Inner Secret T Shirt Company produces and sells one product. The following information pertains to each of the company’s first three years of operations:

Variable costs per unit:     

Manufacturing:     

Direct materials   $   26

Direct labor   $   18

Variable manufacturing overhead   $   5

Variable selling and administrative   $   1

Fixed costs per year:     

Fixed manufacturing overhead   $   540,000

Fixed selling and administrative expenses   $   100,000

During its first year of operations, O’Brien produced 94,000 units and sold 75,000 units. During its second year of operations, it produced 83,000 units and sold 97,000 units. In its third year, O’Brien produced 82,000 units and sold 77,000 units. The selling price of the company’s product is $80 per unit.

Required:

1. Assume the company uses variable costing and a FIFO inventory flow assumption (FIFO means first-in first-out. In other words, it assumes that the oldest units in inventory are sold first):

a. Compute the unit product cost for Year 1, Year 2, and Year 3.

b. Prepare an income statement for Year 1, Year 2, and Year 3.

Inner Secret T Shirt Company produces and sells one product. The following information pertains to each of the company’s first three years of operations: Variable costs per unit: Manufacturing: Direct materials $ 28 Direct labor $ 17 Variable manufacturing overhead $ 3 Variable selling and administrative $ 4 Fixed costs per year: Fixed manufacturing overhead $ 500,000 Fixed selling and administrative expenses $ 130,000 During its first year of operations, O’Brien produced 93,000 units and sold 73,000 units. During its second year of operations, it produced 80,000 units and sold 95,000 units. In its third year, O’Brien produced 89,000 units and sold 84,000 units. The selling price of the company’s product is $73 per unit. 2. Assume the company uses variable costing and a LIFO inventory flow assumption (LIFO means last-in first-out. In other words, it assumes that the newest units in inventory are sold first): a. Compute the unit product cost for Year 1, Year 2, and Year 3. b. Prepare an income statement for Year 1, Year 2, and Year 3

Inner Secret T Shirt Company produces and sells one product. The following information pertains to each of the company’s first three years of operations:

During its first year of operations, O’Brien produced 93,000 units and sold 73,000 units. During its second year of operations, it produced 80,000 units and sold 95,000 units. In its third year, O’Brien produced 89,000 units and sold 84,000 units. The selling price of the company’s product is $73 per unit.

3. Assume the company uses absorption costing and a FIFO inventory flow assumption (FIFO means first-in first-out. In other words, it assumes that the oldest units in inventory are sold first):

a. Compute the unit product cost for Year 1, Year 2, and Year 3.

b. Prepare an income statement for Year 1, Year 2, and Year 3.

1. Bond Premium, Entries for Bonds Payable Transactions, Interest Method of Amortizing Bond Premium.

   Campbell, Inc. produces and sells outdoor equipment. On July 1, Year 1, Campbell issued $56,000,000 of 20-year, 14% bonds at a market (effective) interest rate of 12%, receiving cash of $64,412,320. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year.

   Required:

   If an amount box does not require an entry, leave it blank or enter "0".

   1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds.

   Year 1 July 1

   2. Journalize the entries to record the following:

   a. The first semiannual interest payment on December 31, Year 1, and the amortization of the bond premium, using the interest method. (If required, round your answers to the nearest dollar.)

   Year 1 Dec. 31

   b. The interest payment on June 30, Year 2, and the amortization of the bond premium, using the interest method. (Round your answers to the nearest dollar.)

   Year 2 June 30

   3. Determine the total interest expense for Year 1.
   $

Check My Work

Molly Grey (single) acquired a 30 percent limited partnership interest in Beau Geste LLP several years ago for $52,500. At the beginning of year 1, Molly has tax basis and an at-risk amount of $28,500. In year 1, Beau Geste incurs a loss of $201,500 and does not make any distributions to the partners.

• In year 1, Molly's AGI (excluding any income or loss from Beau Geste) is $60,600. This includes $17,900 of passive income from other passive activities.
• In year 2, Beau Geste earns income of $33,000. In addition, Molly contributes an additional $28,850 to Beau Geste during year 2. Molly's AGI in year 2 is $65,700 (excluding any income or loss from Beau Geste). This amount includes $15,760 in income from her other passive investments.

b. Based on the above information, complete the following table:

1. Cumulative total passive suspended losses:

2.

On January 1, 2018, Corp X issued 3%, 3 ½ year Bonds to the public, and also signed a 3 and 1/2 -year lease with PH Corp. Payments of $10,000 on the lease are made at the end of the year for years 1,2 and 3 and ($5,000 in the last period; year 4.) There are no provisions for a bargain purchase or an extension of the lease term. The asset has a fair value of $35,000 and has a useful economic life of 4 years.

Corp. X is rated as a BBB rated company by Moody’s Investors-a rating company.

Additional Facts

1-BBB Market Interest rates:

Date of issue                         on 12/31/2019

Year 1     2%                               1.5%

Year 2    2.5%                            2.0%

Year 3    2.75%                          2.5%

Year 4    3,5%                             3.0%

Year 5     4.0%.                           4.0%

BTW There is no correct answer

Question 7

1-Calculate the market interest rate at date of issue?

2-Calculate the price of the bond at the date of issue?

3-What is the interest expense in Year 1.

4-What is the Balance Sheet value of Bonds payable on 12/31/19? Please provide 2 answers.