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Crume Incorporated issued bonds with a face value of $100,000, a stated rate of interest of 9 percent

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Question;On January 1, 2012, Crume Incorporated issued bonds with a face value of $100,000, a statedrate of interest of 9 percent, and a five-year term to maturity. Interest is payable in cash onDecember 31 of each year. The effective rate of interest was 8 percent at the time the bonds wereissued. The bonds sold for $103,993. Crume used the effective interest rate method to amortizebond discount.Requireda. Prepare an amortization table as shown below 7-38 template on the excel sheet:b. What item(s) in the table would appear on the 2014 balance sheet?c. What item(s) in the table would appear on the 2014 income statement?d. What item(s) in the table would appear on the 2014 statement of cash flows?Problem 8-18 Recording and reporting stock transactions and cash dividendsacross two accounting cyclesDavis Corporation was authorized to issue 100,000 shares of $10 par common stock and 50,000shares of $50 par, 6 percent, cumulative preferred stock. Davis Corporation completed the following transactions during its first two years of operation.2012Jan. 2 Issued 5,000 shares of $10 par common stock for $28 per share.15 Issued 1,000 shares of $50 par preferred stock for $70 per share.Feb. 14 Issued 15,000 shares of $10 par common stock for $30 per share.Dec. 31 During the year, earned $170,000 of cash service revenue and paid $110,000 of cashoperating expenses.31 Declared the cash dividend on outstanding shares of preferred stock for 2012. Thedividend will be paid on January 31 to stockholders of record on January 15, 2013.2013Jan. 31 Paid the cash dividend declared on December 31, 2012.Mar. 1 Issued 2,000 shares of $50 par preferred stock for $58 per share.June 1 Purchased 500 shares of common stock as treasury stock at $43 per share.Dec. 31 During the year, earned $210,000 of cash service revenue and paid $175,000 of cashoperating expenses.31 Declared the dividend on the preferred stock and a $0.60 per share dividend on thecommon stock.Requireda. Organize the transaction data in accounts under an accounting equation.b. Prepare the stockholders? equity section of the balance sheet at December 31, 2012.Problem 7-38a. Notice that the carrying value begins at 103,993. It sold at a premium.Every year, the carrying value decreases by the premium amortization.b. Think about what is found on the Balance Sheet ? assets, liabilities, and equity accounts. Thecarrying value of the bond liability is the only thing on the table that fits into one of thosecategories. Don't forget to give the dollar amount in your answer.c. Think about what is found on the income statement: only revenues and expenses. The onlything on the table that is a revenue or expense is interest expense. Don?t forget to give thedollar amount in your answer.d. Cash payments are the only use of cash on the table. Don?t forget to give the dollar amountin your answer.Problem 8-18 (parts a and b)Be sure to total the columns. You need the totals for part b.Prefered stock dividends:multiply the $50 par value x the 6% interest rate x the number of shares outstanding.Use format found on page 297 for the Stockholders? Equity sectionProblem 7-38a.DateJanuary 1, 2012December 31, 2012December 31, 2013December 31, 2014December 31, 2015December 31, 2016TotalsCash PaymentInterest ExpensePremiumAmortization?????????????????????b.Item on the table that would appear on the 2014 balance sheet?Dollar amount?c.Item on the table that would appear on the 2014 income stmt?Dollar amount?d.Item on the table that would appear on the 2014 statement of cash flows?Dollar amount?Carrying Value??????Problem 8-18Remember: use Excel formulas when applicablea.Davis CorporationAccounting EquationEvent20121/21/152/1412/3112/3112/31AssetsCashBalance=Liabilities +Dividends= Payable +=Stockholders' EquityPreferred+StockCommon+Stock+PIC inExcessPreferredStock+++b. 2012Stockholders EquityPreferred Stock, $50 par value, 6% cumulative50,000 shares authorized, 1,000 sharesissued and outstandingCommon Stock, $10 par value,100,000shares authorized, 20,000 shares issuedand outstandingPaid-in Capital in Excess of Par-Preferred StockPaid-in Capital in Excess of Par-Common StockTotal Paid-In CapitalRetained EarningsTotal Stockholders' Equity$?????$+?PIC inExcessCommonStockTreasury Retained- Stock + Earnings-+Acct. Title/REn/a

 

Paper#43265 | Written in 18-Jul-2015

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