Accounting 221 Homework 2-8
Bigricker12
wk_2_hw_problems.xlsProblem 1
| On April 1, 20X4, Rojas purchased land by giving $100,000 in cash and executing a $400,000 note payable to the former owner. The note bears interest at 10% per annum, with interest being payable annually on March 31 of each year. Rojas is also required to make a $100,000 payment toward the note's principal on every March 31. | ||
| (a) | Prepare the appropriate journal entry to record the land purchase on April 1, 20X4. | |
| (b) | Prepare the appropriate journal entry to record the year-end interest accrual on December 31, 20X4. | |
| (c) | Prepare the appropriate journal entry to record the payment of interest and principal on March 31, 20X5. | |
| (d) | Prepare the appropriate journal entry to record the year-end interest accrual on December 31, 20X5. | |
| (e) | Prepare the appropriate journal entry to record the payment of interest and principal on March 31, 20X6. |
&R&"Myriad Web Pro,Bold"&20B-13.01
B-13.01
Worksheet 1
| (a), (b), (c), (d), (e) | |||||
| GENERAL JOURNAL | |||||
| Date | Accounts | Debit | Credit | ||
| 04-01-X4 | |||||
| 12-31-X4 | |||||
| 03-31-X5 | |||||
| 12-31-X5 | |||||
| 03-31-X6 |
&L&"Myriad Web Pro,Bold"&12Name:
Date: Section: &R&"Myriad Web Pro,Bold"&20B-13.01
B-13.01
Problem 2
| Ace Brick company issued $100,000 of 5-year bonds. The bonds were issued at par on January 1, 20X1, and bear interest at a rate of 8% per annum, payable semiannually. | |
| (a) | Prepare the journal entry to record the bond issue on January, 20X1. |
| (b) | Prepare the journal entry that Ace would record on each interest date. |
| (c) | Prepare the journal entry that Ace would record at maturity of the bonds. |
&R&"Myriad Web Pro,Bold"&20B-13.06
B-13.06
Worksheet 2
| (a)(b)(c) | |||||
| GENERAL JOURNAL | |||||
| Date | Accounts | Debit | Credit | ||
| Issue | |||||
| Interest | |||||
| Maturity |
&L&"Myriad Web Pro,Bold"&12Name:
Date: Section: &R&"Myriad Web Pro,Bold"&20B-13.06
B-13.06
Problem 3
| Erik Food Supply Company issued $100,000 of face amount of 4-year bonds on January 1, 20X1. The bonds were issued at 98, and bear interest at a stated rate of 8% per annum, payable semiannually. The discount is amortized by the straight-line method. | |
| (a) | Prepare the journal entry to record the initial issuance on January, 20X1. |
| (b) | Prepare the journal entry that Erik would record on each interest date. |
| (c) | Prepare the journal entry that Erik would record at maturity of the bonds. |
&R&"Myriad Web Pro,Bold"&20B-13.08
B-13.08
Worksheet 3
| (a)(b)(c) | |||||
| GENERAL JOURNAL | |||||
| Date | Accounts | Debit | Credit | ||
| Issue | |||||
| Interest | |||||
| Maturity |
&L&"Myriad Web Pro,Bold"&12Name:
Date: Section: &R&"Myriad Web Pro,Bold"&20B-13.08
B-13.08
Problem 4
| Horton Micro Chip Company issued $100,000 of face amount of 6-year bonds on January 1, 20X1. The bonds were issed at 103, and bear interest at a stated rate of 8% per annum, payable semiannually. The premium is amortized by the straight-line method. | |
| (a) | Prepare the journal entry to record the initial issue on January, 20X1. |
| (b) | Prepare the journal entry that Horton would record on each interest date. |
| (c) | Prepare the journal entry that Horton would record at maturity of the bonds. |
&R&"Myriad Web Pro,Bold"&20B-13.07
B-13.07
Worksheet 4
| (a)(b)(c) | |||||
| GENERAL JOURNAL | |||||
| Date | Accounts | Debit | Credit | ||
| Issue | |||||
| Interest | |||||
| Maturity |
&L&"Myriad Web Pro,Bold"&12Name:
Date: Section: &R&"Myriad Web Pro,Bold"&20B-13.07
B-13.07
Problem 5
| Determine the "type" and "basic accounting" approach for each of the following categories of investments. You may find this problem easier to complete by using the pick lists on the excel version of this problem. | ||||||
| Type | Basic Accounting | |||||
| Investment level generally over 20% but not giving control | ||||||
| Investment level usually over 50% | ||||||
| Investment with a plan to hold until a particular future event of payoff | ||||||
| Investment with the goal of a near-term profit | ||||||
| Investment not meeting one of the other logical categories | ||||||
| Your randomized choices for "type" are: | Your randomized choices for "basic accounting" are: | |||||
| Control | Fair Value - gains/losses to operating income | |||||
| Available-for-Sale | Fair Value - gains/losses to other comprehensive income | |||||
| Held to Maturity | Equity Method | |||||
| Trading | Consolidation | |||||
| Significant Influence | Amortized Cost |
&R&"Myriad Web Pro,Bold"&20B-09.01
B-09.01
Worksheet 5
| Type | Basic Accounting | |||||
| Investment level generally over 20% but not giving control | ||||||
| Investment level usually over 50% | ||||||
| Investment with a plan to hold until a particular future event of payoff | ||||||
| Investment with the goal of a near-term profit | ||||||
| Investment not meeting one of the other logical categories |
&L&"Myriad Web Pro,Bold"&12Name:
Date: Section: &R&"Myriad Web Pro,Bold"&20B-09.01
B-09.01
Problem 6
| Winsloe Corporation obtained an investment in the stock of Southern Rail. The intent of the investment was not to obtain control or to exert significant influence. Winsloe has no plans to trade the investment for near-term profits. Following is a description of the activity related to the investment in Southern Rail: | ||
| Aug. 5 | Purchased 10,000 shares of Southern Rail at $9 per share. | |
| Aug. 31 | The fair value of Southern Rail's stock was $10 per share. | |
| Sept. 30 | The fair value of Southern Rail's stock was $8.50 per share. | |
| Oct. 15 | Received a dividend from Southern Rail of $0.25 per share. | |
| Oct. 31 | The fair value of Southern Rail's stock was $9.50 per share. | |
| (a) | What method should be used to account for this investment? Does management intent influence this decision? If the investment were obtained with the objective of near-term trading for profit, what would be done differently? | |
| (b) | Prepare journal entries for the activity pertaining to the investment in Southern Rail. |
&R&"Myriad Web Pro,Bold"&20B-09.04
B-09.04
Worksheet 6
| (a) | |||||
| (b) | GENERAL JOURNAL | ||||
| Date | Accounts | Debit | Credit | ||
| 5-Aug | |||||
| 31-Aug | |||||
| 30-Sep | |||||
| 15-Oct | |||||
| 31-Oct |
&L&"Myriad Web Pro,Bold"&12Name:
Date: Section: &R&"Myriad Web Pro,Bold"&20B-09.04
B-09.04
Problem 7
| On January 1, 2014, Frick Company purchased 10,000 shares of the stock of Floozy, and did obtain significant influence. The investment is intended as a long-term investment. The stock was purchased for $90,000, and represents a 30% ownership stake. |
| Floozy made $25,000 of net income in 2014, and paid dividends of $10,000. The price of Floozy's stock increased from $10 per share at the beginning of the year, to $12 per share at the end of the year. |
| Requirements: |
| a. Prepare the January 1 & December 31 general journal entries for Frick Company. |
| b. How much should the Frick Company report on the balance sheet for the investment in Floozy as the end of 2014 |
Worksheet 7
| a. | |||
| Date | Account | Debit | Credit |
| Jan. 1 | |||
| Dec. 31 | |||
| Dec. 31 | |||
| b. Stock Investments Accounts Balance 12/31/14: |
