Accounting
Name: __________________________ Date: _____________
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Capitalization of interest. During 2017, Barden Building Company constructed various assets at a total cost of $14,700,000. The weighted average accumulated expenditures on assets qualifying for capitalization of interest during 2017 were $9,800,000. The company had the following debt outstanding at December 31, 2017:
Instructions Compute the amounts of each of the following (show computations).
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Dividends on preferred stock. It is assumed that the corporation has $800,000 of 5% preferred stock and $3,200,000 of common stock outstanding, each having a par value of $10. No dividends have been declared for 2016 and 2017.
(a) As of 12/31/18, it is desired to distribute $250,000 in dividends. How much will the preferred stockholders receive if their stock is cumulative?
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2. |
Bond issue price and premium amortization. On January 1, 2018, Piper Co. issued ten-year bonds with a face value of $4,000,000 and a stated interest rate of 10%, payable semiannually on June 30 and December 31. The bonds were sold to yield 12%. Table values are:
Instructions (a) Calculate the issue price of the bonds. (b) Without prejudice to your solution in part (a), assume that the issue price was $3,542,000. Prepare the amortization table for 2018, assuming that amortization is recorded on interest payment dates using the effective-interest method. |
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