Question

In January (it's first year of existence) of 2017 ABC Corp issued 100,000 shares of 1.0 par stock for $1,750,000. ABC issued 10 year $200,000 bonds at 95 with stated rate of 9%; and 20 year $400,000 at 105 with stated rate of 9%. Amortized using the staright-line method. Both pay interest semi-annually. ABC lastly issued 5% 5-year convertible deby for $105,000, par was 100,000. Interest paid annual on 1/1. Amortizable using SL method. The debt is convertible into 5,000 shares of stock.

On July 1, 2017, getting ready for internet launch of new product - ABC Company issued 10 year $500,000 10% bonds at 98. The market rate of interest is 10.5%. The interest is paid annually on 12/31. ABC uses the effective interest rate method for amortization. Note that the 10% stated rate is an annual rate.

On 8/1 ABC issued 10,000 shares of $10 par value preferred stock for $12/share.

Durning the year, the sales of widgets skyrocketed. ABC had $3,500,000 in credit sales for inventory. The inventory, which cost $1,500,000(all purchased with credit) was all sold. No inventory remains. We will pay the supplier in Jan 2018.

Due to unbelievable sales the company determined to buy back bonds. On September first they purchased all the outstanding $200,000 debt for $195,000 cash.

ABC had the following cash transactions: Paid salaries of $100,000, rent of $30,000. Paid for insurance used durning the year of $20,000. Had miscelaneous operating expenses of $5,000. On 12/31 it bought machinery for $10,000 in cash. On 12/31 it bought 1,000 of it's common shares back at a price of $10/share.

On 12/15 ABC declared $10,000 cash dividends. The actual payment will not be made until next year.

On 12/31 all of the convertible debt converted into common stock.

PREPARE ALL JOURNAL ENTRIES (including adjusting and closing)

PREPARE INCOME STATEMENT IN GOOD FORM AND COMPLETE

PREPARE BALANCE SHEETIN GOOD FORM AND COMPLETE.

Answer 1