Answer:
cost of goods manufactured schedule
Raw Materials ($9,180 + $55,020 - $17,480) $46,720
Direct Labor $51,740
Manufacturing overheads :
indirect labor $6,510
factory insurance $4,700
machinery depreciation $4,380
machinery repairs $1,990
factory utilities $3,740
miscellaneous factory costs $1,980
Add Opening Work In Process $5,670
Less Closing Work In Process ($7,610)
Cost of goods manufactured $119,800
Explanation:
Cost of goods manufactured schedule shows a summary of results (cost) obtained from manufacturing activity during the production period.
To avoid accepting projects that actually should be rejected, a company should ignore intangible benefits in calculating net present value.
a. True
b. False
Answer:
false
Explanation:
Net present value is the present value of after-tax cash flows from an investment less the amount invested.
Only projects with a positive NPV should be accepted. A project with a negative NPV should not be chosen because it isn't profitable.
When choosing between positive NPV projects, choose the project with the highest NPV first because it is the most profitable.
Monetary amounts should be allocated to intangible benefits and incorporated into the calculation of NPV
According to the Census Bureau, in October 2016, the average house price in the United States was $354,900. In October 2000, the average price was $215,100. What was the annual increase in the price of the average house sold? (Do not round intermediate calculations)
Answer:
3.18%
Explanation:
Calculation for the annual increase in the price of the average house sold
We are suppose to use this formula FV = PV (1+r)^t but since we are looking for R the formula to use will be:
R = (FV / PV)^1/16– 1
Let note that 2016-2000 will give us 16 years
Where,
FV=$354,900
PV=$215,100
Let plug in the formula
R= ( $354,900/$215,100 )^1/8)16– 1
R=(1.6499)^1/16-1
R=1.0318-1
R=0.0318×100
R=3.18%
Therefore the annual increase in the price of the average house sold will be 3.18%
Maxwell purchased $30,000 worth of 52-week T-Bills for $29,650. What will be the rate of return on his investment? (Round you two decimal places.)
Answer:
The rate of return per year = 1.18%
Explanation:
We know that 52 weeks = 1 year
Investment amount = $29650
Now first find the return on investment by subtracting the purchase price from the actual value of T bills.
Return on the investment = Actual value of T bill – Purchase price
Return on the investment = $30000 - $29650 = $350
The rate of return per year = (350/29650) * 100
The rate of return per year = 1.18%
The profit earned on an investment is divided by the cost of that investment to determine the return on investment (ROI). When represented as a percentage, an investment with a profit of $100 and a cost of $100 would have an ROI of 1 or 100%.
1.18% will be the rate of return on Maxwell's investment.
GIVEN1 year = 52-weeks
Investment amount = $29650
NOTESubtract the purchase price from the real value of T bills to get the return on investment.
[tex]\text{Return on the investment = Actual value of T bill – Purchase price }[/tex]
[tex]\text{Return on the investment} = 30,000 - $29,650 = 350[/tex]
[tex]\text{The rate of return per year} = \frac{350}{29,650}[/tex] × [tex]100[/tex]
[tex]\text{The rate of return per year} = 1.18[/tex]%
Therefore, 1.18% is the computed value of the rate of return on investment.
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________is important if people from different departments are going to work together to produce better outcomes than they could individually.
Answer:
collaboration
Explanation:
Collaboration is a term that describes a form of synergy which involves two or more individuals or groups operating together for the purpose of reaching a common goal of achieving mutual objectives.
Hence, COLLABORATION is important if people from different departments are going to work together to produce better outcomes than they could individually.
line of customers waiting to pay. The first customer asks you for directions to the airport.
It is busy, and you are the only one on the shift. You have
What do you do?
А
Treat all customers the same. Provide the customer with quick directions even though there are others waiting in line.
B
Ask the customer to please wait a few minutes until you check out the remaining customers. Then provide the directions.
с
Ask the other customers in line if they know how to get to the airport and ask them to help the customer. This way you can focus on
checking out the remaining customers.
D
Sell the customer a map so that he can find his way to the airport,
Answer:
the answer is a
Explanation:
because all you have to do is just give them some quick directions and then move on to the rest of the customers but treat them all the same
Identify the two basic categories of items on an income statement.
Answer:
RevenueExpensesExplanation:
The Income statement is used to check the financial performance of a company within a period by calculating the net income or losses made.
It does so by subtracting the expenses incurred from the revenue realized. These two categories are therefore the most basic items in the income statement and will always appear in them.
Examples of Revenue sources include; Sales and Service Revenues.
Examples of Expenses include; Advertising, Salaries and Depreciation.
Smoking cigarettes is a leading cause of many diseases. Suppose the government has opened several public clinics that treat smoking-related diseases and is trying to decide how to fund these clinics. One suggestion is to raise the funds for the public clinics by imposing a tax on yachts. This tax follows:
Answer:
The ability-to-pay principle
Explanation:
Here are simplified financial statements for Watervan Corporation. INCOME STATEMENT (Figures in $millions)Net sales $881Cost of goods sold 741Depreciation 31Earnings before interest and taxes (EBIT) $109Interest before tax $97Taxes 34Net income $63 BALANCE SHEET (Figures in $millions) End of Year Start of YearAssetsCurrent assets $369 $312Long-term assets 258 222Total assets $627 $534Liabilities and shareholders; equityCurrent liabilities $194 $157Long-term debt 108 121Shareholders' equity 325 256Total liabilities and shareholders' equity $627 $534The company's cost of capital is 8.5%a. Calculate Watervan's economic value added (EVA). Do not round intermediate calculations. Enter answer in millions rounded 2 decimal places.Economic value added $_____ millionb. What is the company's return on capital? Use start of year rather than average capital. Do not round intermediate calculations. Enter answer as a percent rounded to 2 decimal places.Return on capital _____%c. What is its return on equity? Use start of year rather than average equity. Enter answer as a percent rounded to 2 decimal places.Return on equity _____%
Answer:
1. Economic value added = $34.04 million
2. Company's return on capital = 18.79%
3. Return on equity = 24.61%
Explanation:
1. Economic value added (EVA) = NOPAT - capital charge
Where;
NOPAT = EBIT × ( 1 - tax rate )
Tax rate = Taxes / Income before taxes
= 34 / 97 * 100
= 35%
NOPAT = 109 × ( 1 - 35% )
= 70.85
But,
Capital charge = Capital employed × Cost of capital = (Equity + Interest bearing Liabilities) × Cost of capital
= (325 + 108) × 8.5%
= 433 × 8.5%
= 36.81
Therefore,
Economic value added(EVA)
= 70.85 - 36.81
= $34.04 million
2. Company's return on capital(using start of year equity)
= NOPAT / (Total assets - Current liabilities)
= 70.85 / (534 - 157)
= 70.85 / 377
= 0.1879
= 18.79%
Return on capital is 18.79%
3. Return on equity(using start of year equity) = Net income / Shareholder's equity
= 63 / 256
= 1.125
= 24.61%
Return on equity is 24.61%
A measurement of the excess value produced on an investment is called the Economic Value Added (EVA). The "true" cash flow return on capital received from an investment is what is meant by the term return on capital (ROC).
1. Economic value added is $34.04 million.
2. Company's return on capital is 18.79%.
3. Return on equity is 24.61%.
The calculations are provided below:
Economic value added (EVA) = capital charge - NOPAT
Where;
NOPAT equals EBIT - (tax rate - 1)
Tax rate equals taxes / pre-tax income
= 34 / 97 * 100
= 35%
NOPAT = 109 × (1 - 35%)
= 70.85
But,
Capital employed x Capital charge Cost of capital is equal to equity plus interest-bearing liabilities.
= (325 + 108) × 8.5%
= 433 × 8.5%
= 36.81
Therefore,
EVA or economic value added
= 70.85 - 36.81
equals $34.04 billion
2. The firm's return on capital (using equity at the year's beginning)
(Total Assets - Current Liabilities) = NOPAT
= 70.85 / (534 - 157)
= 70.85 / 377
= 0.1879
= 18.79%
18.79% is the return on capital.
3. Net income divided by shareholder equity, or return on equity (using start-of-year equity).
= 63 / 256
= 1.125
= 24.61%
24.61% is the return on equity.
A measure of a company's financial performance known as economic value added (EVA) is based on the residual wealth that is determined by subtracting its cost of capital from its operating profit, adjusted for taxes on a cash basis.
EVA is also known as economic profit since it aims to identify a company's genuine economic profit. Stern Value Management, initially established as Stern Stewart & Co., is a management consulting business that developed this metric.
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Which of the following is a difference between the marketing concept and the selling concept?
a. The marketing concept focuses on customer conquest, whereas the selling concept focuses on targeting the right customers.
b. The marketing concept focuses on short-term sales, whereas the selling concept strives to build long-term customer relationships.
c. The marketing concept is product-centered, whereas the selling concept is production-centered.
d. The marketing concept focuses on customer needs, whereas the selling concept focuses on existing products.
e. The marketing concept takes an inside-out perspective, whereas the selling concept takes an outside-in perspective.
Answer: d. The marketing concept focuses on customer needs, whereas the selling concept focuses on existing products.
Explanation:
A difference between the marketing concept and the selling concept is that the marketing concept focuses on customer needs, whereas the selling concept focuses on existing products.
A selling concept believes there must be adequate promotion and large scale selling for consumers to purchase a firm's products while according to Marketing concept,the need of the consumers has to be known and identified by the firms.
For each of the pairs below, determine whether they are positively correlated, negatively correlated, or uncorrelated.
A. Time spent studying and test scores: Positively correlated.
B. Vaccination and illness: Negatively correlated.
C. Soft drink preference and music preference:Uncorrelated.
D. Income and education: Positively correlated.
Answer and Explanation:
In case when there is an existence of the mutual relationship lies between the two variables so it can be said it is a correlation. In case when one variable rises, and the other is also rises so it is positive and in the case when one variable rises, and the other is fall so it is negative
Now the classification is as follows
a. Spent more time that results in more marks so positive correlation
b. In case when the vaccination rises, the illness decreased so negative correlation
c. No relation lies between the soft drink and the music paid so no correlation
d. Increase in education results more income so positive correlation
A recession is usually declared to be over when short-run output returns to potential output.A. TrueB. False
Answer:
False
Explanation:
A recession is a period of general decline in economic activities. It is when the GDP of a country for two consecutive quarters is negative.
Potential output is the output an economy can produce if all its resources are fully employed.
During a recession, output is negative so output would be less than potential output.
Which statement best explains how elasticity and incentives work together?
A )An elastic good, such as a game, is more likely to respond to incentives.
B) An inelastic good, such as a game, is more likely to respond to incentives.
C) An elastic good, such as a game, is less likely to respond to incentives.
D) An inelastic good, such as a game, is less likely to respond to incentives.
Answer: A
Explanation: A. An elastic good, such as a game, is more likely to respond to incentives.
Flexibility and incentives coexist A game is an example of an elastic good that is more likely to respond to incentives. As a result, choice (A) is the right one.
What is Elasticity ?Elasticity is a term used in economics to describe how susceptible one economic component is to shifts in another.
For instance, the relationship between changes in supply or demand and price changes or between changes in demand and income changes.
Demand is said to be inelastic if it remains largely constant regardless of price changes and has a coefficient of elasticity below 1.0.Clothing or electronics are examples of elastic goods, whereas inelastic goods include things like food and prescription medications.
Cross elasticity quantifies the shift in demand for one commodity as a result of price changes for another, related good. when the elasticity value is larger than 1.0
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How would you value a 1000 bond with 10% coupon rate?
Question
How would you value a 1000 bond with 10% coupon rate?
Assuming the bonds is repayable in five (5) years time with a yield of 11% per annum.
Answer:
Value of bond = $948.54
Explanation:
The value of the bond is the present value(PV) of the future cash receipts expected from the bond. The value is equal to present values of interest payment plus the redemption value (RV).
Value of Bond = PV of interest + PV of RV
The value of bond of the can be worked out as follows:
Step 1
PV of interest payments
Annul interest payment = 10% × 1000 = 100
Annual yield = 11%
Total period to maturity (in years) = 8 years
PV of interest =
100 × (1- 1.11^(-8)/)/ 0.11 = 514.612
Step 2
PV of Redemption Value
= 1,000 × (1.11)^(-8) = 433.926
Step 3
Price of bond
= 514.612 + 433.926 = 948.539
Value of bond = $948.54
The financial crisis of 2008 demonstrated the flaw in a bottom-up detailed approach to calculating risk. There are
too many individual judgments that can be biased. Banks and bank regulators instead use a rule of thumb that
bank capital should be 8-10 percent of the balance sheet. That is, managers rely on
A) a heuristic
B) rational decision making
C) intuitive decision making
Answer:
B
Explanation:
Answer: it’s A
Explanation:
Choose the correct term for each of the following descriptions.
A. Expenditure on research and development.
B. A bank loan.
C. Listed on a stock exchange.
D. Has limited liability.
E. Responsible for bank relationships.
F. Agency cost.
Explanation:
A. Expenditure on research and development. > Investment decision.
Reasearch and development (R&D) is an investment cost because the results of such research can benefit the company long-term.
B. A bank loan. > Financial asset.
A bank loan involves cash, and could be rightly called a financial asset.
C. Listed on a stock exchange. > Public corporation.
Only public corporations are listed on stock exchange, an example is Microsoft.
D. Has limited liability. > Corporation
E. Responsible for bank relationships. > The Treasurer.
F. Agency cost. > Agency cost
Anderson's theory of skill development distinguishes between declarative and procedural knowledge. Procedural knowledge refers knowing how to do something. What is declarative knowledge? a. Factual knowledge about a task b. Automatic task processing. c. Associative knowledge of the task. d. Muscle memory
Answer:
a. Factual knowledge about a task
Explanation:
Anderson's theory distinguishes between two theories. The procedural theory and the declarative theory. While the procedural theory is basically knowledge on how to do something, the declarative knowledge theory is the knowledge about facts. It is the basic knowledge or facts about things that are stored in the memory. It is static in nature. It is knowledge about something, a process or a place or task which is already processed and stored in the memory.
Consider the following two countries. Assume they produce only these two goods. Note that productivity is now measured in how many goods can be produced per hour, the opposite of how we measured. U.S. Japan Cars 12 10
Computers 4 6A. What is U.S’ opportunity cost of making cars?
B. What is Japan’s opportunity cost of making cars?
Answer:
A. 1/3 computers
B. 0.6 computers
Explanation:
A. The opportunity cost incurred by the US to make cars is the number of computers it would have to give up to make a car.
The US can either make 12 cars or 4 computers. For every car made therefore the US forgoes;
= 4/12
= 1/3 computers.
B. The same logic applies to Japan. They can either make 10 cars or 6 computers.
Their opportunity cost for cars is therefore;
= 6/10
= 0.6 computers
Which type of private label brand carries no evidence of a retailer s affiliation, is manufactured by a third party, and is sold exclusively at the retailer? A. A captive brand B. A complementary brand C. A cooperative brand D. An exclusive brand E. A generic brand
Answer:
A. A captive brand
Explanation:
-A captive brand is when a brand is produced by another party and owned by the retailer but there is no evidence of this and it is only sold by it.
-A complementary brand is when a brand is marketed together with another one to encourage the purchase of both.
-A cooperative brand is when a brand shares a promotion with another one.
-An exclusive brand is a brand that is produced by the retailer and it is sold using its name.
-A generic brand is when a product doesn't have a brand name and it has a lower price than the ones from well-known brands.
According to this, the answer is that the type of private label brand that carries no evidence of a retailer s affiliation, is manufactured by a third party, and is sold exclusively at the retailer is a captive brand.
What are the two branches of quantitative management?
Answer:
management science and operations management.
Explanation:
Quantitative Management is a form of management that is often employed in solving issues relating to numbers or figures. It involves the utilization of mathematical components, statistical formulas, and computerization modeling to create definite solutions and aids the management team to make a better decision.
It is basically divided into two, and they are:
1. Management Science: this deals with the mathematical aspect of the management team decision.
2. Operations Management: this deals with products and services delivery of the firm
A company's trial balance included the following account balances: Accounts payable $19,287 Accounts receivable 81,416 Cash 73,404 Income tax payable 3,592 Inventories 25,896 Note payable, due in two years 1,789 Equipment 54,928 Stockholders' equity 203,608 Supplies 5,592 Wages payable 12,960 What is the amount of Total Assets on the Balance Sheet
Answer:
Total Assets on the Balance Sheet is $241,236.
Explanation:
Total Assets would include the total from the Non Current Assets Section and the total from the Current Assets Section of the Balance sheet.
Here is an extract of the Assets Section of the Balance Sheet :
Assets
Non-Current Assets
Equipment $54,928
Total Non-Current Assets $54,928
Current Assets
Inventories $25,896
Supplies $5,592
Accounts receivable $81,416
Cash $73,404
Total Current Assets $186,308
Total Assets $241,236
Indicate the effects of the following business transactions on the accounting equation for Sam's Snack Foods, a supplier of snack foods.
Transaction (a) is answered as a guide. a. Sam s Snack Foods received cash from the issuance of common stock to stockholders. Answer: Increase asset (Cash); Increase equity (Common Stock)
b. Cash purchase of land for a building site.
c. Paid cash on accounts payable.
d. Purchased equipment; signed a note payable.
e. Performed service for a customer on account.
f. Employees worked for the week but will be paid next Tuesday.
g. Received cash from a customer on accounts receivable.
h. Borrowed money from the bank.
i. Cash dividends paid to stockholders.
j. Incurred utilities expense on account.
Answer:
a. Sam s Snack Foods received cash from the issuance of common stock to stockholders.
Increase asset (Cash); Increase equity (Common Stock)b. Cash purchase of land for a building site.
Decrease current asset (Cash); Increase non-current asset (Land)c. Paid cash on accounts payable.
Decrease asset (Cash); Decrease liabilities (Accounts payable)d. Purchased equipment; signed a note payable.
Increase non-current asset (Equipment); Increase long term liabilities (Notes payable)e. Performed service for a customer on account.
Increase asset (Accounts receivable); Increase equity (Retained earnings)f. Employees worked for the week but will be paid next Tuesday.
Increase liabilities (Wages payable); Decrease equity (Retained earnings)g. Received cash from a customer on accounts receivable.
Increase asset (Cash); Decrease asset (Accounts receivable)h. Borrowed money from the bank.
Increase asset (Cash); Increase liability (Notes payable)i. Cash dividends paid to stockholders.
Decrease asset (Cash); Decrease equity (Retained earnings)j. Incurred utilities expense on account.
Increase liabilities (Accounts payable); Decrease equity (Retained earnings)Which of the following ratios use de-levered net income?
a. Financial Leverage
b. Return on Equity
c. Return on Assets
d. Asset Turnover
e. Return on Sales
Answer:
c. Return on Assets
Explanation:
The net income usually has an impact of interest expense since interest expense is deducted from earnings before interest and tax in arriving at net income.
Hence, in order to take out the impact interest expense when computing return on assets, an adjusted net income known as de-levered net income is computed using the below formula:
Net Income + (1-t)xInterestExpense
A group of investors are discussing the formation of a new property and liability insurer. The proposed com-pany would market a new homeowners policy that combines traditional homeowner coverages with unem-ployment benefits if the policyholder becomes involun-tarily unemployed. Each investor would contribute at least $100,000 and would receive a proportionate interest in the company. In addition, the company would raise additional capital by selling ownership rights to other investors. Management wants to avoid the expense of hiring and training agents to sell the new policy and wants to sell the insurance directly to the public by selective advertising in personal finance magazines.
A. Identify the type of insurance company that best fits the above description.
B. Identify the marketing system that management is considering adopting.
Answer:
A. Stock insurance company
B. Direct response system marketing strategy
Explanation:
A. A stock insurance company has the stock holders or owners as investors and not policyholders. Profit is made when the stock increases in value over time. In this given question raising additional capital only happens In a stock insurance company.
B. Because the management do not want hiring of agents and personalized selling, they can do this through direct response system marketing strategy. This policy is sold directly to customers through various system such as telemarketing or through the media
Which core competency of the Lean Enterprise focuses on building quality in?
Answer:
Technical Agility
Explanation:
Lean Enterprise is a process of continuous improvements in operations which generates value for the end product. The company have to continuously improve its product so that the customers remains satisfied and newer markets can be easily accessed depending upon the added features in the product.
For this reason, technical agility says that the newer technologies must be adapted or must be integrated with its existing technology because it brings quality to the company end products and makes processes and operations better than before.
You can determine a company's cash situation by analyzing the cash flow statement. The cash flow statement also helps determine whether the company (1) is generating enough cash from its operations to make new investments and pay dividends or (2) will need to generate cash by issuing new debt or selling its assets.
Which of the following is true for the statement of cash flows?
a. It reflects cash generated and used during the reporting period.
b. It reflects revenues when earned.
Three categories of activities (operating, investing, and financing) generate or use the cash flow in a company. In the following table, identify which type of activity is described by each statement.
Globo-Chem Co. reported net sales of $200 million last year and generated a net income of $44 million. Last year's accounts receivable increased by $20 million. What is the maximum amount of cash that Globo-Chem Co. received from sales last year?
a. $135 million
b. $64 million
c. $90 million
d. $180 million
Answer:
Which of the following is true for the statement of cash flows?
a. It reflects cash generated and used during the reporting period.Revenues are recognized when the earning process is completed, and they are not necessarily associated to the collection of cash, e.g. accounts receivable.
Three categories of activities (operating, investing, and financing) generate or use the cash flow in a company. In the following table, identify which type of activity is described by each statement.
What statements? I looked for a similar question:
Ruth Enterprises distributes a holiday bonus to all its employees ⇒ OPERATING ACTIVITYYum Co. uses cash to repurchase 10% of its common stock. ⇒ FINANCING ACTIVITYA company buys some common stock in its supplier's firm with its extra cash. ⇒ INVESTING ACTIVITYA company records a decrease in its total raw materials inventory from the previous year. ⇒ OPERATING ACTIVITYGlobo-Chem Co. reported net sales of $200 million last year and generated a net income of $44 million. Last year's accounts receivable increased by $20 million. What is the maximum amount of cash that Globo-Chem Co. received from sales last year?
d. $180 millionDirect incentives are designed to induce changes in behavior. Indirect incentives change behavior in ways that were not intended. Identify each item as an example of a direct or an indirect incentive.a. Car alarms to discourage break-ins b. Raising corporate income tax rates leads to fewer new businesses c. Frequent-flier points to increase customer loyalty d. Government-funded debt relief for college graduates leads to more student-loan debt
Answer and Explanation:
The Direct incentive is the incentive that has an instant impact on the users of the resources and the returns to the investments are directly influenced
On the other hand, the indirect incentives have an indirect impact for changing overall conditions of the framework
Therefore the categorization is as follows
For direct incentive
1. car alarms
2. Frequent filter points
For indirect incentive
1. raising corporate income
2.Government-funded debt
The following information should be relevant:
The Direct incentive refers to the incentive that has an instant effect on the users of the resources and the returns to the investments are directly impacted. While On the other hand, the indirect incentives have an indirect impact for changing total framework conditions
So, the categorization is as follows
For direct incentive
1. car alarms
2. Frequent filter points
For indirect incentive
1. raising corporate income
2.Government-funded debt
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The primary goal of a financial manager of a corporation is:______.
a. maximize market share.
b. maximize the owner's wealth.
c. increase sales and profit.
d. have healthy cash flow.
Answer:
B
Explanation:
The government must mandate lower prices when beef surpluses exist; otherwise, the quantity supplied will continue to exceed the quantity demandedA. TrueB. False
Answer: True
Explanation:
Beef surplus in the market simply means that there's excess of beef in the market. In this case, the quantity supplied for beef is more than the quantity that the consumers demand, which means that the price at which beef is sold is more than the equilibrium price.
Due to thus reason, the government must mandate lower prices as this will help in increasing the quantity demanded of beef, reduce quantity supplied and hence, the surplus will be curtailed.
Which of the following is not an example of the bricks-and-clicks e-tailing business model? A. Walmart.com B. JCPcnney.com C. Drugstore.com D. Staples.com
Answer:
C
Explanation:
bricks-and-clicks e-tailing business model are businesses that have physical stores and also have an online store.
E-tailing business models only exist online
Which of the following is not generally correct about recording a sale of a debt security before maturity date?
a. Accrued interest will be received by the seller even though it is not an interest payment date.
b. An entry must be made to amortize a discount to the date of sale.
c. The entry to amortize a premium to the date of sale includes a credit to the Premium on Debt Investments.
d. A gain or loss on the sale is reported as an other revenue or expense.
Answer: The entry to amortize a premium to the date of sale includes a credit to the Premium on Debt Investments.
Explanation:
Debt security is simply issued by either the government or a corporation and it's an investment in debt instrument.
The statement that is not generally correct about recording a sale of a debt security before maturity date is that the entry to amortize a premium to the date of sale includes a credit to the premium on debt Investments. This isn't true as the entry to amortize a premium to the date of sale does not include a credit to the premium on debt Investments
Debt securities or bonds are financial instruments. The most common types of debt instruments are municipal bonds and corporate bonds. The debt securities can be the amount taken in the form of a loan that is to be paid mandatorily after the maturity of the time period.
The entry that is incorrect for recording a sale of a debt security before the maturity date is:
Option c. The entry to amortize a premium to the date of sale includes credit to the Premium on Debt Investments.
Reason:
The entry will be incorrect for the sale of debt security because the amortization premium at the date of sale does not include any credit amount to the premium over the debt instruments.
All the other options will record a sale of debt before its maturity period.
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