Answer:
$3.24
Explanation:
Data provided in the question:
Last annual dividend, D0 = $0.90
Growth rate, g = -10% = - 0.10 (negative sign means decrease)
Required return, r = 15% = 0.15
Now,
Future dividend, D1 = D0 × (1 + r)
= $0.9 × (1 + (-0.10) )
= $0.81
Current worth of the stock = $0.81 ÷ ( 0.15 - (-0.10) )
= $0.81 ÷ 0.25
= $3.24
Kimberly has been planning to purchase a digital camera for a long time. She finally makes the purchase and is happy because she feels she has bought it at the best price. However, after using the camera, she feels doubtful about her choice. This scenario exemplifies _____. Select one: a. post-decision dissonance b. impulsiveness c. response uncertainty d. decision disposition e. response derogation
Answer: Option A
Explanation: In simple words post decision resonance refers to the feeling of regret that one gets after making decision that the choice they made was not correct.
This theory suggests that the level of regret that one feels depends on two factors, the net desirability between the option chooses and option not chooses, the importance of the decision made in the Decision makers life.
In the given case, Kimberly bought a camera and now think she did not make right choice. Hence from the above we can conclude that the correct option is A.
Assume that Carol Rogers (a local millionaire) pledges to donate $500,000 to the Springfield Humane Society, which the society plans to use to build a new animal hospital. Based on Carol’s promise, the society begins work on the hospital. Carol, however, reneges on her offer. In this case:
a. Carol may be sued for the money based on promissory estoppel.
b. Carol has clearly violated a firm contract.
c. Nothing can be done. Carol's donation was a gift.
d. Carol will suffer from a bad conscience, but not from any lawsuit.
Answer:
A) Carol may be sued for the money based on promissory estoppel.
Explanation:
In contract law, promissory estoppel refers to a theory that when you make a reasonable promise but later you decide to back down, the other party may sue you in order to force you to fulfill your promise.
This theory has been upheld by the Supreme Court in Cohen v. Cowles Media Co. 501 US 663 (1991). So a reasonable promise will have the same binding effect as a contract.
a. Carol may be sued for the money based on promissory estoppel. Promissory estoppel prevents parties from backing out of promises that have been relied upon to the detriment of the promisee.
In this scenario, Carol Rogers can be held accountable through the principle of promissory estoppel. This legal concept prevents a party from reneging on a promise when the promisee has relied on it to their detriment. Here’s how it applies:
Carol made a clear promise to donate $500,000.The Springfield Humane Society relied on this promise and began constructing the animal hospital.As a result, the Humane Society incurred expenses and undertook actions based on Carol's promise.Given these circumstances, option a. Carol may be sued for the money based on promissory estoppel is the correct answer, as legal action can be taken against Carol for breaking her promise.
The face value of a promissory note is
a. the discounted value of the note.
b. the amount for which the note is written plus the interest due to the maturity date.
c. the amount for which the note is written.
d. its realizable value.
Answer: Option C - the amount for which the note is written.
Explanation:
A written promise to pay a specified amount of money on a specific date. Face value of a promissory note is the amount for which the note is written, also known as the
amount borrowed (principal)
The face value of a promissory note is the amount for which the note is written. This amount is the original value that the issuer agrees to pay the payee in the future, excluding any interest or discount.
Explanation:The face value of a promissory note is the original value or principal amount that is written on the note by the issuer. This is the amount that the issuer agrees to pay the payee at a future date. The face value does not include any interest or discount that may be due at the maturity of the note. Hence, according to your options, the face value of a promissory note is the amount for which the note is written, which is (c).
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JT Engineering usually pays $21 per pound of copper and uses 300 pounds of copper per 1,000 widgets. Due to the current high demand for copper, JT is currently paying $32 per pound of copper. What will JT’s materials price variance be for this purchase?A : $3,300B : $3,200C : $1,300D : $2,100
Answer:
A : $3,300
Explanation:
Given;
Initial cost = $21 per pound of copper
Current cost = $32 per pound of copper
Cost variance = $32 - $21
= $11
If 300 pounds of copper per 1,000 widgets, then
JT’s materials price variance be for this purchase
= Cost variance × Pound required
= $11 × 300
= $3,300
The right answer is A : $3,300
At Debrelas, a cosmetics manufacturing company, the salespeople are eligible for quarterly bonuses only if they meet their sales target for each month in that particular quarter. In the context of reinforcement theory of motivation, which of the following intermittent reinforcement schedules does this scenario best illustrate?
A) A fixed ratio reinforcement scheduleB) A fixed interval reinforcement scheduleC) A variable interval reinforcement scheduleD) A variable ratio reinforcement schedule
Answer:
The correct answer is A. A fixed ratio reinforcement schedule
Explanation:
When we perform an operant conditioning following a fixed interval reinforcement program, we administer to the subject the reinforcing stimulus only when a certain time has elapsed since the last presentation of the reinforcement, that is, with a constant time interval, for example, every minute. If the time interval is not constant but variable, that is once every minute, another every three, another every two, ..., then we have a variable interval reinforcement program.
If we want to create an operant behavior in a subject, we can administer the reinforcing stimulus only when the subject performs a certain number of times the behavior in question, for example every three times; in that case we have a fixed rate reinforcement program. If we prefer to administer the reinforcement when the subject performs a variable number of behaviors (for example, sometimes every three behaviors, sometimes every two, sometimes every four) we have a variable rate reinforcement program.
Suppose the market for tortillas is initially in equilibrium, but then the equilibrium wage rate and the equilibrium quantity of labor both increased. What happened in the market for tortilla?
Answer:
The supply of tortillas decreased
Explanation:
The money demand curve has a negative slope because
Answer:
lower interest rates
Explanation:
lower interest rates cause households and firms to switch from financial assets (bonds) to money. Suppose that there is an increase in the number of people selling bonds.
Final answer:
The money demand curve has a negative slope due to the inverse relationship between the interest rate and the quantity of money demanded. Higher interest rates increase the cost of holding money, leading to a reduction in money demand. The curve's negative slope is critical for understanding the impact of monetary policy.
Explanation:
The money demand curve has a negative slope because it represents the inverse relationship between the interest rate and the quantity of money demanded. As the interest rate increases, the opportunity cost of holding money (instead of saving or investing it) also increases, leading individuals and businesses to reduce the quantity of money they demand. Conversely, when the interest rate decreases, holding money becomes more attractive relative to other investments, leading to an increase in the quantity of money demanded.
This concept is an essential part of understanding how monetary policy and interest rates influence the overall economy. The negative slope is crucial for central banks when they adjust monetary policy tools to control inflation, stimulate economic growth, or address other economic objectives by influencing interest rates.
Archer Company had an inventory balance of $2,600 on January 1. During the accounting period they made purchases of $11,500. The ending inventory balance was $1,250. If Archer Co. uses the periodic inventory system, what is the cost of goods available for sale?
A. $14,100
B. $2,600
C. $12.850
D. $11,500
Answer:
A
Explanation:
Opening stock 2,600
Add: purchases 11,500
------------
Cost of good available for sale 14,100
Less: closing stock (1,250)
------------
cost of sales 12,850
---------------
Which NIMS Management Characteristic follows established processes for gathering, analyzing, assessing, sharing, and managing data?
A. Information and Intelligence Management
B. Common Terminology
C. Establishment and Transfer of Command
D. Integrated Communications
Answer:
(a) Information and intelligence management
Explanation:
Information and intelligence management :
The meaning of Intelligent Information Management is a lot of procedures and basic innovation arrangements that empower associations to deal with their information.
It alludes to how both content and information are overseen inside associations. Methodologies, techniques and instruments used to deal with information.
The NIMS Management Characteristic focused on managing data through established processes is Information and Intelligence Management. It is a key component for decision-making and maintaining situational awareness in emergency management.
Explanation:The NIMS Management Characteristic that follows established processes for gathering, analyzing, assessing, sharing, and managing data is A. Information and Intelligence Management. This characteristic ensures that all command and coordination centers have the information and intelligence they need to make informed decisions. Information and intelligence are crucial for situational awareness and in implementing the standardized management approach that NIMS represents.
It is different from Common Terminology, which is focused on ensuring everyone uses the same terms and definitions; Establishment and Transfer of Command, which deals with the chain of command within the incident command structure; and Integrated Communications, which relates to ensuring that communication equipment, systems, and protocols are interoperable.
The NIMS Management Characteristic that follows established processes for gathering, analyzing, assessing, sharing, and managing data is Information and Intelligence Management. It involves collecting and evaluating information to support incident management decisions. This characteristic helps in the efficient transmission, storage, and retrieval of data during emergency response operations.
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why are separate operating statements prepared for governmental funds and proprietary funds in the the fund financial statements?
Answer:
As a general rule operating statements for governmental funds and proprietary funds should be displayed separately.
In order to prepare financial statements for governmental funds an accountant must use a modified accrual accounting system which combines accrual basis and cash basis accounting.
When an accountant prepares financial statements for proprietary funds they will use the accrual basis accounting system.
The balance sheets also include different accounts. For example, Property, Plant and Equipment accounts are not used in governmental funds' balance sheet. While the governmental fund balances should be segregated in five components: nonspendable, restricted, committed, assigned and unassigned.
Capital budgeting is the process Question 2 options: used in sell or process further decisions.
of determining how much capital stock to issue.
of making capital expenditure decisions.
of eliminating unprofitable product lines.
Answer:
Capital budgeting is the process "of making capital expenditure decisions"
Explanation:
Capital budgeting is a planning process employed by a firm's management to evaluate if embarking on long-term investments (like purchase of a new machinery, replacement of old non-current assets, new product line, etc) are viable and profitable.
Decisions made by management must be informed decisions and one of the ways in which an investment decision can be evaluated to check if it is worthwhile is the capital budgeting process
Capital budgeting is the process of making capital expenditure decisions.
Capital budgeting is the process of making capital expenditure decisions. It involves analyzing and evaluating potential investment opportunities to determine which projects to undertake. This process typically includes estimating cash flows, assessing the risk associated with the projects, and calculating measures such as net present value (NPV) and internal rate of return (IRR) to help in decision-making.
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To finance the purchase of a house from Tuna, Uri signs an instrument promising to pay to "Verity Mortgage Service" $160,000 with interest in installments with the final payment due July 10, 2045. To be negotiable, this instrument must include the signature of:
Answer:
Uri
Explanation:
The document that Uri has prepared is a financial instrument called a promissory note.
A promissory note is a written commitment to pay a debt by the maker of the document. By drafting the promissory note, Uri is making an unconditional promise to pay Verity Mortgage Service the sum stated in the document. Uri is acknowledging that he owes verity mortgage service the sum of $160,000.00.
A promissory note may be used to secure financing for projects. For it to be considered, there has to be an express declaration of debt, and willingness to pay. The amount to be paid and interests payable must be stated. The terms of payments and their due dates should be clear. The maker of the promissory note must sign it. In this case, Uri must sign.
Gregg, age 28, sees himself as a cog in the wheel of his company. He doesn't trust his immediate manager, and he certainly doesn't trust top management. Gregg does his job and frankly does it well, but he does what is asked and not one bit more. He knows his company views him as replaceable and returns that view. He knows he could find a similar job with a similar salary without any trouble. Gregg appears to have low levels of _____.
Answer:
Low Organizational commitment.
Explanation:
Gregg appears to have low levels of Low Organizational commitment.
Gregg knows well that he is replaceable in the organization and could easily find a similar job with similar payment without any difficulty. So, does not show any commitment to the organization and does only what he is asked to do and never does any extra bit.
Gregg has low job satisfaction, organizational commitment, and motivation, influenced by few advancement opportunities, unsupportive management, and a perceived lack of value in his role. Improving his relationship with management and recognizing the value of initiative could enhance his workplace experience.
Explanation:Gregg, age 28, sees himself as a cog in the wheel of his company, where he does not trust his managers and does his job to the minimal requirements. Gregg appears to have low levels of job satisfaction, organizational commitment, and motivation.
Factors contributing to this situation include few opportunities for advancement, unsupportive supervisors, and the feeling of being a replaceable part of the organization with little control over his work. The 'McDonaldization' of industries has led to jobs where decisions are limited and human elements are minimized, which can discourage workers and affect their work ethic. Gregg's scenario is also indicative of a Theory X workplace where employees are not trusted and are not expected to work independently or with initiative.
Managers play a crucial role in influencing job satisfaction and growth, and their support is vital for fostering a workplace environment where employees can thrive and build positive relationships. Without this support, employees may face work overload, unsafe work environments, and frustration. Recognizing the value of initiative could be a significant factor in improving Gregg's situation, as proactive behavior is highly regarded in the current fast-paced work environment.
Damian owns a pick-up truck and a motorcycle. He sells the motorcycle to Eden for $10,000. Eden pays for the cycle with a check, knowing that she had insufficient funds in her account to cover the amount. A week later, Damian files a petition in bankruptcy for relief through a liquidation.
a. not cancel it, but can sue Eden to recover the price.
b. cancel it as a fraudulent transfer.
c. cancel it as a voidable preference.
d. not cancel it or sue to recover the price because it occurred before Damian filed his petition in bankruptcy.
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Damian can cancel the sale of the motorcycle to Eden as a fraudulent transfer because she knowingly wrote a check without sufficient funds, which can be considered an intent to defraud.So,option b is correct.
In the described scenario, Damian, after filing for bankruptcy, has the ability to cancel the transaction with Eden as a fraudulent transfer because she knew she had insufficient funds when she wrote the check for the motorcycle. A fraudulent transfer occurs when the debtor transfers property with the intent to hinder, delay, or defraud creditors. Since Eden knew there were not enough funds to cover the check, this transfer can potentially be deemed intentionally fraudulent. Therefore, the correct answer is that Damian can cancel it as a fraudulent transfer.
Which of the following is incorrect?
a. Given aggregate demand, an increase in aggregate supply increases real output and, assuming downward-flexible prices, reduces the price level.
b. As the U.S. price level rises, U.S. goods become relatively more expensive so that U.S. exports fall and U.S. imports rise.
c. As the price level falls, the demand for money declines, the interest rate declines, and interest-rate-sensitive spending increases.
d. When the price level increases, real balances increase and businesses and households find themselves wealthier and therefore increase their spending.
Answer:
The answer that is incorrect is D)
Explanation:
First of all, it is incorrect because if prices increase, real money balances decrease. The real money balances formula explains this fact:
Real money balances (RMB) = M/P
Where M is the amount of money and P the price level.
If P increases, then M will RMB will decrease.
If RMB are less, then, houses will find themselves poorer, not wealthier, and will decrease their spending, not increase it.
The Soma Inn is trying to determine its break-even point. The inn has 75 rooms that are rented at $52 a night. Operating costs are as follows
Salaries $9550 per month
Utilities 2600 per month
Depreciation 1500 per month
Maintenance 750 per month
Maid service 6 per room
Other costs 28 per room
Determine the inn's break-even point in (1) number of rented rooms per month and (2) dollars.
1. Break-even point in rooms
2. Break-even point
If the inn plans on renting an average of 50 rooms per day (assuming a 30-day month), what is
(1) the monthly margin of safety in dollars and
(2) the margin of safety ratio? (Round ratio to 0 decimal places, e.g. 10.) 1. Margin of safety 2. Margin of safety ratio
Answer:
1) break even point in units = 720 rooms per month
2) break even point in dollars = $37,440 per month
____________ . ____________
1) safety margin is $40,560
2) margin of safety ratio = 52%
Explanation:
First we have to determine the fixed and variable costs:
fixed costs = salaries + utilities + depreciation + maintenance = $9,550 + $2,600 + $1,500 + $750 = $14,400
variable costs = maid service + other costs = $6 + $26 = $32 per room
now we have to determine the contribution margin per room rented = rent price - variable costs = $52 - $32 = $20
so the break even level in units = $14,400 / $20 = 720 rooms per month
the 720 rooms per month x $52 per room = $37,440
____________ . ____________
if Soma estimates to rent 50 rooms per day, that equals 1,500 rooms per month
Soma expects to earn 1,500 rooms x $52 per room = $78,000 per month, which means that their safety margin is $40,560 (= $78,000 - $37,440)
their margin of safety ratio = $40,560 / $78,000 = 0.52 x 100 = 52%
The economic definition of money is__________.A. A good that has intrinsic value.B. Anything authorized by the government to be used in an exchange.C. Anything of value owned by a person or a firm.D. Any asset that people are generally willing to accept in exchange for goods and services.
Answer:
The correct answer is option D.
Explanation:
Money can be defined as any asset that is generally accepted by people in exchange for goods and services. The basic function of money is to act as a medium of exchange.
It reduces the transaction cost in exchange for goods and services by eliminating the double coincidence of wants.
Money can be of different types such as commodity money, fiat money, etc.
Other functions of money are to act as a store of value and unit of account.
Willingness to pay
a. measures the value that a buyer places on a good.
b. is the amount a seller actually receives for a good minus the minimum amount the seller is willing to accept.
c. is the maximum amount a buyer is willing to pay minus the minimum amount a seller is willing to accept.
d. is the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it.
Answer:
The correct answer is option a.
Explanation:
The willingness to pay for a product can be defined as the maximum amount an individual is willing to procure or obtain a product. The price of a product lies between a consumer's willingness to pay and a seller's willingness to accept.
The willingness to accept is the minimum amount a seller is willing to accept to let go of a product. Willingness to pay indicates how valuable good is for the buyer.
Spiral Corporation's December 31, balance sheet shows the following: 8% preferred stock,
$10 par value, cumulative,
40,000 shares authorized; 18,000 shares issued, $180,000 Common stock, $1 par value,
4,000,000 shares authorized; 2,500,000 shares issued,
2,460,000 shares outstanding,
$2,500,000 Paid-in capital in excess of par value – preferred stock, $180,000 Paid-in capital in excess of par value – common stock, $52,000,000 Retained earnings,
$24,000,000 Treasury stock (40,000 shares)-$1,250,000
The company's total stockholders' equity is:
Answer:
The company's total stockholders' equity is $77,610,000.
Explanation:
Total Stockholders' Equity
= $180,000 + $2,500,000 + $180,000 + $24,000,000 + $52,000,000 - $1,250,000
= $77,610,000
Therefore, The company's total stockholders' equity is $77,610,000.
At Taylor Activewear, orders have significantly exceeded projections, and Macon, the operations director, has decided to hire for a third shift in the plant. Macon is clearly operating with the use of a(n) _____ budget.
Answer: variable budget
Explanation: In simple words, variable budget refers to the budget statement which shows how much different costs would vary if the level of activity as per standards set increases or decreases.
These are also called flexible budget and are made on the basis of current level of output. These budgets provides flexibility to the management with respect to both best case and worst case scenarios.
From the above we can conclude that the correct answer is variable budget.
An isocost line shows:
A. all the possible output levels that can be produced at a given total cost.
B. all the input combinations that produce the same total output.
C. all the input combinations that can be purchased at a given total cost.
D. the total cost of producing each possible level of output.
Answer:
C) all the input combinations that can be purchased at a given total cost.
Explanation:
The isocost formula is C =wL + rK
where:
C = Total Cost w = wage rate of labor (L) r = cost of capital (K)The isocost line shows the different combinations of inputs that can be purchased for a given level of total expenditure (C) at given input prices (w, r).
The total costs should be minimized at the point where the isocost line intersects with the isoquant line (shows all possible input combinations capable of producing a given level of output).
A(n) _____ is another form of intrapreneurship initiated by an employee who conceives an idea, convinces top management of its potential, and then recruits human and other resources from within the company to turn that idea into a commercial project.
Answer: skunk works
Explanation: In simple words, skunk works refers to the arrangement under which an individual or a group of individual are given a high degree of autonomy due to their special skills or idea.
These groups works within an organisation for some secret or technical projects and are not strictly monitors by the management for their performance. The group of individuals working is usually low in numbers as the projects they work requires knowledge more than the volume and labor force.
Governments, for many reasons, often intervene in international markets, offsetting some of the efficiencies that may be realized with specialization based on comparative advantage and trade.
When governments imposes a tax on imports, this is knows as:
a. a quota.
b. a tariff.
c. an export subsidy.
d. dumping.
Answer:
The correct answer is option b.
Explanation:
A tariff is a tax imposed on the imports of a product. It is used to restricts imports from another country by increasing the price of goods and services. Tariffs are generally of two types:
Specific tariffAd-valorem tariffA quota is a quantitative restriction on imports of goods and services. An export subsidy is a type of subsidy that is paid to the domestic producers to encourage exports.
Dumping is a situation when a country, a firm or an industry sells a product in a foreign market at a lower price than what it charges in domestic market.
The service cost component of pension expense for 2015 is $890,000 and the amortization of prior service cost due to an increase in benefits is $180,000. The settlement rate is 10% and the expected rate of return is 8%. What is the amount of pension expense for 2015?
Answer:
amount of pension expense = $1,730,000
Explanation:
given data
pension expense = $890,000
benefits = $180,000
settlement rate = 10%
expected rate of return = 8%
to find out
amount of pension expense
solution
we get here amount of pension expense that is express as
amount of pension expense = pension expense + benefits + 10% of projected benefit + 8% of pension assets ................1
from attach file we get these
put here value we get
amount of pension expense = $890,000 + $180,000 + 10% of $11,400,000 + 8% of $6,000,000
amount of pension expense = $1,730,000
Your bank statement shows you have a balance of $268.93. All the checks you have written during this statement period are shown on the statement, but there is a deposit missing on your bank statement. If your check register shows you have a balance of $302.43, how much is the missing deposit?
Answer:
The missing deposit is $33.50
Explanation:
Given,
Bank statement balance = $268.93
Check register balance = $302.43
If all the transactions recorded in the check register where captured in the bank statement, the balances in the statement and register would have been the same. However, we are told that there is a deposit missing on your bank statement. Therefore,
Missing deposit = $302.43 - $268.93
= $33.50
The missing deposit amounts to $33.50.
When a principal falsely leads a third party to believe that another individual serves as his or her agent, the principal has created agency by:_______.
Answer:
Estoppel
Explanation:
An agency is created between two parties when one party, with consent of the other party assign a third party to act on his behalf under his control. This third party is called a agent.
Under agency by estoppel, if the principal (who appoints agent to undertake task) assigns a third party, instead of agent, to carry out a task. It is called an agency by estoppel. The principal cannot deny later that he had assigned the work to a third party.
Throughout the course of your life, you have converted some of your cash on hand to certificates of deposit and bonds. You also own several shares of Disney stock, gifted to you by your great-grandmother. Your bonds, certificates of deposit, and stock certificates are examples of ________ property.
Answer:
intangible property
Explanation:
Intangible property can be defied as property that doesn't have any physical attributes that give them value. For example, a car is a tangible since you can drive it around, but a certificate of deposit is just a piece of paper (or even a computer code) and nothing else. The same applies to bonds and stocks, you know they are valuable but their value is not provided by their physical characteristics.
Other intangible property include patents, software, licenses, copyrights and trademarks. All of these can be extremely expensive, for example Microsoft is worth hundreds of billions and it sells digital ones and zeros.
Mary Beth has written a novel. Copyright protection regarding her work will be for:
Answer: Under copyright laws, the protection for Mary Beth's work will be for 70 years.
Explanation:
Copyright is referred to as the exclusionary authority given to an individual i.e. the creator of an art or work in order to reproduce the similar work, whereby this can be done for a limited time period. This work is mostly in literary, educational, artistic, or even musical form. The copyright is most commonly designed in order to protect and serve the original aspect of a notion in form of creative work.
String Inc. is a software development firm that specializes in information systems. The firm receives a contract to create an information system for one of its clients. What indicates that String is using the prototyping approach?
Answer:
create a demo application
Explanation:
A prototyping approach focuses on created a draft version of the product that is being developed in order to test out it's functionalities and explore additional implementations or changes to the product. This being the case the indication that String Inc. is using the prototyping approach would be if they create a demo application and gather user feedback in order to change the application before creating the final version for release.
Given no monthly adjustments were made during the year, the December 31 year-end adjusting entry to record the interest on a $100,000, 12% bond that pays interest annually on November 1 and was sold at par value will include ______.
Answer:
Dr Interest Expense account 10,000
Cr Cash account 10,000
Explanation:
We have to calculate how much interest did the company paid = $100,000 x 10/12 x 12% = $10,000
Then we must record the journal entries
Dr Interest Expense account 10,000Cr Cash account 10,000Since cash is an asset and it decreases, then it should be credited.
Since interest is an expense and it increases, it should be debited.
The year-end adjusting entry will include a debit to Interest Expense and a credit to Interest Payable for $2,000, representing two months of accrued interest on the bond.
The December 31 year-end adjusting entry to record the interest on a $100,000, 12% bond that pays interest annually on November 1 and was sold at par value will include a debit to Interest Expense and a credit to Interest Payable for the amount of accrued interest from November 1 to December 31.
To calculate the accrued interest: The annual interest payment is 12% of $100,000, which is $12,000. Given that interest is paid annually on November 1, by December 31, two months of interest have accrued. The two months of interest is calculated as follows:
((12% of $100,000) / 12 months) x 2 months
$12,000 / 12 months = $1,000 per month
$1,000 x 2 months = $2,000 of accrued interest
Thus, the journal entry would be:
Debit Interest Expense $2,000Credit Interest Payable $2,000