Universal foods issued 12% bonds, dated January 1, with a face amount of $155 million on January 1, 2018 to Wang Communcations. The bonds mature on December 31, 2032 (15 years). The market rate of interest for similar issues was 14%. Interest is paid semiannually on June 30 and December 31. Universal uses the straight line method. Universal Foods sold the entire bond issue to Wang Communications.

Required: 1-3. Prepare the journal entry to record the purchase of the bonds by Wang Communications on January 1, 2018, interest REVENUE on June 30, 2018 and interest REVENUE on December 31, 2025.

You are given the following past information and assume the tax rate to be 45%

The cash flow from investments is:

The cash flow from financing is:

Net earnings ( NE ) in 2018 is:

Universal foods issued 12% bonds, dated January 1, with a face amount of $155 million on January 1, 2018 to Wang Communcations. The bonds mature on December 31, 2032 (15 years). The market rate of interest for similar issues was 14%. Interest is paid semiannually on June 30 and December 31. Universal uses the straight line method. Universal Foods sold the entire bond issue to Wang Communications.

Required: 1-3. Prepare the journal entry to record the purchase of the bonds by Wang Communications on January 1, 2018, interest revenue on June 30, 2018 and interest revenue on December 31, 2025.

On October 1, 2018, the Allegheny Corporation purchased machinery for $224,000. The estimated service life of the machinery is 10 years and the estimated residual value is $4,000. The machine is expected to produce 400,000 units during its life.

Required:
Calculate depreciation for 2018 and 2019 using each of the following methods. Partial-year depreciation is calculated based on the number of months the asset is in service.

1. Straight line.
2. Sum-of-the-years’-digits.
3. Double-declining balance.
4. One hundred fifty percent declining balance.
5. Units of production (units produced in 2018, 20,000; units produced in 2019, 35,000).

Faith Busby and Jeremy Beatty started the B&B partnership on January 1, 2018. The business acquired $65,100 cash from Busby and $144,900 from Beatty. During 2018, the partnership earned $63,900 in cash revenues and paid $32,850 for cash expenses. Busby withdrew $2,400 cash from the business, and Beatty withdrew $3,900 cash. The net income was allocated to the capital accounts of the two partners in proportion to the amounts of their original investments in the business. Required: Prepare an income statement, capital statement (statement of changes in equity), balance sheet, and statement of cash flows for B&B’s 2018 fiscal year.

On October 1, 2018, the Allegheny Corporation purchased machinery for $224,000. The estimated service life of the machinery is 10 years and the estimated residual value is $4,000. The machine is expected to produce 400,000 units during its life.

Required:
Calculate depreciation for 2018 and 2019 using each of the following methods. Partial-year depreciation is calculated based on the number of months the asset is in service.

1. Straight line.
2. Sum-of-the-years’-digits.
3. Double-declining balance.
4. One hundred fifty percent declining balance.
5. Units of production (units produced in 2018, 20,000; units produced in 2019, 35,000).

Broussard Skateboard's sales are expected to increase by 15% from $7.0 million in 2018 to $8.05 million in 2019. Its assets totaled $4 million at the end of 2018.
Broussard is already at full capacity, so its assets must grow at the same rate as projected sales. At the end of 2018, current liabilities were $1.4 million, consisting of $450,000 of accounts payable, $500,000 of notes payable, and $450,000 of accruals. The after-tax profit margin is forecasted to be 6%, and the forecasted payout ratio is 55%. What would be the additional funds needed? Do not round intermediate calculations. Round your answer to the nearest dollar.
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Broussard Skateboard's sales are expected to increase by 25% from $9.0 million in 2018 to $11.25 million in 2019. Its assets totaled $5 million at the end of 2018. Broussard is already at full capacity, so its assets must grow at the same rate as projected sales. At the end of 2018, current liabilities were $1.4 million, consisting of $450,000 of accounts payable, $500,000 of notes payable, and $450,000 of accruals. The after-tax profit margin is forecasted to be 4%, and the forecasted payout ratio is 70%. What would be the additional funds needed? Do not round intermediate calculations. Round your answer to the nearest dollar.

Faith Busby and Jeremy Beatty started the B&B partnership on January 1, 2018. The business acquired $86,800 cash from Busby and $193,200 from Beatty. During 2018, the partnership earned $68,200 in cash revenues and paid $43,150 for cash expenses. Busby withdrew $3,500 cash from the business, and Beatty withdrew $4,700 cash. The net income was allocated to the capital accounts of the two partners in proportion to the amounts of their original investments in the business.

Required:

Prepare an income statement, capital statement (statement of changes in equity), balance sheet, and statement of cash flows for B&B’s 2018 fiscal year.

Wardell Company purchased a mini computer on January 1, 2016, at a cost of $48,500. The computer has been depreciated using the straight-line method over an estimated five-year useful life with an estimated residual value of $5,000. On January 1, 2018, the estimate of useful life was changed to a total of 10 years, and the estimate of residual value was changed to $900.

Required:

1. Prepare the appropriate adjusting entry for depreciation in 2018 to reflect the revised estimate.

2. Prepare the appropriate adjusting entry for depreciation in 2018 to reflect the revised estimate. Assuming that the company uses the sum-of-the-years'-digits method instead of the straight-line method.