correction need it
homework0116
hw_due_march_1st_correction_need_it.docxOn January 1, 2013, JWS Corporation issued $771,000 of 9% bonds, due in 8 years. The bonds were issued for $729,219, and pay interest each July 1 and January 1. JWS uses the effective-interest method. Prepare the company’s journal entries for (a) the January 1 issuance, (b) the July 1 interest payment, and (c) the December 31 adjusting entry. Assume an effective-interest rate of 10%. (Round answers to 0 decimal places, e.g. $38,548. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
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No. |
Account Titles and Explanation |
Debit |
Credit |
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(a) |
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(b) |
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(c) |
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Wasserman Corporation issued 10-year bonds on January 1, 2013. Costs associated with the bond issuance were $191,800. Wasserman uses the straight-line method to amortize bond issue costs. Prepare the December 31, 2013, entry to record 2013 bond issue cost amortization. (Round answers to 0 decimal places, e.g. $38,548. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
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Account Titles and Explanation |
Debit |
Credit |
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Samson Corporation issued a 5-year, $92,800, zero-interest-bearing note to Brown Company on January 1, 2013, and received cash of $46,138. The implicit interest rate is 15%. Prepare Samson’s journal entries for (a) the January 1 issuance and (b) the December 31 recognition of interest. (Round answers to 0 decimal places, e.g. $38,548. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
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No. |
Account Titles and Explanation |
Debit |
Credit |
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(a) |
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(b) |
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Foreman Company issued $756,000 of 10%, 20-year bonds on January 1, 2013, at 102. Interest is payable semiannually on July 1 and January 1. Foreman Company uses the effective-interest method of amortization for bond premium or discount. Assume an effective yield of 9.7705%. Prepare the journal entries to record the following. (Round answers to 0 decimal places, e.g. $38,548. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
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(a) |
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The issuance of the bonds. |
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(b) |
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The payment of interest and related amortization on July 1, 2013. |
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(c) |
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The accrual of interest and the related amortization on December 31, 2013. |
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No. |
Account Titles and Explanation |
Debit |
Credit |
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(a) |
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(b) |
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(c) |
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On January 1, 2012, Osborn Company sold 11% bonds having a maturity value of $843,000 for $943,973, which provides the bondholders with a 8% yield. The bonds are dated January 1, 2012, and mature January 1, 2017, with interest payable December 31 of each year. Osborn Company allocates interest and unamortized discount or premium on the effective-interest basis. (a) Prepare the journal entry at the date of the bond issuance. (Round answers to 0 decimal places, e.g. $38,548. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
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Account Titles and Explanation |
Debit |
Credit |
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(b) Prepare a schedule of interest expense and bond amortization for 2012–2014. (Round answers to 0 decimal places, e.g. $38,548.)
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Schedule of Interest Expense and Bond Premium Amortization Effective-Interest Method |
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Date |
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Cash Paid |
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Interest Expense |
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Premium Amortized |
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Carrying Amount of Bonds |
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1/1/12 |
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$ |
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$ |
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$ |
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$ |
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12/31/12 |
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12/31/13 |
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12/31/14 |
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(c) Prepare the journal entry to record the interest payment and the amortization for 2012. (Round answers to 0 decimal places, e.g. $38,548. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
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Account Titles and Explanation |
Debit |
Credit |
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(d) Prepare the journal entry to record the interest payment and the amortization for 2014. (Round answers to 0 decimal places, e.g. $38,548. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
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Account Titles and Explanation |
Debit |
Credit |
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The following amortization and interest schedule reflects the issuance of 11-year bonds by Capulet Corporation on January 1, 2006, and the subsequent interest payments and charges. The company’s year-end is December 31, and financial statements are prepared once yearly.
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Amortization Schedule |
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Year |
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Cash |
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Interest |
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Amount Unamortized |
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Carrying Value |
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1/1/2006 |
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$17,896 |
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$ 132,804 |
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2006 |
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$15,070 |
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$15,936 |
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17,030 |
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133,670 |
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2007 |
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15,070 |
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16,040 |
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16,060 |
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134,640 |
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2008 |
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15,070 |
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16,157 |
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14,973 |
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135,727 |
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2009 |
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15,070 |
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16,287 |
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13,756 |
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136,944 |
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2010 |
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15,070 |
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16,433 |
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12,393 |
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138,307 |
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2011 |
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15,070 |
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16,597 |
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10,866 |
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139,834 |
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2012 |
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15,070 |
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16,780 |
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9,156 |
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141,544 |
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2013 |
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15,070 |
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16,985 |
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7,241 |
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143,459 |
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2014 |
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15,070 |
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17,215 |
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5,096 |
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145,604 |
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2015 |
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15,070 |
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20,166 |
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150,700 |
(a) Indicate whether the bonds were issued at a premium or a discount.
(b) Indicate whether the amortization schedule is based on the straight-line method or the effective-interest method.
(c) Determine the stated interest rate and the effective-interest rate.
(Round answers to 0 decimal places, e.g. $38,548.)
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The stated rate |
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% |
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The effective rate |
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% |
(d) On the basis of the schedule above, prepare the journal entry to record the issuance of the bonds on January 1, 2006. (Round answers to 0 decimal places, e.g. $38,548. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
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Account Titles and Explanation |
Debit |
Credit |
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(e) On the basis of the schedule above, prepare the journal entry to reflect the bond transactions and accruals for 2006. (Interest is paid January 1.) (Round answers to 0 decimal places, e.g. $38,548. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
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Account Titles and Explanation |
Debit |
Credit |
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(f) On the basis of the schedule above, prepare the journal entries to reflect the bond transactions and accruals for 2013. Capulet Corporation does not use reversing entries. (Round answers to 0 decimal places, e.g. $38,548. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
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Date |
Account Titles and Explanation |
Debit |
Credit |
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Jan. 1, 2013 |
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Dec. 31, 2013 |
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Novak Corporation is preparing its 2012 statement of cash flows, using the indirect method. Presented below is a list of items that may affect the statement. Using the code below, indicate how each item will affect Novak’s 2012 statement of cash flows.
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Code Letter |
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Effect |
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A |
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Added to net income in the operating section |
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D |
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Deducted from net income in the operating section |
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R-I |
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Cash receipt in investing section |
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P-I |
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Cash payment in investing section |
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R-F |
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Cash receipt in financing section |
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P-F |
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Cash payment in financing section |
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N |
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Noncash investing and financing activity |
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(a) |
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Purchase of land and building. |
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(b) |
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Decrease in accounts receivable. |
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(c) |
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Issuance of stock. |
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(d) |
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Depreciation expense. |
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(e) |
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Sale of land at book value. |
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(f) |
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Sale of land at a gain. |
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(g) |
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Payment of dividends. |
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(h) |
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Increase in accounts receivable. |
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(i) |
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Purchase of available-for-sale investment. |
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(j) |
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Increase in accounts payable. |
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(k) |
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Decrease in accounts payable. |
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(l) |
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Loan from bank by signing note. |
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(m) |
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Purchase of equipment using a note. |
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(n) |
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Increase in inventory. |
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(o) |
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Issuance of bonds. |
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(p) |
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Retirement of bonds payable. |
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(q) |
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Sale of equipment at a loss. |
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(r) |
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Purchase of treasury stock. |
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Bloom Corporation had the following 2012 income statement.
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Sales |
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$209,620 |
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Cost of goods sold |
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118,970 |
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Gross profit |
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90,650 |
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Operating expenses (includes depreciation of $24,940) |
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54,020 |
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Net income |
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$36,630 |
The following accounts increased during 2012: Accounts Receivable $11,030; Inventory $10,310; Accounts Payable $14,820. Prepare the cash flows from operating activities section of Bloom’s 2012 statement of cash flows using the direct method.
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Bloom Corporation Statement of Cash Flows-Direct Method (Partial) For the Year 2012 |
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$ |
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$ |
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$ |
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Cash received from customers |
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($209,620 – $11,030) |
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$198,590 |
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Cash payment to suppliers |
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($118,970 + $10,310 – $14,820) |
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$114,460 |
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Cash payment for operating expenses |
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($54,020 – $24,940) |
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$29,080 |
Loveless Corporation had the following 2012 income statement.
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Revenues |
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$102,933 |
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Expenses |
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58,460 |
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$44,473 |
In 2012, Loveless had the following activity in selected accounts.
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Accounts Receivable |
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Allowance for Doubtful Accounts |
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(a) Prepare Loveless’s cash flows from operating activities section of the statement of cash flows using the direct method.
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Loveless Corporation Statement of Cash Flows-Direct Method (Partial) For the Year 2012 |
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$ |
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$ |
(b) Prepare Loveless’s cash flows from operating activities section of the statement of cash flows using the indirect method. (If an amount reduces the account balance then enter with negative sign.)
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Loveless Corporation Statement of Cash Flows-Indirect Method (Partial) For the Year 2012 |
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$ |
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$ |
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(a) |
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Cash paid for expenses |
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($58,460 – $1,762) |
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$56,698 |
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(b) |
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Increase in net accounts receivable |
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($33,093* – $20,192**) |
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$12,901 |
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* ($35,093 – $2,000) = $33,093 |
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** ($21,440 – $1,248) = $20,192 |
Norman Company’s income statement for the year ended December 31, 2012, contained the following condensed information.
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Service revenue |
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$831,780 |
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Operating expenses (excluding depreciation) |
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$627,170 |
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Depreciation expense |
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60,370 |
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Loss on sale of equipment |
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20,580 |
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708,120 |
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Income before income taxes |
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123,660 |
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Income tax expense |
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39,850 |
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Net income |
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$83,810 |
Norman’s balance sheet contained the following comparative data at December 31.
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2012 |
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2011 |
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Accounts receivable |
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$37,420 |
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$58,130 |
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Accounts payable |
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46,480 |
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32,000 |
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Income taxes payable |
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3,710 |
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8,060 |
(Accounts payable pertains to operating expenses.) Prepare the operating activities section of the statement of cash flows using the direct method.
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NORMAN COMPANY Statement of Cash Flows (Partial) For the Year Ended December 31, 2012 |
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$ |
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$ |
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$ |
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Norman Company’s income statement for the year ended December 31, 2012, contained the following condensed information.
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Service revenue |
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$842,220 |
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Operating expenses (excluding depreciation) |
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$620,990 |
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Depreciation expense |
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56,270 |
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Loss on sale of equipment |
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23,980 |
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701,240 |
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Income before income taxes |
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140,980 |
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Income tax expense |
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41,940 |
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Net income |
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$99,040 |
Norman’s balance sheet contained the following comparative data at December 31.
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2012 |
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2011 |
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Accounts receivable |
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$37,810 |
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$59,540 |
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Accounts payable |
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45,130 |
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31,690 |
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Income taxes payable |
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4,200 |
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8,960 |
(Accounts payable pertains to operating expenses.) Prepare the operating activities section of the statement of cash flows using the indirect method. (If an amount reduces the account balance then enter with negative sign.)
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NORMAN COMPANY Statement of Cash Flows (Partial) For the Year Ended December 31, 2012 |
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$ |
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Adjustments to reconcile net income to |
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$ |
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$ |
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Condensed financial data of Fairchild Company for 2012 and 2011 are presented below.
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FAIRCHILD COMPANY COMPARATIVE BALANCE SHEET AS OF DECEMBER 31, 2012 AND 2011 |
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2012 |
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2011 |
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Cash |
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$1,805 |
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$1,097 |
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Receivables |
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1,753 |
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1,301 |
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Inventory |
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1,594 |
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1,919 |
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Plant assets |
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1,901 |
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1,696 |
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Accumulated depreciation |
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(1,191 |
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(1,167 |
) |
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Long-term investments (held-to-maturity) |
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1,306 |
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1,475 |
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$7,168 |
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$6,321 |
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Accounts payable |
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$1,205 |
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$794 |
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Accrued liabilities |
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205 |
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246 |
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Bonds payable |
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1,410 |
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1,637 |
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Common stock |
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1,900 |
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1,698 |
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Retained earnings |
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2,448 |
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1,946 |
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$7,168 |
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$6,321 |
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FAIRCHILD COMPANY INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2012 |
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Sales |
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$6,845 |
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Cost of goods sold |
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4,708 |
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Gross margin |
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2,137 |
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Selling and administrative expenses |
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924 |
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Income from operations |
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1,213 |
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Other revenues and gains |
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Gain on sale of investments |
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96 |
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Income before tax |
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1,309 |
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Income tax expense |
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534 |
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Net income |
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$775 |
Additional information: During the year, $63 of common stock was issued in exchange for plant assets. No plant assets were sold in 2012. Cash dividends were $273. Prepare a statement of cash flows using the indirect method. (If an amount reduces the account balance then enter with negative sign.)
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FAIRCHILD COMPANY Statement of Cash Flows For the Year Ended December 31, 2012 (Indirect Method) |
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$ |
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Adjustments to reconcile net income to |
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$ |
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$ |
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$ |
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Depreciation expense |
= |
($1,191 – $1,167) |
= |
$24 |
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Sale of held-to-maturity investments |
= |
[($1,475 – $1,306) + $96] |
= |
$265 |
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Purchase of plant assets |
= |
[($1,901 – $1,696) – $63] |
= |
($142) |
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Issuance of capital stock |
= |
[($1,900 – $1,698) – $63] |
= |
$139 |
Interest Expense
37,671
Premium on Bo
129
Discount on B
Cash
37,800
Interest Expen
37,665
Premium on Bo
135
Interest Payable
37,800
41,781
Cash
943,973
Bonds Payable
843,000
Premium on Bo
100973
943973
92,730
75,518
17,212
926,761
92,730
Bonds Payable
74141
18,589
908,172
92,730
72654
20,076
888,095
Interest Expense
75,518
Premium on Bo
17,212
Cash
92,730
771,000
Interest Expen
72,654
premium on Bonds Payable
20,076
Cash
92,730
Discount
Effective interest method
10
Interest Expense
12
Cash
132,804
Discount on B
17,896
Bonds Payable
150,000
Interest Expen
36,461
15,936
Discount on B
866
Interest Payab
15070
Interest Payab
15,070
Cash
15,070
Interest Expen
16,985
Discount on B
Discount on Bonds Payable
1,915
Interest Payab
15050
P-I
A
R-F
A
R-I
R-I
and D
P-F
D
P-I
A
D
1,766
R-F
N
D
R-F
P-F
R-I
and A
P-F
Cash Flows from Operating Activities
Cash Received from Customers
198,590
Cash
Cash Payment to Suppliers
114,460
Cash Payment for Operating Expenses
29,080
143,540
Cash Flows from Operating Activities
55,050
Cash Flows from Operating Activities
Cash Received from Customers
88,270
Cash Paid for Expenses
56,698
Cash Flows from Operating Activities
31,572
Cash Flows from Operating Activities
34,695
Net Income
44,473
Increase in Net Accounts Receivable
12,901
Cash Flows from Operating Activities
31,572
Cash Flows from Operating Activities
Cash Receipts from Customers
852,490
Cash Payments for Operating Expenses
Interest Expen
612,690
Taxes Paid
44,200
656,890
Cash Flows from Operating Activities
195,600
Cash Flows from Operating Activities
Net Income
99,040
36,549
Depreciation expense
56,270
Loss on Sale of Equipment
23,980
Decrease in Accounts Receivable
21,730
Increase in Accounts Payable
13,440
Decrease in Income Taxes Payable
-4,760
110,660
Cash Flows from Operating Activities
209,700
Cash Flows from Operating Activities
Net Income
Discount on Bonds Payable
775
Gain on Sale of Investments
-96
Increase in Receivables
-452
Decrease in Inventory
325
Depreciation Expense
24
Increase in Accounts Payable
411
Decrease in Accrued Liabilities
-41
171
1,854
Cash Flows from Operating Activities
946
Cash Flows from Investing Activities
Purchase of Plant Assets
-142
Sale of Held-to-Maturity Investments
265
Cash Flows from Investing Activities
123
Retirement of Bonds Payable
Interest Payable
-227
Issuance of Capital Stock
139
Payment of Cash Dividends
-273
Cash Flows from Financing Activities
-361
Net Increase in Cash
708
Cash at Beginning of Period
1097
Cash at End of Period
1805
Noncash Investing and Financing Activities
Issuance of Common Stock for Plant Assets
34,695
63
Cash
Debt Expenses
19,180
Debt Issue Co
19,180
Cash
46,138
Discount on Notes Payable
46,662
729,219
Note Payable
92,800
Interest expen
6,921
Discount on Notes Payble
6,921
Cash
771,120
Bonds Payable
756,000
Premium on Bo
15,120
