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ACC - Two problems - Villarente Company and Allen Corporation




Question;Problem 1. Villarente Company issued 5-year $200,000 face value bonds at 95 on January 1,2012. The stated interest rate on these bonds is 9%, and the effective interest rate is 10.33%. Usethe effective interest rate method to complete the amortization schedule below.CashPaymentJanuary 1, 2012December 31, 2012December 31, 2013December 31, 2014December 31, 2015December 31, 2016TotalsInterestExpenseDiscountAmortizationCarryingValueProblem 2. Allen Corporation was organized on July 15, 2012. It was authorized to issue150,000 shares of $25 par value common stock and 50,000 shares of 6% cumulative preferredstock. The preferred stock had a stated value of $50 per share. The following stock transactionsrelate to Allen Corporation.Issued 55,000 shares of common stock for $33 per share.Issued 2,750 shares of the class A preferred stock for $62 per share.Issued 27,500 shares of common stock for $35 per share.Required:1) Indicate the effect of each of these transactions on Allen's financial statements. Include dollaramounts in the model, below. After recording the three transactions, calculate column totals.2) After these transactions have been recorded, what is the total amount of stockholders' equity?3) After these transactions have been recorded, how many shares of common stock areoutstanding?AssetsCash=EquityCommon + Paid-in Capital + PreferredStockin Excess ofStockPar ValueCash Flow+ Paid-inCapital inExcess ofStated Value


Paper#39282 | Written in 18-Jul-2015

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