Question;#1Tallos Company reported retained earnings at December 31, 2013, of $410,000. Tallos had 160,000 shares of common stock outstanding throughout 2014.The following transactions occurred during 2014.1. An error was discovered in 2012, depreciation expense was recorded at $60,000, but the correct amount was $50,000.2. A cash dividend of $0.50 per share was declared and paid.3. A 5% stock dividend was declared and distributed when the market price per share was $15 per share.4. Net income was $225,000.InstructionsPrepare a retained earnings statement for 2014.#2On June 30, 2014, Griffin, Inc. sold $3,000,000 (face value) of bonds. The bonds are dated June 30, 2014, pay interest semiannually on December 31 and June 30, and will mature on June 30, 2017. The following schedule was prepared by the accountant for Griffin, Inc. for 2014.Semi-Annual Interest to Interest Unamortized BondInterest Period be Paid Expense Amortization Amount Carrying Value$75,000 $2,936,6251 $120,000 $131,625 $11,625 63,375 1,936,625InstructionsOn the basis of the above information, answer the following questions. (Round your answer to the nearest dollar or percent.)1. What is the stated interest rate for this bond issue?2. What is the market interest rate for this bond issue?3. What was the selling price of the bonds as a percentage of the face value?4. Prepare the journal entry to record the sale of the bond issue on June 30, 2014.5. Prepare the journal entry to record the payment of interest and amortization on December 31, 2014.#3 An inexperienced accountant for Riley Corporation made the following entries.July 1 Cash 240,000Common Stock 240,000(Issued 15,000 shares of no-par common stock, stated value $10 per share)Sept. 1 Common Stock 32,000Retained Earnings 4,000Cash 36,000(Purchased 2,000 shares issued on July 1 for the treasury at $18 per share)Dec. 1 Cash 20,000Common Stock 16,000Gain on Sale of Stock 4,000(Sold 1,000 shares of the treasury stock at $20 per share)Instructions(a) On the basis of the explanation for each entry, prepare the entry thatshould have been made for the transactions. (Omit explanations)(b) Prepare the correcting entries that should be madeNOW to correct the accounts of Riley Corporation. (i.e.DO NOT REVERSE THE ORIGINAL ENTRY).#4 Presented below are threeindependent situations:(a) Foreman Corporation purchased (called) $380,000 of its bonds on June 30, 2014, at 102 and immediately retired them. The carrying value of the bonds on the retirement date was $371,500. The bonds pay semiannual interest and the interest payment due on June 30, 2014, has been made and recorded.(b) Shittu, Inc. purchased (called) $400,000 of its bonds at 96 on June 30, 2014, and immediately retired them. The carrying value of the bonds on the retirement date was $395,000. The bonds pay semiannual interest and the interest payment due on June 30, 2014, has been made and recorded.(c) Estivariz Company has $80,000, 10%, 12-year convertible bonds outstanding. These bonds were sold at face value and pay semiannual interest on June 30 and December 31 of each year. The bonds are convertible into 40 shares of Estivariz $4 par value common stock for each $1,000 par value bond. On December 31, 2014,after the bond interest has been paid, $30,000 par value of bonds were converted. The market value of Estivariz?s common stock was $38 per share on December 31, 2014. (Hint: See Ch. 15, p.679-680, 10e or p.695-696, 11e)InstructionsFor each of theindependent situations, prepare the journal entry to record the retirement or conversion of the bonds.#5Garcia Company purchased 50 Pear Company 12%, 10-year, $1,000 bonds on January 1, 2014, for $52,000. Garcia Company also had to pay $500 of broker's fees. The bonds pay interest semiannually, on January 1 and July 1. On January 1, 2015, after receipt of interest, Garcia Company sold 30 of the bonds for $30,500.InstructionsPrepare the journal entries to record the transactions described above.#6The following information is available for Perryman Corporation for the year ended December 31, 2014: Sales $900,000, Other revenues and gains $72,000, Operating expenses $110,000, Cost of goods sold $520,000, Other expenses and losses $32,000, Preferred stock dividends $30,000. The company's tax rate was 20%, and it had 40,000 shares outstanding during the entire year.Instructions(a) Prepare a corporate income statement.(b) Calculate earnings per share.#7 Bouvier Corporation issues a $9,000,000, 5%, 20-year mortgage note payable on December 31, 2014, to obtain needed financing for the construction of a building addition. The terms provide for semiannual installment payments of $289,409 on June 30 and December 31.Instructions(a) Prepare the journal entries to record the mortgage loan on December 31, 2014, and the first installment payment.(b) Will the amount ofprincipal reduction in thesecond installment payment bemore orless than with the first installment payment? (Hint: Remember when I drew the graph of a level mortgage payment on the board? AND What is interest?)#8Natal Company purchased 35,000 shares of common stock of Pear Corporation as a long-term investment for $700,000. During the year, Pear Corporation reported net income of $300,000 and paid dividends of $100,000.Instructions(a) Assuming that the 35,000 shares represent a10% interest in Pear Corporation:1. Prepare the journal entry to record the investment in Pear Corporation stock.2. Prepare any entries that Natal Company should make in accounting for its investment in Pear Corporation stock during the year.3. What is the balance of the Stock Investments account on Natal Company's books at the end of the year?(b) Repeat requirements (a) 1. 2. and 3. above except assume that the 35,000 shares represent a20% interest in Pear Corporation.#9Presented below are three different aircraft lease transactions that occurred for Jewell Airways in 2014. All the leases start on January 1, 2014.In no case does Jewell Airways receive title to the aircraft during or at the end of the lease period, nor is there a bargain purchase option.LessorAllstate Insurance Premier Leasing GE Capital LeasingType of property 747 Aircraft 727 Aircraft L-1011 AircraftYearly rental $8,508,645 $6,357,660 $2,851,861Lease term 15 years 20 years 15 yearsEstimated economic life 25 years 25 years 25 yearsFair market value ofleased asset $80,000,000 $63,000,000 $32,000,000Present value of leaserental payments $73,000,000 $54,000,000 $28,000,000Instructions(a) Which of the above leases are operating leases and which are capital leases?Explain your answer. (Hint: OWNS)(b) How should the lease transaction with Allstate Insurance be recorded in 2014?(c) How should the lease transaction with GE Capital Leasing be recorded in 2014?#10On January 1 Littke Corporation purchased 35% equity in Pear Corporation for $220,000. At December 31 Pear declared and paid a $60,000 cash dividend and reported net income of $200,000.Instructions(a) Journalize the transactions.(b) Determine the amount to be reported as an investment in Pear stock at December 31 by Littke Corporation.
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