Intermediate Accounting II Note: Please answer all the questions and show your answers. Please attach all su pporting calculations if you wish to receive partial credit. Total 100 POINTS. 1. Peterson Co issued bonds on May 1, 2009. The face value of the bond is $340,000 and has a coupon rate of 8% per year. The market rate is 12% per year. Interest is paid semi-annually and it is a 4- year bond. (15 points) a. Record the issuance of the bond b. Record the interest payment and amortization of bond/premium on October 31st, 2009 using the effective interest rate method. c. On July 31st, 2010, the company retired the bonds at a price of 99. Record the retirement of the bond. 2. On May 1, the corporation borrowed $85,000 from a bank by signing a 10 percent interest -bearing note per year due three years from May 1. Record the journal entries on May 1, the interest payment 3 months later and any journal entries needed on December 31st. Interest is paid semi-annually. (15 points). 3. Peterson Corporation had the following transactions during the year. Record the journal entries. (45 points) a. On Jan 10 issues 10,000 shares of common stock for cash at $7 per share. The par value is $4 per share b. On Mar 1, Issued 2,000 shares of preferred stock at $15 per share. Par value is $10 per share and the dividend rate is 5%. c. Issued 4,000 shares of common stock in exchange for land valued at $25,000 on July 31st. d. Purchased 500 shares of treasury stock (common stock) at $8 per share on August 30th. e. Sold 300 shares of treasury stock at $6 per share on November 1st. f. Paid a 10% stock dividend to outstanding common shareholders on December 31st. Fair value of stock is $10 per share. g. Paid a cash dividend of $5 per share of common stock. h. Prepare the stockholder section of the Balance sheet if retained earnings are $850,000. 4. On March 1st, 2011 a company issued 800 of $100 bonds, each convertible into 4 shares of common stock at $10 par value. On December 31, the company converted the bonds into common stock when the unamortized discount was $10,000. Record the conversion of the stock. (10 points). 5. During 2011, The company has net income of $1,400,000, convertible bonds of $1,000,000 ($1,000 per bond with a 6% coupon rate) into 5 shares of common stock each (par value $5), has common stock of $2 million purchased on January 2010. On April 30th, the company bought back 2,000 shares of common stock at a price of $8 per share. Compute EPS and Diluted EPS. Tax rate is 40%. (15 points).
Paper#3590 | Written in 18-Jul-2015Price : $25