On 1-1-2015 Avion, Inc. Sold Bonds with these particulars:

Face amt. of Bonds 300,000

Matures on 1-1-2025, in 10 yrs.

Stated annual rate of int. 7.50%

Effective annual rate of interest 8.00%

Int. is paid every six months; 6-30, 12-31

Req. 1, Assume the effective Interest Method in accounting for these Bonds, build a 10 year amortization table

Req. 2, Give General Journal entries to record the sale of the bonds, and the 1st 4 interest payments

1. Suppose that Wal-Mart Stores, Inc. anticipates that profits over the next six years to be as follows:

1. Calculate the value of Wal-Mart Stores, Inc. today. Assume the discount ratio to be three percent.
2. Repeat (a), except assume the discount rate to be five percent.
3. Compare your answers from (a) and (b). Can you draw any conclusions about the value of the firm and the discount rate?

xercise 19-30 (Algo) Stock appreciation rights; cash settlement (Appendix 19B)

As part of its stock-based compensation package, International Electronics granted 14 million stock appreciation rights (SARs) to top officers on January 1, 2021. At exercise, holders of the SARs are entitled to receive cash or stock equal in value to the excess of the market price at exercise over the share price at the date of grant. The SARs cannot be exercised until the end of 2024 (vesting date) and expire at the end of 2026. The $1 par common shares have a market price of $50 per share on the grant date. The fair value of the SARs, estimated by an appropriate option pricing model, is $4.50 per SAR at January 1, 2021. The fair value re-estimated at December 31, 2021, 2022, 2023, 2024, and 2025, is $5.50, $4.50, $6, $1.40, and $4.50, respectively. All recipients are expected to remain employed through the vesting date.

Required:

1. to 3. Prepare the appropriate journal entries pertaining to the SARs on January 1, 2021 and December 31, 2021–December 31, 2024. The SARs remain unexercised on December 31, 2025, prepare the appropriate entry.
4. The SARs are exercised on June 6, 2026, when the share price is $60, and executives choose to receive the market price appreciation in cash. Prepare the appropriate journal entry(s) on that date.

Exercise 19-30 (Algo) Stock appreciation rights; cash settlement (Appendix 19B)

As part of its stock-based compensation package, International Electronics granted 14 million stock appreciation rights (SARs) to top officers on January 1, 2021. At exercise, holders of the SARs are entitled to receive cash or stock equal in value to the excess of the market price at exercise over the share price at the date of grant. The SARs cannot be exercised until the end of 2024 (vesting date) and expire at the end of 2026. The $1 par common shares have a market price of $50 per share on the grant date. The fair value of the SARs, estimated by an appropriate option pricing model, is $4.50 per SAR at January 1, 2021. The fair value re-estimated at December 31, 2021, 2022, 2023, 2024, and 2025, is $5.50, $4.50, $6, $1.40, and $4.50, respectively. All recipients are expected to remain employed through the vesting date.

Required:

1. to 3. Prepare the appropriate journal entries pertaining to the SARs on January 1, 2021 and December 31, 2021–December 31, 2024. The SARs remain unexercised on December 31, 2025, prepare the appropriate entry.
4. The SARs are exercised on June 6, 2026, when the share price is $60, and executives choose to receive the market price appreciation in cash. Prepare the appropriate journal entry(s) on that date.

On Jan 1, 2018, the North Sea Company purchased a highsea platform for $ 12,000,000 and paid $2,000,000 as a downpyament while the balance will be paid over the next 10 years in installments of $500,000 every six months , starting July 1, 2018. The market rate on Jan 1, 2018 was 6%.

Requirements:
a.   For the how much the North Sea Company should recognize the platform on Jan 1, 2018? Show your calculation.

b.   On Jan 1, 2025, the company will pay installment payment of $500,000. How much of this payment represents a payment of the principal and how much of it represents a payment of the interest? Show your calculation (fill in the following table Jan 1 2018 – Jan 2025).
Date   Cash Paid   Interest Exp.   P Payment   Carrying Value
1-Jan-18   $   -   $   -   $   -   $   ………….
1-Jul-18              
1-Jan-19              
1-Jul-19              
1-Jan-20              
1-Jul-20              
1-Jan-21              
1-Jul-21              
1-Jan-22              
1-Jul-22              
1-Jan-23              
1-Jul-23              
1-Jan-24              
1-Jul-24              
1-Jan-25              

c.   What is the total interest expense for the year ended on Dec 31, 2021?

d.   What will be the carrying value of the notes on Dec 31, 2024?

In March 2015, Daniela Motor Financing (DMF), offered some securities for sale to the public. Under the terms of the deal, DMF promised to repay the owner of one of these securities $10,000 in March 2050, but investors would receive nothing until then. Investors paid DMF $3,500 for each of these securities; so they gave up $3,500 in March 2015, for the promise of a $10,000 payment 35 years later.

a. Assuming you purchased the bond for $3,500, what rate of return would you earn if you held the bond for 35 years until it matured with a value $10,000? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Rate of return %

b. Suppose under the terms of the bond you could redeem the bond in 2025. DMF agreed to pay an annual interest rate of 1.3 percent until that date. How much would the bond be worth at that time? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Bond value $

c. In 2025, instead of cashing in the bond for its then current value, you decide to hold the bond until it matures in 2050. What annual rate of return will you earn over the last 25 years? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Rate of return %

Consider the following time series data.

Compute seasonal indexes and adjusted seasonal indexes for the four quarters (to 3 decimals).

Consider the following time series data.

b. Show the four-quarter and centered moving average values for this time series (to 3 decimals if necessary).

c. Compute seasonal indexes and adjusted seasonal indexes for the four quarters (to 3 decimals).

Required information

[The following information applies to the questions displayed below.]

Beech Corporation is a merchandising company that is preparing a master budget for the third quarter of the calendar year. The company’s balance sheet as of June 30th is shown below:

Beech’s managers have made the following additional assumptions and estimates:

1. Estimated sales for July, August, September, and October will be $320,000, $340,000, $330,000, and $350,000, respectively.

2. All sales are on credit and all credit sales are collected. Each month’s credit sales are collected 35% in the month of sale and 65% in the month following the sale. All of the accounts receivable at June 30 will be collected in July.

3. Each month’s ending inventory must equal 25% of the cost of next month’s sales. The cost of goods sold is 70% of sales. The company pays for 40% of its merchandise purchases in the month of the purchase and the remaining 60% in the month following the purchase. All of the accounts payable at June 30 will be paid in July.

4. Monthly selling and administrative expenses are always $40,000. Each month $6,000 of this total amount is depreciation expense and the remaining $34,000 relates to expenses that are paid in the month they are incurred.

5. The company does not plan to borrow money or pay or declare dividends during the quarter ended September 30. The company does not plan to issue any common stock or repurchase its own stock during the quarter ended September 30.

Required:

1. Prepare a schedule of expected cash collections for July, August, and September.

2-a. Prepare a merchandise purchases budget for July, August, and September. Also compute total merchandise purchases for the quarter ended September 30.

2-b. Prepare a schedule of expected cash disbursements for merchandise purchases for July, August, and September.

3. Prepare an income statement that computes net operating income for the quarter ended September 30.

4. Prepare a balance sheet as of September 30.

Required information

[The following information applies to the questions displayed below.]

Beech Corporation is a merchandising company that is preparing a master budget for the third quarter of the calendar year. The company’s balance sheet as of June 30th is shown below:

Beech’s managers have made the following additional assumptions and estimates:

1. Estimated sales for July, August, September, and October will be $320,000, $340,000, $330,000, and $350,000, respectively.

2. All sales are on credit and all credit sales are collected. Each month’s credit sales are collected 35% in the month of sale and 65% in the month following the sale. All of the accounts receivable at June 30 will be collected in July.

3. Each month’s ending inventory must equal 25% of the cost of next month’s sales. The cost of goods sold is 70% of sales. The company pays for 40% of its merchandise purchases in the month of the purchase and the remaining 60% in the month following the purchase. All of the accounts payable at June 30 will be paid in July.

4. Monthly selling and administrative expenses are always $40,000. Each month $6,000 of this total amount is depreciation expense and the remaining $34,000 relates to expenses that are paid in the month they are incurred.

5. The company does not plan to borrow money or pay or declare dividends during the quarter ended September 30. The company does not plan to issue any common stock or repurchase its own stock during the quarter ended September 30.

Required:

1. Prepare a schedule of expected cash collections for July, August, and September.

2-a. Prepare a merchandise purchases budget for July, August, and September. Also compute total merchandise purchases for the quarter ended September 30.

2-b. Prepare a schedule of expected cash disbursements for merchandise purchases for July, August, and September.

3. Prepare an income statement that computes net operating income for the quarter ended September 30.

4. Prepare a balance sheet as of September 30.

Required:

1. Prepare a schedule of expected cash collections for July, August, and September.

2-a. Prepare a merchandise purchases budget for July, August, and September. Also compute total merchandise purchases for the quarter ended September 30.

2-b. Prepare a schedule of expected cash disbursements for merchandise purchases for July, August, and September.

3. Prepare an income statement that computes net operating income for the quarter ended September 30.

4. Prepare a balance sheet as of September 30.

Prepare a balance sheet as of September 30.

1. Calculate the expected cash collections for December.

2. Calculate the expected cash disbursements for merchandise purchases for December.

Prepare a cash budget for December. Indicate in the financing section any borrowing that will be needed during the month. Assume that any interest will not be paid until the following month.

Mel's Hair Salon uses a perpetual inventory system, recorded the following inventory transactions for this year:

                                                                      Purchases            Sales   

                                                            Units           Unit Cost             Units           Selling Price/Unit

Apr       1      Beginning inventory         90                 $ 16

          25      Purchase                       300                    18

May      4      Purchase                       130                    20

           16      Sale                                                                               240                   $32

Jun       4      Purchase                       100                    24

Instructions

(a)   Using the FIFO cost formula, calculate the cost of goods sold for the quarter ended June 30. Show calculations.

(b)   Using the average cost formula, calculate the ending inventory at June 30. Show calculations and use unrounded numbers in your calculations but round to the nearest cent for presentation purposes in your answer.