Question 1) Corp. purchased 10, $1,000, 4% bonds of Current Power Corporation wh
ID: 2588301 • Letter: Q
Question
Question 1)
Corp. purchased 10, $1,000, 4% bonds of Current Power Corporation when the market rate of interest was 10%. Interest is paid semiannually on the bonds, and the bonds will mature in six years. Using the PV function in Excel @, compute the price Desmond paid (the present value) on the bond investment. (Assume that all payments of interest and principal occur at the end of the period. Round your answer to the nearest cent.) Desmond paid $? On the bond investment.
Question 2)
(1) Assume that Robson Electronics completed these selected transactions during June 2014:
a.
Sales of $3,250,000 are subject to estimated warranty cost of 2%. The estimated warranty payable at the beginning of the year was $36,000, and warranty payments for the year totaled $57,000.
b.
On June 1, Robson Electronics signed a $40,000 note payable that requires annual payments of $8,000
plus 4% interest on the unpaid balance each June 2.
c.
Music For You, Inc., a chain of music stores, ordered $135,000 worth of CD players. With its order, Music For You, Inc., sent a check for $135,000 in advance, and Robson shipped $95,000 of the goods. Robson will ship the remainder of the goods on July 3, 2014.
d.
The June payroll of $280,000 is subject to employee withheld income tax of $30,400 and FICA tax of 7.65%. On June 30, Robson pays employees their take-home pay and accrues all tax amounts.
(Round all amounts to the nearest whole dollar. Leave any unused cells blank.)
Robson Electronics Balance Sheet (partial) June 30, 2014 Current liabilities:
Employee withheld income tax payable:
Current portion of long-term note payable:
Interest payable:
Unearned sales revenue:
Estimated warranty payable:
FICA tax payable:
Total current liabilities:
Long-term liabilities:
Note payable
a.
Sales of $3,250,000 are subject to estimated warranty cost of 2%. The estimated warranty payable at the beginning of the year was $36,000, and warranty payments for the year totaled $57,000.
b.
On June 1, Robson Electronics signed a $40,000 note payable that requires annual payments of $8,000
plus 4% interest on the unpaid balance each June 2.
c.
Music For You, Inc., a chain of music stores, ordered $135,000 worth of CD players. With its order, Music For You, Inc., sent a check for $135,000 in advance, and Robson shipped $95,000 of the goods. Robson will ship the remainder of the goods on July 3, 2014.
d.
The June payroll of $280,000 is subject to employee withheld income tax of $30,400 and FICA tax of 7.65%. On June 30, Robson pays employees their take-home pay and accrues all tax amounts.
Explanation / Answer
1. Payment for bond investment = (Semi-annual interest payment x PVA5%,12) + (Face value x PV5%,12)
= ($10000 x 2% x 8.86325) + ($10000 x 0.55684)
= $7341
2. Balance sheet (Partial)
Current liabilities: Employee withheld income tax payable $30400 Current portion of long-term note payable 8000 Interest payable (40000 x 4% x 1/12) 133 Unearned sales revenue (135000-95000) 40000 Estimated warranty payable [36000+ (3250000 x 2%) - 57000] 44000 FICA tax payable (280000 x 7.65%) 21420 Total current liabilities $143953 Long-term liabilities: Note payable 32000Related Questions
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