Gingrich Corporation issued $2,000,000 in bonds on January 1, 2017. The bonds have a coupon rate of 1.5% and pay interest semi-annually on July 1st and January 1st. The bonds have a 10 year term. The market rate at the issue date is 3.9%. What amount of interest expense will be recorded on July 1, 2017 (the first interest payment)?

None of the above

$15,000.00

$31,310.48

$12,042.49

Gingrich Corporation issued $2,000,000 in bonds on January 1, 2017. The bonds have a coupon rate of 1.5% and pay interest semi-annually on July 1st and January 1st. The bonds have a 10 year term. The market rate at the issue date is 3.9%. What amount of interest expense will be recorded on December 31, 2020 (the eighth interest payment)?

None of the above

$33,671.42

$15,000.00

$31,310.48

Gingrich Corporation issued $2,000,000 in bonds on January 1, 2017. The bonds have a coupon rate of 1.5% and pay interest semi-annually on July 1st and January 1st. The bonds have a 10 year term. The market rate at the issue date is 3.9%. Which of these accurately reflects the financial statement effect of the journal entry to record the bond issue?

Cash increases by $2,000,000 and Liabilities increase by $2,000,000.

Cash increases by $1,605,665.44 and liabilities increase by $2,000,000.

None of the above

Cash increases by $1,605,665.44 and liabilities increase by $1,605,665.44.

Gingrich Corporation issued $2,000,000 in bonds on January 1, 2017. The bonds have a coupon rate of 1.5% and pay interest semi-annually on July 1st and January 1st. The bonds have a 10 year term. The market rate at the issue date is 3.9%. What amounts related to interest expense will be included in the cash flow statment for the period from January 1, 2017 to July 1, 2017 (the first interest payment)?

$15,000.00 cash outflow from operations

None of the above

$31,310.48 cash outflow from financing

$31,310.48 cash outflow from operations

On January 1, 2017, Wood Corporation leases a piece of equipment from Prior Corporation and properly accounts for the equipment as a finance lease. Under the agreement, Wood will make 7 annual payments of $550,000 each January 1st. At the end of 7 years, Wood has the option of buying the equipment for $200,000, when the estimated fair value will be $400,000. If Wood's incremental borrowing rate is 7%, what is the present value of the minimum lease payments?

None of the above

$3,296,146.76

$3,088,659.12

$2,754,865.26

On January 1, 2017, Wood Corporation leases a piece of equipment from Prior Corporation and properly accounts for the equipment as a finance lease. Under the agreement, Wood will make 7 annual payments of $750,000 each January 1st. At the end of 7 years, Wood has the option of buying the equipment for $200,000, when the estimated fair value will be $400,000. If Wood's incremental borrowing rate is 7%, what is the present value of the minimum lease payments?

None of the above

$4,574,004.64

$4,449,454.69

$4,166,517.00

On January 1, 2017, Wood Corporation leases a piece of equipment from Prior Corporation and properly accounts for the equipment as a finance lease. Under the agreement, Wood will make 5 annual payments of $750,000 each January 1st. At the end of 5 years, Wood has the option of buying the equipment for $200,000, when the estimated fair value will be $400,000. If Wood's incremental borrowing rate is 7%, what is the present value of the minimum lease payments?

$3,433,005.68

$3,290,408.44

$3,217,745.31

None of the above

On January 1, 2017, Wood Corporation leases a piece of equipment from Prior Corporation and properly accounts for the equipment as a finance lease. Under the agreement, Wood will make 5 annual payments of $550,000 each January 1st. At the end of 5 years, Wood has the option of buying the equipment for $100,000, when the estimated fair value will be $400,000. If Wood's incremental borrowing rate is 7%, what is the present value of the minimum lease payments?

None of the above

$2,484,264.81

$2,326,407.21

$2,688,231.04

On January 1, 2017, Wood Corporation leases a piece of equipment from Prior Corporation and properly accounts for the equipment as a fiance lease. Under the agreement, Wood will make 5 annual payments of $500,000 each January 1st. At the end of 5 years, Wood has the option of buying the equipment for $200,000, when the estimated fair value will be $400,000. If Wood's incremental borrowing rate is 7%, what is the present value of the minimum lease payments?

$2,192,695.95

$1,846,184.67

None of the above

$2,336,202.86

On January 1, 2017, Wood Corporation leases a piece of equipment from Prior Corporation and properly accounts for the equipment as a finance lease. Under the agreement, Wood will make 10 annual payments of $900,000 each January 1st. At the end of 10 years, Wood has the option of buying the equipment for $200,000, when the estimated fair value will be $400,000. If Wood's incremental borrowing rate is 7%, what is the present value of the minimum lease payments?

None of the above

6,967,048.74

6,865,378.88

6,422,893.25

On January 1, 2017, Wood Corporation leases a piece of equipment from Prior Corporation and properly accounts for the equipment as a finance lease. Under the agreement, Wood will make 10 annual payments of $500,000 each January 1st. At the end of 10 years, Wood has the option of buying the equipment for $200,000, when the estimated fair value will be $400,000. If Wood's incremental borrowing rate is 7%, what is the present value of the minimum lease payments?

3,859,285.98

None of the above

3,613,460.63

3,366,402.87

On January 1, 2017, Wood Corporation leases a piece of equipment from Prior Corporation and properly accounts for the equipment as a finance lease. Under the agreement, Wood will make 10 annual payments of $600,000 each January 1st. At the end of 10 years, Wood has the option of buying the equipment for $200,000, when the estimated fair value will be $400,000. If Wood's incremental borrowing rate is 7%, what is the present value of the minimum lease payments?

4,315,818.78

4,017,926.10

None of the above

4,610,809.21

On January 1, 2017, Wood Corporation leases a piece of equipment from Prior Corporation and properly accounts for the equipment as a finance lease. Under the agreement, Wood will make 10 annual payments of $700,000 each January 1st. At the end of 10 years, Wood has the option of buying the equipment for $100,000, when the estimated fair value will be $400,000. If Wood's incremental borrowing rate is 6%, what is the present value of the minimum lease payments?

5,207,900.41

None of the above

4,820,374.44

5,517,024.07

On January 1, 2017, Wood Corporation leases a piece of equipment from Prior Corporation and properly accounts for the equipment as a capital lease. Under the agreement, Wood will make 10 annual payments of $386,000 each January 1st. At the end of 10 years, Wood has the option of buying the equipment for $20,000, when the estimated fair value will be $400,000. If Wood's incremental borrowing rate is 6%, what is the present value of the minimum lease payments?

3,022,621.11

3,011,453.22

None of the above

2,852,161.50