On January 1, 2017, Boston Enterprises issues bonds that have a $1,600,000 par value, mature in 20 years, and pay 8% interest semiannually on June 30 and December 31. The bonds are sold at par.

1. How much interest will Boston pay (in cash) to the bondholders every six months?

2. Prepare journal entries to record (a) the issuance of bonds on January 1, 2017; (b) the first interest payment on June 30, 2017; and (c) the second interest payment on December 31, 2017.

3. Prepare the journal entry for issuance assuming the bonds are issued at (a) 98 and (b) 102.

Lone Star Sales & Service acquired a new machine that cost $84,000 in early 2016. The machine is expected to have a five-year useful life and is estimated to have a salvage value of $14,000 at the end of its life. (Round your final answers to the nearest dollar.)

(a.) Using the straight-line depreciation method, calculate the depreciation expense to be recognized in the second year of the machine's life and calculate the accumulated depreciation after the third year of the machine's life.
(b.) Using the double-declining-balance depreciation method, calculate the depreciation expense for the third year of the machine's life and the net book value of the machine at this point in time.  

The management team of U. Dunnit Limited have four projects for consideration. In the past, they have evaluated projects

against simple payback. The following information is available:

   Project A Project B Project C Project D £

REQUIRED

Evaluate the projects using each of the following methods:

(a) Payback.

(b) Accounting rate of return using full capital outlay (investment).

(c) Net present value and profitability index. Assuming a cost of capital of 6%.

Warnerwoods Company uses a periodic inventory system. It entered into the following purchases and sales transactions for March.  

For specific identification, the March 9 sale consisted of 60 units from beginning inventory and 455 units from the March 5 purchase; the March 29 sale consisted of 135 units from the March 18 purchase and 215 units from the March 25 purchase.

3. Compute the cost assigned to ending inventory using (a) FIFO, (b) LIFO, (c) weighted average, and (d) specific identification. (Round your average cost per unit to 2 decimal places

Bargain Rental Car offers rental cars in an off-airport location near a major tourist destination in California. Management would like to better understand the variable and fixed portions of its car washing costs. The company operates its own car wash facility in which each rental car that is returned is thoroughly cleaned before being released for rental to another customer. Management believes that the variable portion of its car washing costs relates to the number of rental returns. Accordingly, the following data have been compiled:

Using least-squares regression, estimate the variable cost per rental return and the monthly fixed cost incurred to wash cars. (Round Fixed cost to the nearest whole dollar amount and the Variable cost per unit to 2 decimal places.)

Warnerwoods Company uses a periodic inventory system. It entered into the following purchases and sales transactions for March.  

For specific identification, the March 9 sale consisted of 60 units from beginning inventory and 455 units from the March 5 purchase; the March 29 sale consisted of 135 units from the March 18 purchase and 215 units from the March 25 purchase.

4. Compute gross profit earned by the company for each of the four costing methods. (Round your average cost per unit to 2 decimal places and final answers to nearest whole dollar.)

Fiber Technology, Inc., manufactures glass fibers used in the communications industry. The company's materials and parts manager is currently revising the inventory policy for XL-20, one of the chemicals used in the production process. The chemical is purchased in 10-pound canisters for $107 each. The firm uses 6,000 canisters per year. The controller estimates that it costs $162 to place and receive a typical order of XL-20. The annual cost of storing XL-20 is $5.20 per canister.

Required:

2. Use the EOQ formula to determine the optimal order quantity.

3. What is the total annual cost of ordering and storing XL-20 at the economic order quantity?

4. How many orders will be placed per year?

5. Fiber Technology’s controller, Jay Turnbull, recently attended a seminar on JIT purchasing. Afterward he analyzed the cost of storing XL-20, including the costs of wasted space and inefficiency. He was shocked when he concluded that the real annual holding cost was $31.20 per canister. Turnbull then met with Doug Kaplan, Fiber Technology’s purchasing manager. Together they contacted Reno Industries, the supplier of XL-20, about a JIT purchasing arrangement. After some discussion and negotiation, Kaplan concluded that the cost of placing an order for XL-20 could be reduced to just $32. Using these new cost estimates, Turnbull computed the new EOQ for XL-20 a. Use the equation approach to compute the new EOQ.b. How many orders will be placed per year?

1.Use the EOQ formula to determine the optimal order quantity. (Round your answer to nearest whole number.)

2.What is the total annual cost of ordering and storing XL-20 at the economic order quantity? (Round intermediate calculations and final answer to nearest whole number.)

3.How many orders will be placed per year? (Round intermediate calculations and final answer to nearest whole number.)

4. Fiber Technology’s controller, Jay Turnbull, recently attended a seminar on JIT purchasing. Afterward he analyzed the cost of storing XL-20, including the costs of wasted space and inefficiency. He was shocked when he concluded that the real annual holding cost was $31.20 per canister. Turnbull then met with Doug Kaplan, Fiber Technology’s purchasing manager. Together they contacted Reno Industries, the supplier of XL-20, about a JIT purchasing arrangement. After some discussion and negotiation, Kaplan concluded that the cost of placing an order for XL-20 could be reduced to just $32.00. Using these new cost estimates, Turnbull computed the new EOQ for XL-20.

a. Use the equation approach to compute the new EOQ. (Round your answer to nearest whole number.)
b. How many orders will be placed per year? (Round your answer to nearest whole number.)

Warnerwoods Company uses a perpetual inventory system. It entered into the following purchases and sales transactions for March.

4. Compute gross profit earned by the company for each of the four costing methods. For specific identification, the March 9 sale consisted of 115 units from beginning inventory and 245 units from the March 5 purchase; the March 29 sale consisted of 95 units from the March 18 purchase and 135 units from the March 25 purchase. (Round weighted average cost per unit to two decimals and final answers to nearest whole dollar.)

The budget director of Gourmet Grill Company requests estimates of sales, production, and other operating data from the various administrative units every month. Selected information concerning sales and production for July is summarized as follows:

a. Estimated sales for July by sales territory:

b. Estimated inventories at July 1:

c. Desired inventories at July 31:

d. Direct materials used in production:

e. Anticipated purchase price for direct materials:

f. Direct labor requirements:

Required:

1. Prepare a sales budget for July.

2. Prepare a production budget for July. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

3. Prepare a direct materials purchases budget for July. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

4. Prepare a direct labor cost budget for July.

You are a real estate owner in Bloomington Indiana and you have rented a house to students. You expect to make 6% per year on this leasehold investment. The terms of the lease are for 24 months and the rent is due at the beginning of the month. Your savvy renters are Kelley students and they request that the rent be paid, instead, at the end of the month. How much more will the investor receive as a result of payments at the beginning of the month rather than the student's proposed payments at the end of the month over the entire life of the lease? The monthly rent payment is $2800.

a. $1800

b. $162.67

c. $2108.46

d. $315.88

e. $1408.49

Danos Company’s partial worksheet for the month ended December 31, 2019, is shown below. Open the owner’s capital account (account number 301) in the general ledger and record the December 1, 2019, balance of $77,000 shown on the worksheet.

Prepare the closing entries for the Danos Company’s on December 31, 2019. Post the closing entries to the owner’s capital account. Prepare a postclosing trial balance.

Lynch Company manufactures and sells a single product. The following costs were incurred during the company’s first year of operations:

During the year, the company produced 21,000 units and sold 17,000 units. The selling price of the company’s product is $40 per unit.

Required:

1. Assume that the company uses absorption costing:

a. Compute the unit product cost.

b. Prepare an income statement for the year.

2. Assume that the company uses variable costing:

a. Compute the unit product cost.

b. Prepare an income statement for the year.

A company sells personal computeres. The price includes a two-year warranty. During 2016, the company made $920,000 in sales. On the basis of past experience, the warranty costs are estimated to be 10% of sales. One customer brought in their computer on January 10, 2017 which required warranty repairs of $200 taken from parts taken from the Repair Parts Inventory. Prepare general journal entries to record: a. the estimated warranty expense on December 31, 2016. b. The warranty repair costs