Hw-1718 finance mcq | Management homework help

  

1. Concord Inc issues(sells) $100,000 of it’s 10 year 8% bonds to yield 10% on January 1, Year 1. The bonds pay interest annually on December 31. The bonds were sold with a discount of $12,289. What is the bond carrying amount(book value) at the end of Year 1?

a) $88482

b) $96482

c) $100000

d) $100711

  

100,000*8%

=8,000

100,000*-12289   =87711

87711*10%   =8771.1

8771.1   -8000 =771.1

12289-771.1

=11517.1

100,000   -11517.9

=88,482

2. Concord Inc issues (sells) $100000 of its 10 year 8% bonds to yield 10% on January 1, Year 1. The bonds pay interest annually on December 31. The bonds were sold with a discount of $12289. What is the bond interest expense for Year 1.

a) $8000

b) $8771

c) $10000

d) $10771

3. Concord Inc issues (sells) $100000 of its 10 year 8% bonds to yield 10% on January 1, Year 1. The bonds pay interest annually on December 31. The bonds were sold with a discount of $12289. Calculate the amount of cash interest paid on the bonds in Year 1.

a) $7017

b) $8000

c) $8771

d) $10000

4. Concord Inc issues (sells) $100000 of its 10 year 8% bonds to yield 10% on January 1, Year 1. The bonds pay interest annually on December 31. The bonds were sold with a discount of $12289. Calculate the amount of bond discount amortization for Year 2.

a) $848

b) $1229

c) $1540

d) $2000

  

100,000*8%

=8,000

100,000*-12289   =87711

87711*10%   =8771.1

8771.1   -8000 =771.1

12289-771.1

=11517.1

100,000   -11517.9

=88,482

 

8,000

88,482   *10% 

= 8,848.2

8,848.2-   8000

=848

11517.1-848.2

=10,669.69

88482-10,669.69

=77,812.31

5. Will company issued $100000 worth of bonds on January 1, Year 3 with interest payable annually. The bonds had a contract rate of 8%. The bonds were set up as floating-rate debt with the rate benchmarked to LIBOR plus 3%. The entry to record the sale (issuance) of the bonds would be which one of the following?

a)  DR Cash 100000 CR Bonds Payable 100000

b) DR Bonds Payable 100000 CR Cash 100000

c) DR Cash 108000 CR Bonds Payable 108000

d) DR Cash 111000 CR Bonds payable 111000

6. Will company issued $100000 worth of bonds on January 1, Year 3 with interest payable annually. The bonds had a contract rate of 8%. The bonds were set up as floating-rate debt with the rate benchmarked to LIBOR plus 3%. What would interest expense for year one if LIBOR is 5% be?

a) $3000

b) $5000

c) $8000

d) $9000

$100,000 *8% = $8,000

7. Research on debt-for-equity swaps has shown that most of these swaps have resulted in an extinguishment gain. Therefore, some analysts have argued that debt-for-equity swaps have been undertaken to:

a) Negatively alter capital structure

b) Provide no altercation of capital structure

c) Provide no real economic benefit

d) Smooth transitory decreases in quarterly earnings.

8. Which one of the following contingencies must be accrued on the balance sheet?

a) The probable loss on a lawsuit that the firm’s attorneys believe will be dropped.

b) The probable loss on a lawsuit that the firm’s attorneys believe will be settle for $90000

c) The reasonably probable loss on a lawsuit that the firms attorneys believe will be incurred, but the amount is unknown.

d) The reasonable possible loss on a lawsuit that the firm’s attorneys believe will be settled for $90000.

9. Hall Inc agrees to lease equipment from White Inc for 10 years for $50000 at the end of each year. The equipment has a fair value of $350000 and an estimated useful life of 10 years. The lease includes a guaranteed residual value of $20000. In addition to the lease payments, Hall will pay $10000 per year for a maintenance agreement. Hall can finance this lease with its bank at a 12% rate. The lessor’s implicit interest rate is 10%. The Hall lease is a/an:

a) Capital lease because the lease term is more than 75% of the life of the asset.

b) Capital lease because the lease value is 90% of the fair value of the asset.

c) Operating lease because the lease value is less than 90% of the fair value of the asset.

d) Operating lease because the asset reverts to White at the end of the lease.

10. Hall Inc agrees to lease equipment from White Inc for 10 years for $50000 at the end of each year. The equipment has a fair value of $350000 and an estimated useful life of 10 years. The lease includes a guaranteed residual value of $20000. In addition to the lease payments, Hall will pay $10000 per year for a maintenance agreement. Hall can finance this lease with its bank at a 12% rate. The lessor’s implicit interest rate is 10%. What is the entry to record this lease on Hall’s books?

a) DR Leased equipment – capital lease $288951 CR Obligation under capital lease $288951

b) DR Leased equipment – capital lease $314949 CR Obligation under capital lease $314939

c) DR Leased equipment – capital lease $314939 DR Discount on lease obligation $185061 CR Obligation under capital lease $500000

d) DR Leased equipment – capital lease $334939 DR Discount on lease obligation $165061 CR Obligation under capital lease $500000

Present Value of Lease payment =50000 *6.14457 = $307,228

Add Present Value of Residual Value =20,000*.38554 = $7,711

Total Present Value $314,939

11. Hall Inc agrees to lease equipment from White Inc for 10 years for $50000 at the end of each year. The equipment has a fair value of $350000 and an estimated useful life of 10 years. The lease includes a guaranteed residual value of $20000. In addition to the lease payments, Hall will pay $10000 per year for a maintenance agreement. Hall can finance this lease with its bank at a 12% rate. The lessor’s implicit interest rate is 10%. At the end of year 1, Hall will make a payment of $60000. How much straight-line depreciation expense will Hall record for year 1?

a) $29494

b) $30723

c) $31494

d) $35000

$314,939 -$20,000 / 10 = $29, 494

12. Burrell Corp leases a building from Bennett Corp for 10 years for $50000 at the end of the year. The building has a fair value of $350000 and an estimated useful life of 25 years. In addition to the lease payments, Burrell will pay $10000 per year for general maintenance. Burrell can finance this lease with its bank at a 12% rate. The lessor’s implicit interest rate is 10%. The Burrell lease is a/an:

a) Capital lease because the lease term is more than 75% of the life of the asset.

b) Capital lease because the lease value is 90% or more of the fair value of the asset.

c) Operating lease because the asset reverts to the lessor at the end of the lease.

d) Operating lease because the lease value is less than 90% of the fair value of the asset,

13. Randall Corp leases a truck from David’s Trucks with a 5 year non-cancelable lease on January 1, Year 5 with the following terms,

-5 payments of $26379.74(a 9% implicit rate) due at the end of each year.

-the fair value of the truck is $100000 and cost David $80000

-The lease is nonrenewable the truck revers to David at the end

-the truck has a 6 year economic life

-Randall has excellent credit rating

-David offers no warranty on the truck other than the manufacturer’s 2 year warranty.

Which one of the following entries will David’s Trucks make to record the lease?

a) DR Gross investment in leased assets 131989.70

CR Equipment 131898.70

b) DR Gross investment in leased assets 131898.70

DR Cost of goods sold 80000.00

CR Sales 100000.00

CR Unearned financing income-leases 31898.70

CR Inventory 80000.00

c) DR Accounts receivable – leases 131898.70

CR Cash 26379.74

CR Inventory 105518.96

d) DR Gross investment in leased assets 131898.70

DR Cost of goods sold 80000.00

CR Sales 180000.00

CR Unearned financing income-leases 31898.70

14. If the Bean Company sells an asset to Corn Company for a profit of $175000 and immediately leases it back with a capital leases, the gain is recognized by Bean:

a) Immediately as an extraordinary gain

b) Immediately as an ordinary gain

c) Over the life of the lease in proportion to the rental payment

d) Over the life of the lease using the same rate and life used to amortize the leased asset.

Calculate your paper price
Pages (550 words)
Approximate price: -

Why Choose Us

Quality Papers

We value our clients. For this reason, we ensure that each paper is written carefully as per the instructions provided by the client. Our editing team also checks all the papers to ensure that they have been completed as per the expectations.

Professional Academic Writers

Over the years, our Acme Homework has managed to secure the most qualified, reliable and experienced team of writers. The company has also ensured continued training and development of the team members to ensure that it keep up with the rising Academic Trends.

Affordable Prices

Our prices are fairly priced in such a way that ensures affordability. Additionally, you can get a free price quotation by clicking on the "Place Order" button.

On-Time delivery

We pay strict attention on deadlines. For this reason, we ensure that all papers are submitted earlier, even before the deadline indicated by the customer. For this reason, the client can go through the work and review everything.

100% Originality

At Buy An Essay, all papers are plagiarism-free as they are written from scratch. We have taken strict measures to ensure that there is no similarity on all papers and that citations are included as per the standards set.

Customer Support 24/7

Our support team is readily available to provide any guidance/help on our platform at any time of the day/night. Feel free to contact us via the Chat window or support email: support@acmehomework.com.

Try it now!

Calculate the price of your order

We'll send you the first draft for approval by at
Total price:
$0.00

How it works?

Follow these simple steps to get your paper done

Place your order

Fill in the order form and provide all details of your assignment.

Proceed with the payment

Choose the payment system that suits you most.

Receive the final file

Once your paper is ready, we will email it to you.

Our Services

Buy An Essay has stood as the world’s leading custom essay writing services providers. Once you enter all the details in the order form under the place order button, the rest is up to us.

Essays

Essay Writing Services

At Buy An Essay, we prioritize on all aspects that bring about a good grade such as impeccable grammar, proper structure, zero-plagiarism and conformance to guidelines. Our experienced team of writers will help you completed your essays and other assignments.

Admissions

Admission and Business Papers

Be assured that you’ll definitely get accepted to the Master’s level program at any university once you enter all the details in the order form. We won’t leave you here; we will also help you secure a good position in your aspired workplace by creating an outstanding resume or portfolio once you place an order.

Editing

Editing and Proofreading

Our skilled editing and writing team will help you restructure you paper, paraphrase, correct grammar and replace plagiarized sections on your paper just on time. The service is geared toward eliminating any mistakes and rather enhancing better quality.

Coursework

Technical papers

We have writers in almost all fields including the most technical fields. You don’t have to worry about the complexity of your paper. Simply enter as much details as possible in the place order section.