Homework Answers
Option 2 is correct. Compensating Balance Loan.
Compensating Balance Loan is a type of loan in which a minimum balance is maintained in the Bank all the time. It cant be used by the borrower but interest is still paid. Furthermore the Bank may use this fund to lend to other to compensate the cost of loan.
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type of loan is similar to a line of credit. However, even though only a portion...
A firm has the line of credit with an interest rate of 3% and a commitment...
A firm has the line of credit with an interest rate of 3% and a commitment fee of 0.25% based on the unused portion of the line. The total funds available on the credit line equal $5,000,000. The firm expects average daily borrowings of $3,500,000. What’s the effective cost of this LOC? If the bank asks for 10% compensating balance, what’s the effective cost of this LOC? A firm is looking to raise $5,000,000 from the commercial paper (CP) market. ...
P12-34A (similar to) Question Help On January 1, 2018, Agricultural Credit Union (ACU) issued 7 %...
P12-34A (similar to) Question Help On January 1, 2018, Agricultural Credit Union (ACU) issued 7 % , 20-year bonds payable with face value of $800,000. The bonds pay interest on June 30 and Decemb 31 Read the requirements Requirement 1. If the market interest rate is 5 % when ACU issues its bonds, will the bonds be priced at face value, at a premium, or at a discount? Explain. The 7% bonds issued when the market interest rate is 5...
Question 12 4 pts Bill just financed a used car through his credit union. His loan...
Question 12 4 pts Bill just financed a used car through his credit union. His loan of $14,572 has an interest rate of 5.00% and requires payments of $275 a month for 60 months. Assuming that all payments are paid on time, his last payment will pay off the loan in full. What type of loan does Bill have? Amortizing Pure discount Lump sum Interest-only
Only need to approve loan or not LOAN DETAILS Little Annin Flagmakers has requested a line...
Only need to approve loan or not
LOAN DETAILS
Little Annin Flagmakers has requested a line of credit of
US$60,000 to cover production costs during the seasonal increase in
business. Kent Bank uses the following terms on its lines of
credit. All borrowing is done at the beginning of the month, in
whole dollar increments. All repayments are made at the end of the
month, in whole dollar increments. The full line of credit is
expected to be paid off...
When the loan is first obtained, $300,000 will be posted in the long- term debt account...
When the loan is first obtained, $300,000 will be posted in
the long- term debt account and will appear on the balance sheet.
At the end of the first year, Sunnyvale will pay the bank a total
of $130,000, consisting of $30,000 interest on the loan and
$100,000 repayment on the principal portion of the loan. The
$30,000 interest expense, which is paid to the bank for the use of
its money, appears as an expense on the income statement....
Debt Issued at a Discount (Straight Line) On January 1, 2020, Drew Company issued $900,000, 5-year...
Debt Issued at a Discount (Straight Line) On January 1, 2020, Drew Company issued $900,000, 5-year bonds for $855,000. The stated rate of interest was 8% and interest is paid annually on December 31. Required: Prepare the amortization table for Drew Company's bonds. If an amount box does not require an entry, leave it blank and if the answer is zero, enter "o". Drew Company Amortization Table Interest Expense (Debit) Discount on Bonds Payable (Credit) Discount on Bonds Payable Balance...
Please answer in table form only for easy understanding. Thanks. Diaz Company issued $148,000 face...
Please answer in table form only for easy understanding.
Thanks.
Diaz Company issued $148,000 face value of bonds on January 1, 2018. The bonds had a 6 percent stated rate of interest and a ten- year term. Interest is paid in cash annually, beginning December 31, 2018. The bonds were issued at 97. The straight-line method is used for amortization Required a. Use a financial statements model like the one shown below to demonstrate how (1) the January 1,...
QULOTIUNI u pullit Sa Pearson Company obtained a line of credit from City Bank that is...
QULOTIUNI u pullit Sa Pearson Company obtained a line of credit from City Bank that is renewable annually. How will Pearson classify the line of credit borrowings on its balance sheet? O A. Equity O B. Short-term investment O C. Short-term liability O D. Long-term liability QUESTION 12 5 points Sa On January 1, 2011, Norton Corporation received cash from issuing 10-year $200,000 bonds at face value. Interest of $10,000 is paid annually to the bondholders on December 31. How...
If the credit card has an annual interest rate of 13.6% and only the minimum monthly payment of $35 is made, how many months will it take to pay off the credit card?
Part 2: Credit Cards Another type of personal loan is a credit card. A financial institution allows you to charge a purchase to your account, and you are required to pay the financial institution at a later time. As with other loans, credit cards charge interest. Interest rates can range from 3% - 22%. When you are paying for debt on a credit card, the financial institution will require a minimum balance be paid each month. The higher the interest rate that is charged...
Using a Discount Amortization Table (Straight Line) Panamint Candy Company prepared the following amortization table for...
Using a Discount Amortization Table (Straight Line) Panamint Candy Company prepared the following amortization table for $300,000 of 5-year, 9% bonds issued and sold by Panamint on january 1, 2021, for $285,000: Period Cash Payment (Credit) Interest Expense (Debit) Discount on Bonds Payable (Credit) Discount on Bonds Payable Balance Carrying Value At issue $15,000 $285,000 06/30/21 $13,500 $15,000 $1,500 13,500 286,500 12/31/21 13,500 15,000 1,500 12,000 288,000 06/30/22 13,500 15,000 1,500 10,500 289,500 12/31/22 13,500 15,000 1,500 9,000 291,000 06/30/23...
P12-34A (similar to) Question Help On January 1, 2018, Agricultural Credit Union (ACU) issued 7 % , 20-year bonds payable with face value of $800,000. The bonds pay interest on June 30 and Decemb 31 Read the requirements Requirement 1. If the market interest rate is 5 % when ACU issues its bonds, will the bonds be priced at face value, at a premium, or at a discount? Explain. The 7% bonds issued when the market interest rate is 5...
Question 12 4 pts Bill just financed a used car through his credit union. His loan of $14,572 has an interest rate of 5.00% and requires payments of $275 a month for 60 months. Assuming that all payments are paid on time, his last payment will pay off the loan in full. What type of loan does Bill have? Amortizing Pure discount Lump sum Interest-only
Only need to approve loan or not
LOAN DETAILS
Little Annin Flagmakers has requested a line of credit of
US$60,000 to cover production costs during the seasonal increase in
business. Kent Bank uses the following terms on its lines of
credit. All borrowing is done at the beginning of the month, in
whole dollar increments. All repayments are made at the end of the
month, in whole dollar increments. The full line of credit is
expected to be paid off...
When the loan is first obtained, $300,000 will be posted in
the long- term debt account and will appear on the balance sheet.
At the end of the first year, Sunnyvale will pay the bank a total
of $130,000, consisting of $30,000 interest on the loan and
$100,000 repayment on the principal portion of the loan. The
$30,000 interest expense, which is paid to the bank for the use of
its money, appears as an expense on the income statement....
Debt Issued at a Discount (Straight Line) On January 1, 2020, Drew Company issued $900,000, 5-year bonds for $855,000. The stated rate of interest was 8% and interest is paid annually on December 31. Required: Prepare the amortization table for Drew Company's bonds. If an amount box does not require an entry, leave it blank and if the answer is zero, enter "o". Drew Company Amortization Table Interest Expense (Debit) Discount on Bonds Payable (Credit) Discount on Bonds Payable Balance...
Please answer in table form only for easy understanding.
Thanks.
Diaz Company issued $148,000 face value of bonds on January 1, 2018. The bonds had a 6 percent stated rate of interest and a ten- year term. Interest is paid in cash annually, beginning December 31, 2018. The bonds were issued at 97. The straight-line method is used for amortization Required a. Use a financial statements model like the one shown below to demonstrate how (1) the January 1,...
QULOTIUNI u pullit Sa Pearson Company obtained a line of credit from City Bank that is renewable annually. How will Pearson classify the line of credit borrowings on its balance sheet? O A. Equity O B. Short-term investment O C. Short-term liability O D. Long-term liability QUESTION 12 5 points Sa On January 1, 2011, Norton Corporation received cash from issuing 10-year $200,000 bonds at face value. Interest of $10,000 is paid annually to the bondholders on December 31. How...
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