Noelle Inc. issued a $1.3 million bond at 9% for 3 years to finance a project. The bonds were issued on January 1, 2018. The bond pays interest semi annually on July 1 and January 1. The market rate is 8%. The company used effective interest method. Year end is September 30. Required: a) Calculate the proceeds (price) that Noelle Inc. would receive for the bond on January 1, 2018. The PV tables can be used. Show calculations b) Prepare a bond amortization schedule using the effective interest method. c) Prepare the journal entries to record the initial sale of the bond on January 1, 2018, the interest payment on July 1, 2018, the accrual on September 30, 2018 and the interest payment on January 1, 2019. d) Assume that on May 1, 2020, Noelle Inc. decides to retire 30% of the bonds for a cash price of 102 plus accrued interest. 1. Prepare the journal entry to pay out the interest to the bondholders on May 1, 2020 due to the bond retirement 2. Prepare the journal entry for the bond retirement on May 1, 2020

On December 31, 2017, Berclair Inc. had 500 million shares of common stock and 6 million shares of 9%, $100 par value cumulative preferred stock issued and outstanding. On March 1, 2018, Berclair purchased 24 million shares of its common stock as treasury stock. Berclair issued a 5% common stock dividend on July 1, 2018. Four million treasury shares were sold on October 1. Net income for the year ended December 31, 2018, was $800 million. The income tax rate is 40%. Also outstanding at December 31 were incentive stock options granted to key executives on September 13, 2013. The options are exercisable as of September 13, 2017, for 30 million common shares at an exercise price of $56 per share. During 2018, the market price of the common shares averaged $70 per share. In 2014, $62.5 million of 8% bonds, convertible into 6 million common shares, were issued at face value. Required: Compute Berclair’s basic and diluted earnings per share for the year ended December 31, 2018.

Tanner-UNF Corporation acquired as a long-term investment $270 million of 8% bonds, dated July 1, on July 1, 2018. The market interest rate (yield) was 10% for bonds of similar risk and maturity. Tanner-UNF paid $230 million for the bonds. The company will receive interest semiannually on June 30 and December 31. Company management has classified the bonds as available-for-sale investments. As a result of changing market conditions, the fair value of the bonds at December 31, 2018, was $240 million.

Required:
1. & 2. Prepare the journal entry to record Tanner-UNF’s investment in the bonds on July 1, 2018 and interest on December 31, 2018, at the effective (market) rate.
3. Prepare any additional journal entry necessary for Tanner-UNF to report its investment in the December 31, 2018, balance sheet.
4. Suppose Moody’s bond rating agency downgraded the risk rating of the bonds motivating Tanner-UNF to sell the investment on January 2, 2019, for $220 million. Prepare the journal entries necessary to record the sale, including updating the fair-value adjustment, recording any reclassification adjustment, and recording the sale.

Brady Construction Company contracted to build an apartment complex for a price of $5,200,000. Construction began in 2018 and was completed in 2020. The following is a series of independent situations, numbered 1 through 6, involving differing costs for the project. All costs are stated in thousands of dollars.

On December 31, 2017, Berclair Inc. had 280 million shares of common stock and 3 million shares of 9%, $100 par value cumulative preferred stock issued and outstanding. On March 1, 2018, Berclair purchased 24 million shares of its common stock as treasury stock. Berclair issued a 5% common stock dividend on July 1, 2018. Four million treasury shares were sold on October 1. Net income for the year ended December 31, 2018, was $250 million. The income tax rate is 40%.

Also outstanding at December 31 were incentive stock options granted to key executives on September 13, 2013. The options are exercisable as of September 13, 2017, for 30 million common shares at an exercise price of $56 per share. During 2018, the market price of the common shares averaged $70 per share.

In 2014, $62.5 million of 8% bonds, convertible into 6 million common shares, were issued at face value.

Required:

Compute Berclair’s basic and diluted earnings per share for the year ended December 31, 2018

Brady Construction Company contracted to build an apartment complex for a price of $6,000,000. Construction began in 2018 and was completed in 2020. The following is a series of independent situations, numbered 1 through 6, involving differing costs for the project. All costs are stated in thousands of dollars.

Required:
Complete the following table. (Do not round intermediate calculations. Enter answers in dollars. Round your final answers to the nearest whole dollar. Negative amounts should be indicated by a minus sign.)

Complete the following table.

                                Gross Profit (Loss) Recognized

                   Revenue Recognized Over Time             Revenue Recognized Upon Completion

Situation       2016       2017       2018                             2016       2017     2018       

1.

2.

3.

4.

5.

6.

On December 6, 2017, Norwood Co., an office equipment supplier, sold a copier for cash of $12,000 (cost $9,400) with a two-year parts and labour warranty. Based on prior experience, Norwood expects eventually to incur warranty costs equal to 5% of the selling price. The fiscal year coincides with the calendar year. On January 20, 2018, the customer returned the copier for repairs that were completed the same day. The cost of the repairs consisted of $198 for the materials taken from the parts inventory and $360 of labour that was fully paid with cash. These were the only repairs required in 2018 for this copier.

Required:
1. How much warranty expense should the company report in 2017 for this copier?

2. How much is the warranty liability for this copier as of December 31, 2017?

3. How much warranty expense should the company report in 2018 for this copier?

4. How much is the warranty liability for this copier as of December 31, 2018?

5. Show the journal entries that would be made to record (a) the sale (assume a perpetual inventory system); (b) the adjustment on December 31, 2017, to record the warranty expense; and (c) the repairs that occurred in January 2018. Ignore sales taxes.

Milani, Inc., acquired 10 percent of Seida Corporation on January 1, 2017, for $187,000 and appropriately accounted for the investment using the fair-value method. On January 1, 2018, Milani purchased an additional 30 percent of Seida for $626,000 which resulted in significant influence over Seida. On that date, the fair value of Seida's common stock was $1,980,000 in total. Seida's January 1, 2018 book value equaled $1,830,000, although land was undervalued by $130,000. Any additional excess fair value over Seida's book value was attributable to a trademark with an 8-year remaining life. During 2018, Seida reported income of $282,000 and declared and paid dividends of $101,000. Prepare the 2018 journal entries for Milani related to its investment in Seida. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

1.

Record acquisition of Seida stock.

2

Record income for the year: 40% of the $282,000 reported income.

3

Record 2018 amortization for trademark excess fair value.

4

Record dividend declaration from Seida.

5

The record collection of dividend from investee.