ACC 422 Week 5 Team Paper -UOP

P 13-10
P21-3
Instructions
(a)   Discuss the nature of this lease transaction from the viewpoints of both lessee and lessor.
(b)   Prepare the journal entry or entries to record the transaction on January 1, 2014, on the books of Winston Industries.
(c)   Prepare the journal entry or entries to record the transaction on January 1, 2014, on the books of Ewing Inc.
(d)   Prepare the journal entries for both the lessee and lessor to record the first rental payment on January 1, 2014.
(e)   Prepare the journal entries for both the lessee and lessor to record interest expense (revenue) at December 31, 2014. (Prepare a lease amortization schedule for 2 years.)
(f)   Show the items and amounts that would be reported on the balance sheet (not notes) at December 31, 2014, for both the lessee and the lessor.

P14-2
Venezuela Co. is building a new hockey arena at a cost of $2,500,000. It received a downpayment of $500,000 from local businesses to support the project, and now needs to borrow $2,000,000 to complete the project. It therefore decides to issue $2,000,000 of 10.5%, 10-year bonds. These bonds were issued on January 1, 2013, and pay interest annually on each January 1. The bonds yield 10%. Venezuela paid $50,000 in bond issue costs related to the bond sale.
Instructions
(a)   Prepare the journal entry to record the issuance of the bonds and the related bond issue costs incurred on January 1, 2013.
(b)   Prepare a bond amortization schedule up to and including January 1, 2017, using the effective-interest method.
(c)   Assume that on July 1, 2016, Venezuela Co. redeems half of the bonds at a cost of $1,065,000 plus accrued interest. Prepare the journal entry to record this redemption.