General Host; Accounting for a Bond Refunding Essay

A. You have just won the Strayer Lottery jackpot of $11,000,000. You will be paid in 26 equal annual installments beginning immediately. If you had the money now, you could invest it in an account with a quoted annual interest rate of 9% with monthly compounding of interest. What is the present value of the payments you will receive?

B. Suppose you have two bank accounts, one called Account A and another Account B. Account A will be worth $6,500.00 in one year. Account B will be worth $12,600.00 in two years. Both accounts earn 6% interest. What is the present value of each of these accounts?

D. Under 10% annual compounding of interest for 5 years, an annuity would require five equal payments of $3,275.95 in order to accumulate

1-year note payable in exchange. Assuming 10% approximates the market rate of return, how much interest would be recorded for the year ending December 31 if the sale was made on June 30? PxRxT 1yr 80,000 x 10% = 8,000 x 6/12 = $4,000

Assume the current market interest rate is 12%. 7/1/12 Notes Receivable...............400,000.00 Discount on Notes Receivable..... 178,836.32 Service Revenue............................... 221,163.68 Computation of the present value of the note: Maturity value ...................................................... $400,000.00 (a) Present value of $400,000 due in 8 years at 12%: $400,000 X .40388= $161,552 (b) Present value of $12,000 payable annually for 8 years at 12% annually: $12,000 X 4.96764 =

A. Suppose your bank account will be worth $15,000.00 in one year. The interest rate (discount rate) that the bank pays is 7%. What is the present value of your bank account today?

Suppose that the pension fund manager wants to invest a sum of money that will satisfy this liability stream. Assuming that any amount that can be invested today can earn an annual interest rate of 7.6%, how much must be invested today to satisfy this liability stream?

We distinguish between two types of adjusting entries and those are prepaid and accruals. I would like to utilize Horngren’s accounting in explaining in detail about each adjusting entry because the book explains that “In a prepaid adjustment, the cash payment occurs before an expense is incurred or the cash receipt occurs before the revenue is earned.” (Nobles, Mattison, & Matsumura, 2014, p.139)” While the textbook also elaborates that “An accrual records an expense before the cash is paid or it records the revenue before cash is received.” (Nobles, Mattison, & Matsumura, 2014, p.139) The first adjusting entry mentioned above, prepaid can be further broken down to prepaid expenses and unearned revenues, while accruals can be broken down to accrued expenses and accrued revenues. When we talk about

2. Your uncle plans to buy a piano and can afford to set aside $1,930 toward the purchase today. If the annual interest rate is 14.8%, how much can he spend in four years on the purchase? If the interest rate is 7.4%, how much can he spend?

1. If my account pays 5% and will be worth $4200 in one year, the present value of my account today is:

1. 2010 late-night talk show indicated the existence of an unclaimed municipal bond issued in 1883 by a town in Missouri. The bond was $100 with an interest rate on 10%. At a compound interest, what would be the bonds value in 2010.

What is the future value of $1,560 in 13 year assuming an interest rate of 9percent compounded semi-annually?

Consider an amount $ invested for years at a simple interest rate of per annum (where is expressed as a decimal). If

b. b. The company holds about half of its assets in the form of U.S. Treasury bonds, and it keeps these funds available for use in emergencies. In the future, though, SSC plans to shift its emergency funds from Treasury bonds to common stocks. Discuss how SSC’s stockholders might view each of these actions, and how they might affect the stock price.

The assessee had also taken funding for trading in securities and had shown the profits made through the funding as capital gains. Taking the view that the transactions made in cash segment from 1-10-2004 to 31-3-2005, were all executed in the normal course of business and not as investments, assessment was sought to be made as business income.