Question

12. On January 1, a company issues bonds dated January 1 with a par value of $740,000. The bonds mature in 3 years. The contract rate is 10%, and interest is paid semiannually on June 30 and December 31. The bonds are sold for $719,000. The journal entry to record the first interest payment using straight-line amortization is:

16. On January 1, a company issues bonds dated January 1 with a par value of $330,000. The bonds mature in 5 years. The contract rate is 9%, and interest is paid semiannually on June 30 and December 31. The market rate is 8% and the bonds are sold for $343,395. The journal entry to record the issuance of the bond is:

20.

n preparing a company's statement of cash flows for the most recent year using the indirect method, the following information is available:

Net income for the year was	$	58,000
Accounts payable decreased by		21,000
Accounts receivable increased by		28,000
Inventories increased by		8,000
Depreciation expense was		36,000

Net cash provided by operating activities was:

22. On January 1, Year 1, Stratton Company borrowed $210,000 on a 10-year, 10% installment note payable. The terms of the note require Stratton to pay 10 equal payments of $34,177 each December 31 for 10 years. The required general journal entry to record the payment on the note on December 31, Year 2 is

23. Fargo Company's outstanding stock consists of 950 shares of noncumulative 5% preferred stock with a $10 par value and 4,800 shares of common stock with a $1 par value. During the first three years of operation, the corporation declared and paid the following total cash dividends.

24. Fetzer Company declared a $0.55 per share cash dividend. The company has 280,000 shares authorized, 266,000 shares issued, and 11,200 shares in treasury stock. The journal entry to record the payment of the dividend is:

25. Northington, Inc. is preparing the company's statement of cash flows for the fiscal year just ended. Using the following information, determine the amount of cash flows from financing activities:

Net income	$	182,000
Gain on the sale of equipment		12,300
Proceeds from the sale of equipment		92,300
Depreciation expense—equipment		50,000
Payment of bonds at maturity		100,000
Purchase of land		200,000
Issuance of common stock		300,000
Increase in merchandise inventory		35,400
Decrease in accounts receivable		28,800
Increase in accounts payable		23,700
Payment of cash dividends		32,000

Answer 1

Q12.
The journal entry:
Interest expense Account Dr.				40500
Cash account (740000*10%*6/12)					37000
Discount on bonds payable (21000/6)					3500
Q16.
Journal entry:
Cash account Dr.				343395
Bonds payable Account					330000
Premium on Bonds payable Account					13395
Q20.
Cashflows from Operating activities:
Net income for the year				58000
Adjustment required:
Accounts payable decrease				-21000
Accounts receivable increase				-28000
Inventory increase				-8000
Depreciation				36000
Net cash provided from operating activities				37000
Q22.
Amort chart:
Year	Payment	Interest	Principal paid	Outstanding Balance
Year 1	34177	21000	13177	196823
Year 2	34177	19682	14495	182328
Journal entry for second payment:
Instalment note payable Dr.			13177
Interest expense Account Dr.			21000
Cash account				34177