Colton Enterprises experienced the following events for Year 1, the first year of operation: Acquired $45,000 cash from the issue of common stock. Paid $13,000 cash in advance for rent. The payment was for the period April 1, Year 1, to March 31, Year 2. Performed services for customers on account for $92,000. Incurred operating expenses on account of $40,000. Collected $70,500 cash from accounts receivable. Paid $31,000 cash for salary expense. Paid $32,000 cash as a partial payment on accounts payable. Adjusting Entries Made the adjusting entry for the expired rent. (See Event 2.) Recorded $4,400 of accrued salaries at the end of Year 1. Events for Year 2 Paid $4,400 cash for the salaries accrued at the end of the prior accounting period. Performed services for cash of $41,000. Purchased $3,800 of supplies on account. Paid $13,500 cash in advance for rent. The payment was for one year beginning April 1, Year 2. Performed services for customers on account for $108,000. Incurred operating expenses on account of $51,500. Collected $99,000 cash from accounts receivable. Paid $49,000 cash as a partial payment on accounts payable. Paid $32,500 cash for salary expense. Paid a $13,000 cash dividend to stockholders. Adjusting Entries Made the adjusting entry for the expired rent. (Hint: Part of the rent was paid in Year 1.) Recorded supplies expense. A physical count showed that $400 of supplies were still on hand.

b. Post the Year 1 events to T-accounts.

Toys Co. issued 10-year bonds a year ago at a coupon rate of 10%. The bonds make semiannual payments and have a par value of $1,000. If the YTM on these bonds is 9%, what is the current bond price?

Dexter Mills issued 20-year bonds a year ago at a coupon rate of 10.2 percent. The bonds make semiannual payments and have a par value of $1,000. If the YTM on these bonds is 9.2 percent, what is the current yield of the bond?

Question 33 options:

Suppose the yield curve shows 1 year rates at 5%, 2 year rates at 10% and 3 year rates at 15%. What is the price of a bond with a $1000 par value, maturity 3 years, and annual coupon payment of $50? Show work for credit.

1. A deposit of $4,375 earns 5.45 percent the first year, 5.86 percent the second year, 6.52 percent the third year, 7.08 percent in the fourth year and 7.54 percent in the fifth year. What is the amount of the fifth year future value?
A. less than $5,915
B. more than $5,915 but less than $5,950
C. more than $5,950 but less than $5,985
D. more than $5,985 but less than $6,020
E. more than $6,020

2. How much would be in your savings account in 18 years after depositing $1,475 today if the bank pays 5.76 percent interest per year and compounds annually?
A. less than $3,920
B. more than $3,920 but less than $3,955
C. more than $3,955 but less than $3,990
D. more than $3,990 but less than $4,025
E. more than $4,025

3. You can invest $7,500 for 12 years in an account that earns 5.76 percent per year or you can choose an account that has a delayed start for two years. That is, you wait two years and put $7,500 into an account that earns 6.84 percent per year. Assume that both accounts compound monthly. If you select the investment earning 5.76 percent, how much more interest will you earn than the account that pays 6.84 percent per year?
A. less than $115
B. more than $115 but less than $140
C. more than $140 but less than $175
D. more than $175 but less than $210
E. more than $210

4. Caroline wants to retire in 20 years and she has $167,895 in her retirement account today. Her Uncle James and Aunt Mary have established a trust fund for her that will pay $125,000 to her in 20 years. Caroline wants the sum of the trust and her retirement account to equal $725,000 upon retirement. If the accounts compound interest annually, what annual rate will Caroline need to earn on the retirement account to achieve this goal?
A. less than 6.00
B. more than 6.00 percent but less than 6.35 percent
C. more than 6.35 percent but less than 6.70 percent
D. more than 6.70 percent but less than 7.05 percent
E. more than 7.05 percent

The following transactions apply to Pecan Co. for Year 1, its first year of operations:

1. Received $38,000 cash in exchange for issuance of common stock.
2. Secured a $101,000 ten-year installment loan from State Bank. The interest rate is 6 percent and annual payments are $13,723.
3. Purchased land for $20,000.
4. Provided services for $115,000.
5. Paid other operating expenses of $39,000.
6. Paid the annual payment on the loan.

Required

1. Organize the transaction data in accounts under an accounting equation.
2. Prepare an income statement and balance sheet for Year 1.
3. What is the interest expense for Year 2? Year 3?

The following transactions apply to Pecan Co. for Year 1, its first year of operations:

1. Received $38,000 cash in exchange for issuance of common stock.
2. Secured a $101,000 ten-year installment loan from State Bank. The interest rate is 6 percent and annual payments are $13,723.
3. Purchased land for $20,000.
4. Provided services for $115,000.
5. Paid other operating expenses of $39,000.
6. Paid the annual payment on the loan.

Required

1. Organize the transaction data in accounts under an accounting equation.
2. Prepare an income statement and balance sheet for Year 1.
3. What is the interest expense for Year 2? Year 3?

The stock of Sedly Inc. is expected to paythe following dividends. Dividends: Year 1: $2.25 year 2: $3.60 year 3: $1.70 . year 4: $2.00 At the end of the fourth year its value is expected to be $37.70. What should Sedly sell for today if the return on stocks of similar risk is 11.924%? Round PVF values in intermediate calcualtions to four decimal places. Round the answer to two decimal places.

You plan to retire in year 20
Your retirement will last 25 years starting in year 21
You want to have $50,000 each year of your retirement.
How much would you have to invest each year, starting in one year, for 15 years , to exactly pay for your retirement ,if your investments earn 6.00% APR (compounded annually)?

Answers:

$21,349

$21,546

$20,930

$20,520

XYZ stock price and dividend history are as follows:

An investor buys five shares of XYZ at the beginning of 2015, buys another two shares at the beginning of 2016, sells one share at the beginning of 2017, and sells all six remaining shares at the beginning of 2018. What is the dollar-weighted rate of return? (Hint: If your calculator cannot calculate internal rate of return, you will have to use a spreadsheet or trial and error.) (Negative value should be indicated by a minus sign. Round your answer to 4 decimal places.)

Volunteer Corporation reported taxable income of $470,000 from operations this year. During the year, the company made a distribution of land to its sole shareholder, Rocky Topp. The land’s fair market value was $85,000 and its tax and E&P basis to Volunteer was $58,500. Rocky assumed a mortgage attached to the land of $17,000. Any gain from the distribution will be taxed at 21 percent. The company had accumulated E&P of $780,000 at the beginning of the year.

b. Compute Volunteer's current E&P.
c. Compute Volunteer’s accumulated E&P at the beginning of next year.
d. What amount of dividend income does Rocky report as a result of the distribution?
e. What is Rocky’s income tax basis in the land received from Volunteer?