A business issued a 30-day, 4% note for $60,000 to a creditor on account. Illustrate the effects on the accounts and financial statements of recording (a) the issuance of the note and (b) the payment of the note at maturity, including interest
The Dapper-Dons Partnership (employer identification no. 89-3456798) was formed ten years ago as a general partnership to custom tailor men’s clothing. Dapper-Dons is located at 123 Flamingo Drive in Miami, Florida 33131. Bob Dapper (Social Security No.654-32-1098) manages the business and has a 40% capital and profits interest. His address is 709 Brumby Way, Miami, Florida 33131. Jeremy Dons (Social Security No.354-12-6531) owns the remaining 60% interest but is not active in the business. His address is 807 9th Avenue, North Miami, Florida 33134. The partnership values its inventory using the cost method and did not change the method used during the current year. The partnership uses the accrual method of accounting. Because of its simplicity, the partnership is not subject to the partnership audit procedures. The partnership has no foreign partners, no foreign transactions, no interests in foreign trusts, and no foreign financial accounts. This partnership is neither a tax shelter nor a publicly traded partnership. No changes in ownership of partnership interests occurred during the current year. The partnership made cash distributions of $155,050 and $232,576 to Dapper and Dons, respectively, on December 30 of the current year. It made no other property distributions. Financial statements for the current year are presented in Tables C9-1 and C9-2. Assume that Dapper-Dons’ business qualifies as a U.S. production activity and that its qualified production activities income is $600,000. The partnership uses the small business simplified overall method for reporting these activities (see discussion for Line 13d of Schedules K and K-1 in the Form 1065 instructions). Prepare a current year partnership tax return for Dapper-Dons
1. Bond. What is the value of a $1,000 par value bond with annual payments of an
a. 11% coupon with a maturity of 20 years and a 15% required return?
b. 12% coupon with a maturity of 10 years and a 7% required return?
c. 8% semiannual coupon with a maturity of 10 years and a 11% required return?
d. 8% semiannual coupon with a maturity of 20 years and a 6% required return?
2. Bond. What is the yield to maturity of a $1000 par value bond with an
a. 10% semiannual coupon and 20 years to maturity and a $1,000 price?
b. 6.5% semiannual coupon and 13 years to maturity and a $890 price?
c. 7.5% annual coupon and 19 years to maturity and a $788 price?
d. 4.5% annual coupon and 7 years to maturity and a $800 price?
What are the factors that would influence the Federal Reserve in adjusting the discount rate?
• How does the discount rate affect the decisions of banks in setting their specific interest rates?
- How does monetary policy aim to avoid inflation?
• How does monetary policy control the money supply?
• How does a stimulus program (through the money multiplier) affect the money supply?
• Currently, what indictors are evident that there is too much or too little money within the economy? How is monetary policy aiming to adjust this?