Barcamone only 3
mbdake
Problem 1
Assume the following transactions occurred during the year. The annual accounting period ends on December 31.
Jan. 15 | Purchased and paid for merchandise for resale at an invoice cost of $15,600. A periodic inventory system is used. |
Apr. 1 | Borrowed $800,000 from a bank for general use, executing a one-year, 5% note payable |
June 14 | Received a $12,000 customer deposit for services to be performed in the future. |
July 15 | Performed $4,250 of the services paid for on June 14. |
Dec. 15 | Received an electric bill for $25,680. The bill will be paid in early January. |
Dec. 31 | Determined wages owed to employees to be $13,500 that will be paid on January 2. |
Required:
- Prepare journal entries for each of the transactions listed.
- Prepare any required adjusting entries on December 31.
Problem 2
A company issued a $50,000 four-year, 4% bond on January 1. Bond interest is paid each December 31. The bond was sold to yield 5%.
Required:
Complete a bond amortization schedule for the life of the bond using the effective interest method.
Problem 3
A company with an annual accounting year ending on December 31 issued bonds on January 1 in the amount of $500,000 maturing in 10 years with interest payable each June 30 and December 31 at a 6% annual rate. The company uses straight-line amortization for any bond discounts or premiums.
Required:
Provide the following amounts to be reported in the company financial statements at the end of year one under each scenario.
| Issued at Par | Issued at 99 | Issued at 102 |
Interest expense |
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Bonds payable |
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Unamortized premium or discount |
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Net bond liability |
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Cash interest paid |
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Problem 4
A corporation was formed on January 1 and was authorized to issue 400,000 shares of common stock at $2 par value. During the first year of operations, the company earned $325,000 and the following transactions occurred:
- Sold 150,000 shares of common stock in an initial public offering of $15 per share
- Repurchased 35,000 shares of previously common stock at $20 to be held as treasury shares.
- Resold 5,000 of the treasury stock at $22 per share.
- Market price of the outstanding shares on December 31 was $25
Required:
Prepare the stockholders’ equity section of the balance sheet at December 31 of the first year.
- 11 years ago
- 20
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