On January 1, 20X3, Shuey Company Borrowed $1,000,000 at the Fixed

question 2

Multiple Choice

On January 1, 20X3, Shuey Company borrowed $1,000,000 at the fixed rate of 10% for 10 years with interest payable semi-annually.Shuey anticipates that interest rates will fall and has also arranged to receive a 10% rate of interest in exchange for the payment of variable rates based on LIBOR + 1.5%.LIBOR rates were as follows on the reset dates: ?

$$\begin{array} { l r r } & \text { LIBOR rate } & \text { FV of swap } \\\text { January } 1,20 \mathrm { X } 3 & 8.5 \% & \\\text { July } 1,20 \mathrm { X } 3 & 8.3 \% & \$ 40,000 \\\text { January } 1,20 \mathrm { X } 4 & 8.2 \% & \$ 38,000\end{array}$$ How much interest expense is recognized for the six months ended December 31, 20X3?

• A)-$49,000
• B)-$50,000
• C)-$41,900
• D)-$48,500

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Definitions:

Withheld

Typically refers to portions of an employee’s earnings that are not paid directly to the employee but instead held back for taxes, retirement contributions, or other purposes.

Matched By Employer

Contributions made by an employer towards an employee's benefit plan, such as a 401(k), that are equal to the contributions made by the employee.

Accrued Vacation Pay

The amount of earned vacation time that an employee has not yet taken or been paid for, represented as a liability on the company's balance sheet.

Current Year

The present calendar or fiscal year in which a business is operating or reporting financial activities.