The Following Information Applies to Both Questions

question 20

Multiple Choice

The following information applies to both questions
On October 1, 2010 Bartley Corporation issued 5%, 10-year bonds with a face value of $500,000 at 108 (a 4% yield) .Interest is paid on October 1 and April 1, with any premiums or discounts amortized on an effective-interest basis.
-The entry to record the issuance of the bonds would include a

• A)credit of $12,500 to interest Payable.
• B)credit of $540,000 to Bonds Payable.
• C)credit of $500,000 to Bonds Payable.
• D)debit of $40,000 to Bonds Payable.

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Definitions:

Capital Cost Allowance

A tax deduction in some jurisdictions that allows businesses to depreciate the cost of tangible and intangible assets over time.

Weighted Average Cost of Capital (WACC)

The average rate of return a company is expected to pay to its security holders to finance its assets, weighted by the proportion of equity and debt in the company’s capital structure.

Expected Return

The projected return on an investment, based on historical data or statistical analysis.

Shareholder Wealth

The overall value of an investment to its owners (shareholders), typically measured by the price of their shares in the stock market.