Question;1. Assume;that last year (2011) A &A Products had a net operating loss of $50,000 and;for this problem A & A Products reported tax expense for 2012 of $70,000.;Also assume that in 2010 A &A products had income of $10,000 and tax rate;of 20% (ignore any earlier years). This year A 7A products reported net income;of $70,000 and tax rate 20%. Prepare the entry that A & A should have made;in 2011. Prepare an entry for 2012 recording the effect on A & A products;books of the 2011 NOL.;2. On;January 1 of 2012 P&P Products purchased $1000000 of 8%, 5 year A7A;Products bonds on the open market for $960000. the bonds are dated and were;issued by A7A Products on January 1,2010. The bond pay each January 1st and;July 1st. The effective interest method is used. Make necessary entries for A;A Products.;3. On;November 1,2012 P&P Products entered into an agreement whereby P&P;products accepted a discounted note payable for $2,000,000, (A7A Products;received cash) the terms were 0% interest (market rate of interest is6%) and;payable on May1 2013. Make all necessary entries on the books of A &A;Products for 2012.;4A A&a Products entered into a lease agreement with;P&P Products to purchase a piece of equipment on January 1, 2012. The terms;of the lease are:8%, 5 years lease with a 6 year useful life. The machine has;a fair value of $600,000. The residual value is zero. A&A products does not;know the interest rate that P&P product uses Assume the entries have not;yet been made on the books of A &A Products;Prepared a 5 year amortization schedule. Make all necessary;entries on the books of A & A Products for the first year.;4B Assume that the lessor (P&P Product) interest rate is;also 8% and that the lease qualifies as a direct financing lease, using the;above info in 4A. Prepare the lessor?s amortization table for the duration of;the lease and make all necessary entries on the books of P&P Products for;the first two years.
Paper#47752 | Written in 18-Jul-2015Price : $21