On 1/1/2010, Fikle Corporation issued $3,000,000 of 10% bonds due December 31, 2019. Interest on the bonds is payable annually each December 31. The bonds were sold for $3,402,605, which is market yield of 8%. Legal and other costs of $210,075 were incurred in connection with the issue, which increased the cost of borrowing (effective rate) from 8% to 9%.1. Record the sale of the bond and all required interest entries for 2010 and 2011. Use the straightline method to amortize discounts and premiums.2. Record the sale of the bond and all required interest entries for 2010 and 2011. Use the effective interest rate method to amortize discounts and premiums.3. Now assume that the bonds were issued on 4/1/2010 but that all other facts (amounts, rates, maturity date) remain the same. Record the sale of the bond and all required interest entries for 2010 and 2011. Use the straight-line method to amortize discounts and premiums.4. Now assume that the bonds were issued on 4/1/2010 but that the maturity date was changed to 4/1/2020 and that interest is now payable annually on April 1 of each year. Record the sale of the bond and all required interest entries for 2010 and 2011. Use the effective interest rate method to amortize discounts and premiums.

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Eliminating entries (including goodwill impairment) and worksheets for various years on january 1, 2013, porter company purchased an 80% interest in the capital stock of salem company for$850,000. at that time, salem company had capital stock of $550,000 and retained earnings of $80,000.differences between the fair value and the book value of the identifiable assets of salem company were asfollows: fair value in excess of book valueequipment$130,000land65,000inv entory40,000the book values of all other assets and liabilities of salem company were equal to their fair values onjanuary 1, 2013. the equipment had a remaining life of five years on january 1, 2013. the inventory was sold in2013.salem company’s net income and dividends declared in 2013 and 2014 were as follows: year 2013 net income of $100,000; dividends declared of $25,000year 2014 net income of $110,000; dividends declared of $35,000required: a. prepare a computation and allocation schedule for the difference between book value of equity acquired andthe value implied by the purchase price. b.present the eliminating/adjusting entries needed on the consolidated worksheet for the year endeddecember 31, 2013. (it is not necessary to prepare the worksheet.)lo6lo1

Afirm's before-tax cost of debt, rd, is the interest rate that the firm must pay on debt. because interest is tax deductible, the relevant cost of debt used to calculate a firm's wacc is the cost of debt, rd (1 – t). the cost of debt is used in calculating the wacc because we are interested in maximizing the value of the firm's stock, and the stock price depends on cash flows. it is important to emphasize that the cost of debt is the interest rate on debt, not debt because our primary concern with the cost of capital is its use in capital budgeting decisions. the rate at which the firm has borrowed in the past is because we need to know the cost of capital. for these reasons, the on outstanding debt (which reflects current market conditions) is a better measure of the cost of debt than the . the on the company's -term debt is generally used to calculate the cost of debt because more often than not, the capital is being raised to fund -term projects. quantitative problem: 5 years ago, barton industries issued 25-year noncallable, semiannual bonds with a $1,600 face value and a 8% coupon, semiannual payment ($64 payment every 6 months). the bonds currently sell for $845.87. if the firm's marginal tax rate is 40%, what is the firm's after-tax cost of debt? round your answer to 2 decimal places. do not round intermediate calcu