Question;E10-9 Northeast;Airlines is considering two alternatives for the financing of a purchase of a;fleet of airplanes.;These two;alternatives are;1. Issue 60,000;shares of common stock at $45 per share. (Cash dividends have not been paid;nor is the payment of;any contemplated.);2.Issue 10%;10-year bonds at par for $2,700,000.;It is estimated that the company will;earn $800,000 before interest and taxes as a result of this purchase.;The company has an estimated tax rate of;30% and has 90,000 shares of common stock outstanding prior to the;new financing.;Instructions;Determine the;effect on net income and earnings per share for these two methods of;financing.;E10-10 On January;1, Neuer Company issued $500,000, 10%, 10-year bonds at par. Interest is;payable;semiannually on July 1 and January 1.;Instructions;Present journal;entries to record the following.;(a)The issuance of;the bonds.;(b)The payment of;interest on July 1, assuming that interest was not accrued on June 30.;(c)The accrual of;interest on December 31;E10-11 On January;1, Flory Company issued $300,000, 8%, 5-year bonds at face value.;Interest is;payable semiannually on July 1 and January 1.;Instructions;Prepare journal;entries to record the following events.;(a)The issuance of;the bonds.;(b)The payment of;interest on July 1, assuming no previous accrual of interest.;(c)The accrual of;interest on December 31.;E10-15 Leoni Co.;receives $240,000 when it issues a $240,000, 10%, mortgage note payable to;finance the;construction of a building at December 31, 2011. The terms provide for;semiannual;installment;payments of $20,000 on June 30 and December 31.;Instructions;Prepare the;journal entries to record the mortgage loan and the first two installment;payments.;*E10-18 Hrabik;Corporation issued $600,000, 9%, 10-year bonds on January 1, 2011, for;$562,613.This;price resulted in an effective-interest rate of 10% on the bonds. Interest is;payable;semiannually on;July 1 and January 1. Hrabik uses the effective-interest method to amortize;bond premium or;discount.;Instructions;Prepare the;journal entries to record the following. (Round to the nearest dollar.);(a)The issuance of;the bonds.;(b)The payment of;interest and the discount amortization on July 1, 2011, assuming that;interest;was not accrued;on June 30.;(c)The accrual of;interest and the discount amortization on December 31, 2011.;*P10-8A Soprano;Electric sold $3,000,000, 10%, 10-year bonds on January 1, 2011. The bonds;were dated;January 1 and pay interest July 1 and January 1. Soprano Electric uses the;straightline;method to;amortize bond premium or discount. The bonds were sold at 104. Assume no;interest is;accrued on June 30.;Instructions;(a)Prepare the;journal entry to record the issuance of the bonds on January 1, 2011.;(b)Prepare a bond;premium amortization schedule for the first 4 interest periods.;(c)Prepare the;journal entries for interest and the amortization of the premium in 2011 and;2012.;(d)Show the balance;sheet presentation of the bond liability at December 31, 2012.
Paper#37252 | Written in 18-Jul-2015Price : $20