On January 1, 2020, Archer Company issued ten-year bonds with a face value of $10,000,000 and a stated interest rate of 4%, payable semiannually on June 30 and December 31. The bonds were sold to yield 3%.
Instructions
1-Calculate the issue price of the bonds.
2-Record the bond issuance
3-Record the first interest payment and use the straight line method to amortize the discount or premium.
In: Accounting
Pearl Inc., a greeting card company, had the following
statements prepared as of December 31, 2020.
|
PEARL INC. |
||||||
|---|---|---|---|---|---|---|
|
12/31/20 |
12/31/19 |
|||||
|
Cash |
$6,100 |
$7,100 |
||||
|
Accounts receivable |
62,400 |
51,000 |
||||
|
Short-term debt investments (available-for-sale) |
34,700 |
18,100 |
||||
|
Inventory |
40,400 |
60,300 |
||||
|
Prepaid rent |
4,900 |
4,000 |
||||
|
Equipment |
154,100 |
130,600 |
||||
|
Accumulated depreciation—equipment |
(34,900 |
) |
(24,800 |
) |
||
|
Copyrights |
46,400 |
49,800 |
||||
|
Total assets |
$314,100 |
$296,100 |
||||
|
Accounts payable |
$46,500 |
$40,200 |
||||
|
Income taxes payable |
4,000 |
6,000 |
||||
|
Salaries and wages payable |
8,100 |
4,100 |
||||
|
Short-term loans payable |
7,900 |
10,100 |
||||
|
Long-term loans payable |
59,600 |
68,400 |
||||
|
Common stock, $10 par |
100,000 |
100,000 |
||||
|
Contributed capital, common stock |
30,000 |
30,000 |
||||
|
Retained earnings |
58,000 |
37,300 |
||||
|
Total liabilities & stockholders’ equity |
$314,100 |
$296,100 |
||||
|
PEARL INC. |
||||
|---|---|---|---|---|
|
Sales revenue |
$339,800 |
|||
|
Cost of goods sold |
176,500 |
|||
|
Gross profit |
163,300 |
|||
|
Operating expenses |
120,500 |
|||
|
Operating income |
42,800 |
|||
|
Interest expense |
$11,300 |
|||
|
Gain on sale of equipment |
2,000 |
9,300 |
||
|
Income before tax |
33,500 |
|||
|
Income tax expense |
6,700 |
|||
|
Net income |
$26,800 |
|||
Additional information:
| 1. | Dividends in the amount of $6,100 were declared and paid during 2020. | |
| 2. | Depreciation expense and amortization expense are included in operating expenses. | |
| 3. | No unrealized gains or losses have occurred on the investments during the year. | |
| 4. | Equipment that had a cost of $20,100 and was 70% depreciated was sold during 2020. |
Prepare a statement of cash flows using the indirect method.
(Show amounts that decrease cash flow with either a -
sign e.g. -15,000 or in parenthesis e.g.
(15,000).)
In: Accounting
Presented below is information related to equipment owned by
Novak Company at December 31, 2020.
| Cost | $11,250,000 | |
| Accumulated depreciation to date | 1,250,000 | |
| Expected future net cash flows | 8,750,000 | |
| Fair value | 6,000,000 |
Novak intends to dispose of the equipment in the coming year. It is
expected that the cost of disposal will be $25,000. As of December
31, 2020, the equipment has a remaining useful life of 4 years.
Prepare the journal entry (if any) to record the impairment of
the asset at December 31, 2020. (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.)
| Date |
Account Titles and Explanation |
Debit |
Credit |
|---|---|---|---|
|
Dec. 31 |
enter an account title to record the transaction on December 31, 2017 |
enter a debit amount |
enter a credit amount |
|
enter an account title to record the transaction on December 31, 2017 |
enter a debit amount |
enter a credit amount |
Prepare the journal entry (if any) to record depreciation
expense for 2021. (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.)
|
Account Titles and Explanation |
Debit |
Credit |
|---|---|---|
|
enter an account title |
enter a debit amount |
enter a credit amount |
|
enter an account title |
enter a debit amount |
enter a credit amount |
The asset was not sold by December 31, 2021. The fair value of
the equipment on that date is $6,625,000. Prepare the journal entry
(if any) necessary to record this increase in fair value. It is
expected that the cost of disposal is still $25,000.
(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.)
| Date |
Account Titles and Explanation |
Debit |
Credit |
|---|---|---|---|
|
Dec. 31 |
enter an account title to record the transaction on December 31, 2018 |
enter a debit amount |
enter a credit amount |
|
enter an account title to record the transaction on December 31, 2018 |
enter a debit amount |
enter a credit amount |
In: Accounting
|
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|
(a) State the total monthly budgeted cost
formula. (Round cost per unit to 2 decimal places, e.g.
1.25.) In September, 65,000 units were produced. Prepare the budget report using flexible budget data, assuming (1) each variable cost was 10% higher than its actual cost in August, and (2) fixed costs were the same in September as in August. (List variable costs before fixed costs.) |
In: Accounting
|
|
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In: Accounting
Metlock Inc., a greeting card company, had the following
statements prepared as of December 31, 2020.
|
METLOCK INC. |
||||||
|---|---|---|---|---|---|---|
|
12/31/20 |
12/31/19 |
|||||
|
Cash |
$5,900 |
$7,100 |
||||
|
Accounts receivable |
62,000 |
51,000 |
||||
|
Short-term debt investments (available-for-sale) |
35,000 |
18,100 |
||||
|
Inventory |
40,400 |
59,900 |
||||
|
Prepaid rent |
5,000 |
4,000 |
||||
|
Equipment |
153,300 |
129,100 |
||||
|
Accumulated depreciation—equipment |
(35,000 |
) |
(24,800 |
) |
||
|
Copyrights |
46,300 |
50,300 |
||||
|
Total assets |
$312,900 |
$294,700 |
||||
|
Accounts payable |
$46,500 |
$40,200 |
||||
|
Income taxes payable |
4,100 |
6,100 |
||||
|
Salaries and wages payable |
8,100 |
4,100 |
||||
|
Short-term loans payable |
8,000 |
10,100 |
||||
|
Long-term loans payable |
60,600 |
69,600 |
||||
|
Common stock, $10 par |
100,000 |
100,000 |
||||
|
Contributed capital, common stock |
30,000 |
30,000 |
||||
|
Retained earnings |
55,600 |
34,600 |
||||
|
Total liabilities & stockholders’ equity |
$312,900 |
$294,700 |
||||
|
METLOCK INC. |
||||
|---|---|---|---|---|
|
Sales revenue |
$338,150 |
|||
|
Cost of goods sold |
175,700 |
|||
|
Gross profit |
162,450 |
|||
|
Operating expenses |
119,400 |
|||
|
Operating income |
43,050 |
|||
|
Interest expense |
$11,300 |
|||
|
Gain on sale of equipment |
2,000 |
9,300 |
||
|
Income before tax |
33,750 |
|||
|
Income tax expense |
6,750 |
|||
|
Net income |
$27,000 |
|||
Additional information:
| 1. | Dividends in the amount of $6,000 were declared and paid during 2020. | |
| 2. | Depreciation expense and amortization expense are included in operating expenses. | |
| 3. | No unrealized gains or losses have occurred on the investments during the year. | |
| 4. | Equipment that had a cost of $19,800 and was 70% depreciated was sold during 2020. |
Prepare a statement of cash flows using the direct method.
In: Accounting
Sage Inc., a greeting card company, had the following statements
prepared as of December 31, 2020.
|
SAGE INC. |
||||||
|---|---|---|---|---|---|---|
|
12/31/20 |
12/31/19 |
|||||
|
Cash |
$6,100 |
$6,900 |
||||
|
Accounts receivable |
62,500 |
51,000 |
||||
|
Short-term debt investments (available-for-sale) |
34,800 |
18,100 |
||||
|
Inventory |
39,600 |
60,200 |
||||
|
Prepaid rent |
4,900 |
4,000 |
||||
|
Equipment |
154,500 |
130,100 |
||||
|
Accumulated depreciation—equipment |
(34,800 |
) |
(25,300 |
) |
||
|
Copyrights |
46,300 |
50,400 |
||||
|
Total assets |
$313,900 |
$295,400 |
||||
|
Accounts payable |
$46,000 |
$40,200 |
||||
|
Income taxes payable |
4,000 |
6,000 |
||||
|
Salaries and wages payable |
8,100 |
4,000 |
||||
|
Short-term loans payable |
8,000 |
10,000 |
||||
|
Long-term loans payable |
59,700 |
69,000 |
||||
|
Common stock, $10 par |
100,000 |
100,000 |
||||
|
Contributed capital, common stock |
30,000 |
30,000 |
||||
|
Retained earnings |
58,100 |
36,200 |
||||
|
Total liabilities & stockholders’ equity |
$313,900 |
$295,400 |
||||
|
SAGE INC. |
||||
|---|---|---|---|---|
|
Sales revenue |
$339,075 |
|||
|
Cost of goods sold |
175,000 |
|||
|
Gross profit |
164,075 |
|||
|
Operating expenses |
119,900 |
|||
|
Operating income |
44,175 |
|||
|
Interest expense |
$11,300 |
|||
|
Gain on sale of equipment |
2,000 |
9,300 |
||
|
Income before tax |
34,875 |
|||
|
Income tax expense |
6,975 |
|||
|
Net income |
$27,900 |
|||
Additional information:
| 1. | Dividends in the amount of $6,000 were declared and paid during 2020. | |
| 2. | Depreciation expense and amortization expense are included in operating expenses. | |
| 3. | No unrealized gains or losses have occurred on the investments during the year. | |
| 4. | Equipment that had a cost of $19,900 and was 70% depreciated was sold during 2020. |
Prepare a statement of cash flows using the direct method.
(Show amounts in the investing and financing sections
that decrease cash flow with either a - sign e.g. -15,000 or in
parenthesis e.g. (15,000).)
In: Accounting
Culver Inc., a greeting card company, had the following
statements prepared as of December 31, 2020.
|
CULVER INC. |
||||||
|---|---|---|---|---|---|---|
|
12/31/20 |
12/31/19 |
|||||
|
Cash |
$6,100 |
$7,000 |
||||
|
Accounts receivable |
62,200 |
51,500 |
||||
|
Short-term debt investments (available-for-sale) |
34,900 |
17,900 |
||||
|
Inventory |
40,300 |
60,500 |
||||
|
Prepaid rent |
5,000 |
3,900 |
||||
|
Equipment |
153,200 |
131,200 |
||||
|
Accumulated depreciation—equipment |
(35,000 |
) |
(24,700 |
) |
||
|
Copyrights |
46,200 |
49,800 |
||||
|
Total assets |
$312,900 |
$297,100 |
||||
|
Accounts payable |
$46,000 |
$40,000 |
||||
|
Income taxes payable |
4,000 |
6,000 |
||||
|
Salaries and wages payable |
7,900 |
4,000 |
||||
|
Short-term loans payable |
8,100 |
10,100 |
||||
|
Long-term loans payable |
59,800 |
69,200 |
||||
|
Common stock, $10 par |
100,000 |
100,000 |
||||
|
Contributed capital, common stock |
30,000 |
30,000 |
||||
|
Retained earnings |
57,100 |
37,800 |
||||
|
Total liabilities & stockholders’ equity |
$312,900 |
$297,100 |
||||
|
CULVER INC. |
||||
|---|---|---|---|---|
|
Sales revenue |
$336,150 |
|||
|
Cost of goods sold |
174,100 |
|||
|
Gross profit |
162,050 |
|||
|
Operating expenses |
120,800 |
|||
|
Operating income |
41,250 |
|||
|
Interest expense |
$11,400 |
|||
|
Gain on sale of equipment |
1,900 |
9,500 |
||
|
Income before tax |
31,750 |
|||
|
Income tax expense |
6,350 |
|||
|
Net income |
$25,400 |
|||
Additional information:
| 1. | Dividends in the amount of $6,100 were declared and paid during 2020. | |
| 2. | Depreciation expense and amortization expense are included in operating expenses. | |
| 3. | No unrealized gains or losses have occurred on the investments during the year. | |
| 4. | Equipment that had a cost of $20,200 and was 70% depreciated was sold during 2020. |
Prepare a statement of cash flows using the indirect method.
(Show amounts that decrease cash flow with either a -
sign e.g. -15,000 or in parenthesis e.g.
(15,000).)
In: Accounting
Crane Company estimates that 300,000 direct labor hours will be
worked during the coming year, 2020, in the Packaging Department.
On this basis, the following budgeted manufacturing overhead cost
data are computed for the year.
|
Fixed Overhead Costs |
Variable Overhead Costs |
|||||
|---|---|---|---|---|---|---|
|
Supervision |
$84,000 |
Indirect labor |
$120,000 |
|||
|
Depreciation |
66,000 |
Indirect materials |
60,000 |
|||
|
Insurance |
24,000 |
Repairs |
30,000 |
|||
|
Rent |
18,000 |
Utilities |
45,000 |
|||
|
Property taxes |
12,000 |
Lubricants |
15,000 |
|||
|
$204,000 |
$270,000 |
|||||
It is estimated that direct labor hours worked each month will
range from 20,000 to 26,000 hours.
During October, 20,000 direct labor hours were worked and the
following overhead costs were incurred.
Fixed overhead costs: Supervision $7,000, Depreciation $5,500,
Insurance $1,975, Rent $1,500, and Property taxes $1,000.
Variable overhead costs: Indirect labor $8,970, Indirect materials,
$3,700, Repairs $1,960, Utilities $3,250, and Lubricants
$1,240.
(a) Prepare a monthly manufacturing overhead
flexible budget for each increment of 2,000 direct labor hours over
the relevant range for the year ending December 31, 2020.
(List variable costs before fixed
costs.)
(b) Prepare a flexible budget report for October. (List variable costs before fixed costs.)
In: Accounting
Crane Company leases a building to Walsh, Inc. on January 1, 2020. The following facts pertain to the lease agreement. 1. The lease term is 4 years, with equal annual rental payments of $4,056 at the beginning of each year. 2. Ownership does not transfer at the end of the lease term, there is no bargain purchase option, and the asset is not of a specialized nature. 3. The building has a fair value of $16,200, a book value to Crane of $9,200, and a useful life of 5 years. 4. At the end of the lease term, Crane and Walsh expect there to be an unguaranteed residual value of $2,300. 5. Crane wants to earn a return of 8% on the lease, and collectibility of the payments is probable. This rate is known by Walsh. Click here to view factor tables. (b) Using the original facts of the lease, show the journal entries to be made by both Crane and Walsh in 2020. (For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to 0 decimal places, e.g. 5,275. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)
In: Accounting