BAC 201

QUESTION TWO

n rate d) Kent bank Itd pays its bank managers a bonus of 2.0% of the income. The income before taxes and bonus for the year 2016 amounted to Ksh.80 million. The company has three prision ford. provision bonus plans and can use any to reward good performance for its employees. Bonus based on income before taxes but after bonus. (3 Marks) rovision "ii ) Bonus on before bonus but after taxes certain. (3 Marks) iii) Net income i.e bonus after taxes and bonus (3 Marks) Tax rate is 30% Calculate bonus payable under each of the plans govts $ Corporations when He opportunity to repurchaseQUSETION TWO -J sales taxes poyante J shanterm loans - Decount Payable-) Bank account over dred - Deemed expenses Zeta Company uses the effective interest method of bond amortization. It issues a bond with a par of Kshs. 3000,000 and a contract rate of 12%. The market rate is 10% and the life of the bond is 3 years. Interest is paid twice in a year; January 15 and July 31st. (a) Determine the price of the bond. (4 mks) (b) Prepare journal entry to record issuance of the bond ( 2 mks) (c) Prepare an amortization table. (7 mks) (e) How much would an investor pay to acquire 20% of the bond by the end of the first year? (1mks) 9 )-3 31020 800