On June 30, 2020, Ivanhoe Company issued $3,420,000 face value of 16%, 20-year bonds at $4,449,160, a yield of 12%. Ivanhoe uses the effective-interest method to amortize bond premium or discount. The bonds pay semiannual interest on June 30 and December 31.

(a)

Prepare the journal entries to record the following transactions. (Round answer to 0 decimal places, e.g. 38,548. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Swifty Corp. owes $269,000 to Nash Trust. The debt is a 10-year, 12% note due December 31, 2020. Because Swifty Corp. is in financial trouble, Nash Trust agrees to extend the maturity date to December 31, 2022, reduce the principal to $215,000, and reduce the interest rate to 7%, payable annually on December 31.

(Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 58,971. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

SweetFish Corp. issued bonds with a par value of $875,000 and a five-year life on May 1, 2020. The contract interest rate is 7.00%. The bonds pay interest on October 31 and April 30. They were issued at a price of $839,515 when the market interest rate was 8.00%. SweetFish Corp.’s year-end is December 31.

a. Prepare an amortization table for these bonds that covers their entire life. Use the effective interest method of allocating interest. (Do not round intermediate calculations. Round the final answers to the nearest whole dollar. Enter all the amounts as positive values.)

b. Prepare the journal entries that the issuer would make to record the entries on October 31, 2020; December 31, 2020; and April 30, 2021. (Do not round intermediate calculations. Round the final answers to the nearest whole dollar.)

On January 1, 2020, Ivanhoe Company has the following defined benefit pension plan balances.

The interest (settlement) rate applicable to the plan is 10%. On January 1, 2021, the company amends its pension agreement so that prior service costs of $506,000 are created. Other data related to the pension plan are as follows.

1.Prepare a pension worksheet for the pension plan for 2020 and 2021. (Enter all amounts as positive.)

2. For 2021, prepare the journal entry to record pension-related amounts

Culver Company sells 8% bonds having a maturity value of $1,500,000 for $1,386,275. The bonds are dated January 1, 2020, and mature January 1, 2025. Interest is payable annually on January 1.

1.Determine the effective-interest rate. (Round answer to 0 decimal places, e.g. 18%.)

The effective-interest rate _______%

2.Set up a schedule of interest expense and discount amortization under the effective-interest method. (Round intermediate calculations to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 38,548.)

Blue Company sells 8% bonds having a maturity value of $2,510,000 for $2,319,700. The bonds are dated January 1, 2020, and mature January 1, 2025. Interest is payable annually on January 1.

Determine the effective-interest rate. (Round answer to 0 decimal places, e.g. 18%.)

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Set up a schedule of interest expense and discount amortization under the effective-interest method. (Round intermediate calculations to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 38,548.)

Cheyenne Company sells 8% bonds having a maturity value of $2,400,000 for $2,218,040. The bonds are dated January 1, 2020, and mature January 1, 2025. Interest is payable annually on January 1.

Determine the effective-interest rate. (Round answer to 0 decimal places, e.g. 18%.)

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Set up a schedule of interest expense and discount amortization under the effective-interest method. (Round intermediate calculations to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 38,548.)

Below is the net income of Blue Instrument Co., a private corporation, computed under the three inventory methods using a periodic system.

(Ignore tax considerations.)

(a) Assume that in 2021 Blue decided to change from the FIFO method to the average-cost method of pricing inventories. Prepare the journal entry necessary for the change that took place during 2021, and show net income reported for 2018, 2019, 2020, and 2021.

(b) Assume that in 2021 Blue, which had been using the LIFO method since incorporation in 2018, changed to the FIFO method of pricing inventories. Prepare the journal entry necessary to record the change in 2021 and show net income reported for 2018, 2019, 2020, and 2021.

Grier & Associates maintains its records on the accrual basis. You have been engaged to convert its income statement to the cash basis. The accrual basis income statement, along with additional information, follows:

Grier & Associates

Income Statement (Accrual Basis)

For the Year Ended December 31, 2020

Sales Revenue $425,000

Expenses:

Salaries and wages $170,000

Income taxes 65,000

Insurance 40,000

Depreciation 15,000

Interest                                  25,000           315,000

Net income   $110,000

Additional information:

       Balances at 12/31                 

     2020                          2019        

Accounts receivable $50,000                     $30,000

Salaries and wages payable 10,000                       20,000

Income taxes payable 24,000                       19,000

Prepaid insurance 8,000                         4,000

Accumulated depreciation 95,000                       80,000

Interest payable 3,000                         9,000

No plant assets were sold during 2020.

What is cash basis net income? $__________