On October 1, 2020 MK Corporation issues a bond for $110,000 cash. The bond has a face value of $100,000. Interest is paid quarterly. On January 1, 2021 the company records the following entry for the first coupon payment:

Which of the following would be included in the journal entry to record the next coupon payment which the company pays in cash on April 1, 2021?

On October 15, 2017, the board of directors of Ensor Materials Corporation approved a stock option plan for key executives. On January 1, 2018, 21 million stock options were granted, exercisable for 21 million shares of Ensor's $1 par common stock. The options are exercisable between January 1, 2021, and December 31, 2023, at 90% of the quoted market price on January 1, 2018, which was $10. The fair value of the 21 million options, estimated by an appropriate option pricing model, is $4 per option. Ensor chooses the option to recognize forfeitures only when they occur.

Ten percent (2.1 million) of the options were forfeited when an executive resigned in 2019. All other options were exercised on July 12, 2022, when the stock’s price jumped unexpectedly to $20 per share.

Required:
1. When is Ensor’s stock option measurement date?
2. Determine the compensation expense for the stock option plan in 2018. (Ignore taxes.)
3. & 5. Prepare the necessary journal entries.:Record compensation expense on December 31, 2019.,Record compensation expense on December 31, 2020.,Record the exercise of the options in 2022.

Open the subsidiary ledger accounts and enter the balances for October 1, 2019. Obtain the necessary figures from the schedule of accounts payable and schedule of accounts receivable prepared on September 30, 2019, which appears below. (If you are using the Study Guide & Working Papers, you will find that the subsidiary ledger accounts are already open.)

SCHEDULE OF ACCOUNTS PAYABLE

September 30, 2019

SCHEDULE OF ACCOUNTS RECEIVABLE

September 30, 2019

On October 1, Year 6, Wheeling Company contracted to sell merchandise to a customer in Switzerland at a selling price of CHF422,000. The contract called for the merchandise to be delivered to the customer on January 31, Year 7, with payment due on delivery. On October 1, Year 6, Wheeling arranged a forward contract to deliver CHF422,000 on January 31, Year 7, at a rate of CHF1 = $1.23. Wheeling's’s year-end is December 31.

The merchandise was delivered on January 31, Year 7, and CHF422,000 were received and delivered to the bank.

Exchange rates were as follows:

**For contracts expiring on January 31, Year 7.

Required:

(a) Prepare the journal entries (using net method) that Wheeling should make to record the events described assuming that the forward contract is designated as a cash flow hedge. For Exchange Gains/Losses - OCI account, just use OCI, and the credit or debit will determine if it is a gain/loss

(b) Prepare a partial trial balance of the accounts used as at December 31, Year 6

(c) Prepare the journal entries (using net method) that Wheeling should make to record the events described, assuming that the forward contract is designated as a fair value hedge.

(d) Prepare a partial trial balance of the accounts used as at December 31, Year 6.

On October 1, Year 6, Wheeling Company contracted to sell merchandise to a customer in Switzerland at a selling price of CHF422,000. The contract called for the merchandise to be delivered to the customer on January 31, Year 7, with payment due on delivery. On October 1, Year 6, Wheeling arranged a forward contract to deliver CHF422,000 on January 31, Year 7, at a rate of CHF1 = $1.23. Wheeling's’s year-end is December 31.

The merchandise was delivered on January 31, Year 7, and CHF422,000 were received and delivered to the bank.

Exchange rates were as follows:

**For contracts expiring on January 31, Year 7.

Required:

(a) Prepare the journal entries (using net method) that Wheeling should make to record the events described assuming that the forward contract is designated as a cash flow hedge. For Exchange Gains/Losses - OCI account, just use OCI, and the credit or debit will determine if it is a gain/loss

(b) Prepare a partial trial balance of the accounts used as at December 31, Year 6.

(c) Prepare the journal entries (using net method) that Wheeling should make to record the events described, assuming that the forward contract is designated as a fair value hedge.

(d) Prepare a partial trial balance of the accounts used as at December 31, Year 6.

Pitman Company is a small editorial services company owned and operated by Jan Pitman. On October 31, 2019 the end of the current year, Pitman Company’s accounting clerk prepared the following unadjusted trial balance:

Pitman Company

UNADJUSTED TRIAL BALANCE

October 31, 2019

The data needed to determine year-end adjustments are as follows:

CHART OF ACCOUNTSPitman CompanyGeneral Ledger

1. Journalize the adjusting entries using the following additional accounts: Salaries and Wages Payable; Rent Revenue; Insurance Expense; Depreciation Expense—Building; Depreciation Expense—Equipment; and Supplies Expense. Refer to the Chart of Accounts for exact wording of account titles.

How does grading work?

PAGE 10

JOURNAL

ACCOUNTING EQUATION

Score: 164/176

2. Determine the balances of the accounts affected by the adjusting entries, and prepare an adjusted trial balance.

Question not attempted.

Pitman Company

ADJUSTED TRIAL BALANCE

Score: 0/103

October 31, 2019

On October 15, 2020, the board of directors of Ensor Materials Corporation approved a stock option plan for key executives. On January 1, 2021, 21 million stock options were granted, exercisable for 21 million shares of Ensor's $1 par common stock. The options are exercisable between January 1, 2024, and December 31, 2026, at 90% of the quoted market price on January 1, 2021, which was $10. The fair value of the 21 million options, estimated by an appropriate option pricing model, is $4 per option. Ensor chooses the option to recognize forfeitures only when they occur.

Ten percent (2.1 million) of the options were forfeited when an executive resigned in 2022. All other options were exercised on July 12, 2025, when the stock’s price jumped unexpectedly to $20 per share.

Required:
1. When is Ensor’s stock option measurement date?
2. Determine the compensation expense for the stock option plan in 2021. (Ignore taxes.)
3. Prepare the journal entries to reflect the effect of forfeiture of the stock options on Ensor’s financial statements for 2022 and 2023.
5. Prepare the journal entry to account for the exercise of the options in 2025.

In October, Nicole eliminated all existing inventory of cosmetic items. The trouble of ordering and tracking each product line had exceeded the profits earned. In December, a supplier asked her to sell a prepackaged spa kit. Feeling she could manage a single product line, Nicole agreed. Nicole’s Getaway Spa (NGS) would make monthly purchases from the supplier at a cost that included production costs and a transportation charge. NGS would keep track of its new inventory using a perpetual inventory system. On December 31, NGS purchased 20 units at a total cost of $5.30 per unit. Nicole purchased 20 more units at $7.30 in February. In March, Nicole purchased 20 units at $9.30 per unit. In May, 40 units were purchased at $9.10 per unit. In June, NGS sold 40 units at a selling price of $11.30 per unit and 50 units at $11.70 per unit. Compute the Cost of Goods Available for Sale, Cost of Goods Sold, and Cost of Ending Inventory using the first-in, first-out (FIFO) method.

Athletic World began October with merchandise inventory of 95 crates of vitamins that cost a total of $3,800. During the month, Athletic World purchased and sold merchandise on account as follows:

Begin by computing the cost of goods sold and cost of ending merchandise inventory using the FIFO inventory costing method. Enter the transactions in chronological​ order, calculating new inventory on hand balances after each transaction. Once all of the transactions have been entered into the perpetual​ record, calculate the quantity and total cost of merchandise inventory​ purchased, sold, and on hand at the end of the period.​ (Enter the oldest inventory layers​ first.)

Requirement 1. Prepare a perpetual inventory​ record, using the FIFO inventory costing​ method, and determine the​ company's cost of goods​ sold, ending merchandise​ inventory, and gross profit.