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Question 1 On January 1, 2009, Clintwood Corpor...




Question 1 On January 1, 2009, Clintwood Corporation issued a $50,000, ten-year, 6% bond payable (interest payable semi annually on June 30 and December 31). For the three assumptions below, complete the following schedule assuming the accounting year ends December 31, and straight-line amortization is used: D. Provide the June 30 and December 31, 2009 journal entries to record interest expense and the payment of interest. Question 2 Matthew is considering several possible investment alternatives: Option A: Matthew could receive $8,000 today. Option B: Matthew could receive $2,500 at the end of each of the next four years. Option C: Matthew could receive $12,000 five years from now. Required: 1. Calculate the net present value for each option assuming that Matthew can earn 7 percent on any investment funds. 2. Which option results in the greatest financial benefit to Matthew? 3. If Matthew earns 10 percent, will that change your answer to # 2 above? Please explain. Question 3 RecordingTransactions Affecting Stockholders' Equity GeraldCompany was granted a charter that authorized the following capital stock: Commonstock: 100,000 shares, par value per share is $40. Preferredstock: 8 percent, par $5, 20,000 shares. Duringthe first year, 2009, the following selected transactions occurred in the order given: a. Sold30,000 shares of the common stock at $40 cash per share and 5,000 shares of the preferred stockat $26 cash per share. b. Issued2,000 shares of preferred stock when the stock was selling at $32. c. Repurchased 3,000 shares of the common stock sold earlier; paid cash, $38 per share. Required: Provide the journal entries necessary for each transaction Prepare the stockholder?s equity section of the balance sheet at December 31, 2009. Question 4 McPherson Construction Supply Company is developing its annual financial statements at December31, 201l. The statements are complete except for the statement of cash flows. The completed comparative balance sheets and income statement are summarized: Additional Data: a. Bought equipment for cash, $21,000. b. Paid $6,000 on the long-term note payable. c. Issued new shares of stock for $16,000 cash. d. Dividends of $ 10,000 were declared and paid in cash e. Other expenses included depreciation, $5,000; wages, $20,000; taxes, $6,000; other $6,800. f. Accounts payable includes only inventory purchases made on credit. Because there are no liability account relating to taxes or other expenses, assume that these expenses were fully paid in cash. Required: 1- Prepare the statement of cash flows using the indirect methods for the year ended December 31, 2011. 2- Evaluate statement of cash flows


Paper#4468 | Written in 18-Jul-2015

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