby, Patricia Libby, Frank Hodge
Related Video
Bond valuation is the process of determining the worth of a bond. It is based on the present value of the bond\'s future cash flows, which include coupon payments and the return of the bond\'s face value (or \"principal\") at maturity. The discount rate used in the calculation is directly tied to prevailing interest rates, and a rise in interest rates will decrease the present value of the bond and thus lower its price. Conversely, a fall in interest rates will increase the present value of the bond and raise its price. Interest rates serve as a benchmark for determining the value of a bond, as they determine the discount rate used in the bond valuation calculation. The most commonly used measure of interest rates is the yield to maturity (YTM), which represents the internal rate of return of an investment in a bond if the investor holds the bond until maturity and receives all scheduled payments. Yield to maturity is a function of the coupon rate, the current market price of the bond, the face value of the bond, and the number of years remaining until maturity. By comparing the yield to maturity of a bond to prevailing market interest rates, an investor can assess the relative value of the bond.
Students also viewed these Business questions
-
Determine whether each of the following represents loss aversion. a. Nearing retirement, an investor chooses investments with lower return and lower risk, because she wants to make sure she has a...
-
Determine whether each of the following scenarios best reflects features of Sweezy, Cournot, Stackelberg, or Bertrand duopoly: a. Neither manager expects her own output decision to impact the other...
-
Determine whether each of the following is best described as a fixed, variable, or mixed cost with respect to product units. 1. Packaging expense. 2. Factory supervisors salary. 3. Taxes on factory...
-
Figure shows a current loop ABCDEFA carrying a current i = 5.00 A. The sides of the loop are parallel to the coordinate axes shown, with AB = 20.0 cm, BC = 30.0 cm, and FA = 10.0 cm. In unit vector...
-
The article Poll Finds Most Oppose Return to Draft, Wouldnt Encourage Children to Enlist (Associated Press, December 18, 2005) reports that in a random sample of 1,000 American adults, 430 answered...
-
A 540 kg spacecraft first is placed into a circular orbit about the earth at an altitude of 4500 km and then is transferred to a circular orbit about themoon. Knowing that the mass of the moon is...
-
On August 31, Pro Tennis Equipment had a $150,000 debit balance in Accounts Receivable. During September, Pro Tennis Equipment had the following transactions: Sales of $500,000, all on credit. ...
-
The following variable production costs apply to goods made by Raeburn Manufacturing Corporation: Item Cost per Unit Materials ............... $ 8.00 Labor ............... 3.50 Variable overhead...
-
2. Let f(x) be the PDF of some random variable X. f is said to be symmetric about a number a if for all > 0, f(a - ) = (a + ). (a) Show that if f(x) is symmetric around a number a, then the median of...
-
An electronic component in a dental x-ray system has an exponential time to failure distribution with . What are the mean and variance of the time to failure? What is the reliability at 30,000 hours?...
-
Define the term corporation and identify the primary advantages of organizing as a corporation.
-
Several years ago, Tamika Company issued bonds with a face value of $1,000,000 at par. As a result of declining interest rates, the company has decided to call the bond at a call premium of 5 percent...
-
Some employers are offering their employees a Consumer Directed Health Plan (CDHP) where the employer provides employees with a sum of money from which employees can purchase their health plan from...
-
During Year 3 , Anywhere, Incorporated ( Al ) incurred the following product costs. Raw materials Labor Overhead $ 62,000 89,422 58,000 The Year 2 ending balance in the Work in Process (WIP) account...
-
During May, Darling Company accumulated 810 hours of direct labor costs on Job 200 and 770 hours on Job 305. The total direct labor was incurred at a rate of $18 per direct labor hour for Job 200 and...
-
25 years ago, A College had 18685 students enrolled. This year there are 21752 students enrolled. What is the percent change of students enrolled at that College? (remember to specify increase or...
-
2. Mike lives for seven periods, t = 1, 2, 3, 4, 5, 6, 7. In period 7, he enjoys the fruits of the human capital, e, that he has amassed up to that point. In period 7 his instantaneous utility for...
-
Find the volume of the solid obtained by rotating the region in the first quadrant bounded by the curves x = 0, y = 1, x = y, about the line y = 1.
-
Suppose that x = 14 is an observation from a B(37, pA) random variable, and that y = 7 is an observation from a B(26. pB) random variable. (a) Compute a two-sided 99% confidence interval for PA - PB....
-
You are maintaining a subsidiary ledger account for Police-Training Expenditures for 2013. The following columns are used: Inventory purchases are initially recorded as expenditures. Record the...
-
McDonalds Corporation reports total average assets of $28.9 billion and net sales of $20.5 billion. What is the companys asset turnover ratio?
-
Match the statement with the term most directly associated with it. Goodwill.......... Amortization Intangible assets ....... Franchise Research and development costs 1. _______ Rights, privileges,...
-
Fraud experts often say that there are three primary factors that contribute to employee fraud. Identify the three factors and explain what is meant by each.
-
This is a theoretical case taken from VHA Intensive Ethics Advisory Committee Training, 1998, as presented by Arthur R. Derse MD, JD. An 87-year-old woman widowed for six years, who is otherwise...
-
Mica Inc. began operations in October, 2014. During October, Mica sold ordinary shares for 600,000, earned revenue of 66,000, incurred expenses of 36,000, and paid dividends of 3,000. Calculate...
-
1. Display through your discussion answer an understanding of the four required elements for negligence. 2. Display through your discussion answer an understanding of vicarious liability and...
Study smarter with the SolutionInn App