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    Homework   1.1  1.2   2.1  2.2  3.1  3.2   4.1  4.2  5.1  5.2   6.1   6.2  7.1  7.2  8.1  8.2  9.1  9.2  10.1   10.2  11.1   11.2  12.1  12.2   13.1  13.2

Problem 10-5A Straight-Line: Amortization of bond premium and discount LO P1, P2, P3
[The following information applies to the questions displayed below.]
 
Legacy issues $680,000 of 6.5%, four-year bonds dated January 1, 2017, that pay interest semiannually on June 30 and December 31.
They are issued at $645,669 and their market rate is 8% at the issue date.
 

4. Prepare the journal entries to record the first two interest payments.
 
2.  Exercise 10-10 Installment note with equal total payments LO C1
On January 1, 2017, Eagle borrows $32,000 cash by signing a four-year, 9% installment note.
The note requires four equal payments of $9,877, consisting of accrued interest and principal on December 31 of each year from 2017 through 2020.
(Table B.1, Table B.2, Table B.3, and Table B.4)
(Use appropriate factor(s) from the tables provided.)
  
Prepare an amortization table for this installment note.

   
On January 1, Renewable Energy issues bonds that have a $34,000 par value, mature in ten years, and pay 17% interest semiannually on June 30 and December 31.
Prepare the journal entry for issuance assuming the bonds are issued at (a) 99 and (b) 103½.
 

   
On July 1, Aloha Co. exercises a call option that requires Aloha to pay $408,000 for its outstanding bonds that have a carrying value of $412,000
and par value of $400,000. The company exercises the call option after the semiannual interest is paid the day before on June 30.
Record the entry to retire the bonds.
 

   
Select the phrase that best fits each term of the description A through H.
 

   
On January 1, 2019, Shay Company issues $280,000 of 12%, 12-year bonds. The bonds sell for $272,300. Six years later, on January 1, 2025,
Shay retires these bonds by buying them on the open market for $293,300. All interest is accounted for and paid through December 31, 2024,
the day before the purchase. The straight-line method is used to amortize any bond discount.
 
What is the amount of the discount on the bonds at issuance?
How much amortization of the discount is recorded on the bonds for the entire period from January 1, 2019, through December 31, 2024?
 

 
What is the carrying (book) value of the bonds as of the close of business on December 31, 2024?
 

 
Prepare the journal entry to record the bond retirement.
 

   
Hillside issues $2,100,000 of 5%, 15-year bonds dated January 1, 2019, that pay interest semiannually on June 30 and December 31.
The bonds are issued at a price of $2,570,390.
 
Prepare the January 1 journal entry to record the bonds’ issuance.

 
For each semiannual period, complete the table below to calculate the cash payment. For each semiannual period, complete the table below
to calculate the straight-line premium amortization. For each semiannual period, complete the table below to calculate the bond interest expense.
 

 
Complete the below table to calculate the total bond interest expense to be recognized over the bonds’ life.
 

 
Prepare the first two years of a straight-line amortization table.
 

 
Prepare the journal entries to record the first two interest payments.
 

   
On May 1, 2024, Dooley borrowed $250,000 from Prime Bank by signing a three-year, 6% note payable. Interest is due each May 1.
What adjusting entry, if any, should Prime Bank record on December 31, 2024?

a) Debit interest receivable and credit interest revenue for $5,000
b) No adjusting entry is necessary
c) Debit interest receivable and credit interest revenue for $15,000
d) Debit interest receivable and credit interest revenue for $10,000
   
On September 1, 2024, Greenwood Gaming sold 400 one-year subscriptions to its online gaming website for $90 each.
The total amount received was credited to Deferred Revenue. What would be the required adjusting entry at December 31, 2024?

a) Debit deferred revenue and credit service revenue for $12,000
b) Debit deferred revenue and credit service revenue for $24,000
c) Debit deferred revenue and credit service revenue for $36,000
d) Debit service revenue and credit deferred revenue for $24,000
   
FastFlix sells one-year online subscriptions for viewing classic movies.
Customers are required to pay for the subscription at the beginning of the subscription period.
On April 1, 2024, total sales of one-year subscriptions are $12,000.
What adjusting entry does FastFlix need to record on December 31, 2024?

a) Debit deferred revenue and credit service revenue for $12,000
b) Debit deferred revenue and credit service revenue for $9,000
c) Debit service revenue and credit deferred revenue for $9,000
d) Debit service revenue and credit deferred revenue for $12,000
   
On July 1, 2024, Charlie Company paid $18,000 to Rent-An-Office for rent covering 18 months from July 2024 through December 2025.
What adjusting entry should Charlie Company record on December 31, 2024?

a) Debit rent expense and credit prepaid rent for $6,000
b) Debit prepaid rent and credit rent expense for $6,000
c) Debit rent expense and credit prepaid rent for $18,000
d) Debit rent expense and credit cash for $18,000
   
The year-end adjustment required when goods or services are provided to a customer for amounts previously recorded as Deferred Revenues includes a(n):

a) Decrease in an asset
b) Increase in an asset
c) Decrease in a liability
d) Increase in a liability
   
A gym offers one-year memberships for $99 and requires customers to pay the full amount of cash at the beginning of the membership period.
For the gym, this is an example of a(n):

a) Deferred revenue
b) Accrued expense
c) Prepaid expense
d) Accrued revenue
   
Which of the following statements is true regarding the post-closing trial balance?

a) The post-closing trial balance is an internal report prepared as the last step in the accounting cycle
b) The post-closing trial balance proves that all entries have been made correctly and accurately during the accounting period
c) The post-closing trial balance will be distributed to investors and other stakeholders along with the financial statements
d) The post-closing trial balance is a report prepared and the financial statements are prepared to prove that debits equal credits
   
Which of the following is true concerning temporary and permanent accounts?

a) Permanent accounts must be closed at the end of every reporting period
b) Cash is a temporary account
c) Temporary accounts represent activity over the previous three years
d) Permanent accounts represent activity over the entire life of the company
   
Which of the following is a correct step in the closing process?

a) Increase cash, increase retained earnings
b) Decrease service revenue, increase retained earnings
c) Increase cash, increase service revenue
d) Increase dividends, increase retained earnings
   
Which of the following is a permanent account?

a) Advertising expense
b) Service revenue
c) Dividends
d) Retained earnings
   
Gagner Clinic purchases land for $175,000 cash. The clinic assumes $1,500 in property taxes due on the land.
The title and attorney fees totaled $1,000. The clinic has the land graded for $2,200.
What amount does Gagner Clinic record as the cost for the land?
 
$179,700
 
175,000 + 1,500 + 1,000 + 2,200 = 179,700
   
During 2015, Zuma Company had $150,000 in cash sales and $1,240,000 in credit sales.  The accounts receivable balances were
$180,000 and $215,000 at December 31, 2014 and 2015, respectively.  Using the direct method of reporting cash flows from operating
activities, what was the total cash collected from all customers during 2015?
 
$1,355,000
 
1,240,000 - (180,000 - 215,000) + 150,000 = 1,355,000
   
Pare Company reported a net loss of $30,000 for the year ended December 31, 2014. During the year,
accounts receivable decreased $15,000, merchandise inventory increased $25,000, accounts payable increased by
$30,000, and depreciation expense of $20,000 was recorded. During 2014, operating activities provided net cash of:
 
$10,000
 
(30,000) + 15,000 + (25,000) + 30,000 + 20,000 = 10,000
   
Ale Company reports a $16,000 increase in inventory and a $8,000 increase in accounts payable during the year.
Cost of Goods Sold for the year was $150,000. The cash payments made to suppliers were
 
$158,000
 
150,000 + 16,000 - 8,000 = 158,000
   
The net income reported on the income statement for the current year was $245,000. Depreciation was $40,000.
Account receivable and inventories decreased by $12,000 and $35,000, respectively. Prepaid expenses and accounts payable increased,
respectively, by $1,000 and $8,000. How much cash was provided by operating activities?
 
$339,000
 
245,000 + 40,000 + 12,000 + 35,000 - 1,000 + $8,000 = 339,000
   
Wilson Company reported net income of $105,000 for the year ended December 31, 2014. During the year,
inventories decreased by $15,000, accounts payable decreased by $20,000, depreciation expense was $18,000
and a gain on disposal of equipment of $9,000 was recorded.
Net cash provided by operating activities in 2014 using the indirect method was
 
$109,000
 
105,000 + 15,000 - $20,000 + 18,000 -$9,000 = 109,000
   
In Jude Company, land decreased $150,000 because of a cash sale for $150,000, the equipment account increased
$60,000 as a result of a cash purchase, and Bonds Payable increased $120,000 from issuance for cash at face value.
The net cash provided by investing activities is
 
$90,000.
 
150,000 - 60,000 = 90,000
   
The net income reported on the income statement for the current year was $220,000. Depreciation recorded on
plant assets was $35,000. Accounts receivable and inventories increased by $2,000 and $8,000, respectively.
Prepaid expenses and accounts payable decreased by $2,000 and $12,000 respectively.
How much cash was provided by operating activities?
 
$235,000
 
220,000 + 35,000 - 2,000 - 8,000 + 2,000 - 12,000 = 235,000
   
LRRP Company had credit sales of $650,000. The beginning accounts receivable balance was $15,000 and the ending
accounts receivable balance was $140,000. What were the cash collections from customers during the period?
 
$525,000
 
650,000 - (140,000 - 15,000) = 525,000
   
Jean's Vegetable Market had the following transactions during 2014:
 
1. Issued $50,000 of par value common stock for cash.
2. Repaid a 6 year note payable in the amount of $22,000.
3. Acquired land by issuing common stock of par value $100,000.
4. Declared and paid a cash dividend of $2,000.
5. Sold a long-term investment (cost $3,000) for cash of $8,000.
6. Acquired an investment in IBM stock for cash of $15,000.
 
What is the net cash provided (used) by investing activities?
 
($7,000)
 
8,000 - 15,000 = (7,000)
   
A company had net income of $210,000. Depreciation expense is $27,000.
During the year, Accounts Receivable and Inventory increased $17,000 and $42,000, respectively.
Prepaid Expenses and Accounts Payable decreased $5,000 and $6,000, respectively.
There was also a loss on the sale of equipment of $2,000. How much cash was provided by operating activities?
 
$179,000
 
210,000 + 27,000 - 17,000 - 42,000 + 5,000 - 6,000 + 2,000 = 179,000
   
Adama Company reported a net loss of $6,000 for the year ended December 31, 2014.
During the year, accounts receivable increased $15,000, merchandise inventory decreased $12,000, accounts payable decreased by
$20,000, and depreciation expense of $12,000 was recorded.
 
During 2014, operating activities used net cash of $17,000.
 
(6,000) + (15,000) + 12,000 +(20,000) + 12,000 = (17,000)
   
On October 1, Arcade Fire Enterprises reported stockholders' equity of $70,000. During October,
no stock was issued, and the company earned net income of $18,000.
If stockholders' equity on October 31 totals $78,000, what amount of dividends were paid during the month?
 
$10,000
 
70,000 + 18,000 – 78,000 = 10,000
   
Barsuk Company began the year with stockholders' equity of $108,000.
During the year, Barsuk issued stock for $147,000, recorded expenses of $420,000, and paid dividends of $28,000.
If Barsuk's ending stockholders' equity was $290,000, what was the company's revenue for the year?
 
$483,000.
 
108,000 + 147,000 + (x - 420,000) - 28,000 = 290,000
x = 483,000
   
During the year 2015, Dilego Company earned revenues of $90,000, had expenses of $56,000,
purchased assets with a cost of $10,000 and paid dividends of $6,000. Net income for the year is
 
$34,000.
 
90,000 - 56,000 = 34,000
   
Black Keys Company began the year with stockholders' equity of $280,000.
During the year, the company recorded revenues of $375,000, expenses of $285,000, and paid dividends of $30,000.
What was Black Keys' stockholders' equity at the end of the year?
 
$340,000.
 
280,000 + (375,000 - $285,000) - 30,000 = 340,000
   
On January 1, 2015, Cat Power Company reported stockholders' equity of $705,000. During the year,
the company paid dividends of $30,000. At December 31, 2015, the amount of stockholders' equity was $825,000.
What amount of net income or net loss would the company report for 2015?
 
Net income of $150,000
 
825,000 – 30,000 – 705,000 = 150,000
   
Stahl Consulting started the year with total assets of $60,000 and total liabilities of $15,000.
During the year, the business recorded $48,000 in catering revenues and $30,000 in expenses.
Stahl issued stock of $9,000 and paid dividends of $15,000 during the year.
The stockholders' equity at the end of the year was
 
$57,000.
 
(60,000 - 15,000) + (48,000 - 30,000) + 9,000 - 15,000 = 57,000
   
Fat Possum's Service Shop started the year with total assets of $330,000 and total liabilities of $240,000.
During the year, the business recorded $630,000 in revenues, $420,000 in expenses, and paid dividends of $60,000.
Stockholders' equity at the end of the year was:
 
$240,000
 
(330,000 - 240,000) + (630,000 - 420,000) - 60,000 = 240,000
   
 
Kennedy Company issued stock to Ed Kennedy in exchange for his investment of $75,000 cash in the business.
The company recorded revenues of $555,000, expenses of $420,000, and had paid dividends of $30,000.
What was Kennedy's net income for the year?
 
$135,000.
 
555,000 - 420,000 = 135,000.
   
At September 1, 2015, Promise Ring Co. reported stockholders' equity of $156,000.
During the month, Promise Ring generated revenues of $38,000, incurred expenses of $21,000,  purchased equipment for $5,000
and paid dividends of $2,000. What is the amount of stockholders' equity at September 30, 2015?
 
$171,000
 
156,000 + 38,000 - 21,000 - 2,000 = 171,000

    Homework   1.1  1.2   2.1  2.2  3.1  3.2   4.1  4.2  5.1  5.2   6.1   6.2  7.1  7.2  8.1  8.2  9.1  9.2  10.1   10.2  11.1   11.2  12.1  12.2   13.1  13.2