Answer
The answer and procedures of the exercise are attached in a microsoft excel document.
Explanation
Please consider the data provided by the exercise. If you have any question please write me back. All the exercises are solved in a single sheet with the formulas indications.
Answer:
- Gain = $271,310
- Net reduction in retained earnings = $105,690
Explanation:
Gain = (Ivanhoe market price - Purchase price) * Number of shares issued as property dividend
Purchase price = 130,000 / 16,000
= $8.13
Number of shares issued as property dividend = 130,000 shares of Concord / 10
= 13,000 Ivanhoe shares
Gain = (29 - 8.13) * 13,000
= $271,310
Net reduction in retained earnings:
= Dividends payable - Gain
= (13,000 * 29) - 271,310
= $105,690
The D/E ratio indicates how much debt a company is using to finance its assets relative to the value of shareholders' equity
Answer:
$74,880
Explanation:
The computation of the amount of interest Cullumber must pay the bondholders is shown below:
= Face value of the bond × interest rate
where,
Face value of the bond is $1,248,000
And the interest rate is 6%
So, the amount of interest paid is
= $1,248,000 × 6%
= $74,880
We simply multiplied the face value of the bond with the interest rate so that the amount of interest expense could come
