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The Jeff Co issued $100,000, six year bonds, carrying a coupon rate of ten percent...

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Question;Prepare journal entries for the following FOUR events (use straight-line amortization).01/01/07 The Jeff Co issued $100,000, six year bonds, carrying a coupon rate of ten percent (10%), interest payable annually on December 31 each year. Assume that the net proceeds from the issue of the bond were $112,000.12/31/07 Recognize the first interest payment.12/31/08 Recognize the second interest payment.01/01/09 Redeem (ie, buy back) twenty percent (20%) of the bonds outstanding for $18,500.II. Is it better for a company to issue bonds at a discount or at a premium? Explain your answer.III. Use the data from Problem V. For the most recent year (2008) calculate the following ratios.Current ratioInventory turnoverRate of return on total assetsAccounts receivable turnover (assume all sales are on account)Debt ratioIV. Prepare journal entries for ABC Co?s following events.05/12/08 Received charter authorizing ABC Co to issue 20,000 shares of common stock at a par value of $2 per share.06/03/08 Issued 8,000 shares of stock, receiving $40,000.06/04/08 Paid the law firm of Lobello for their services to help organize the company by sending them two thousand shares of stock.11/15/08 Declared a cash dividend of $2 per share, payable on 01/15/09, to holders of record as of 12/15/08.12/15/08 Make the appropriate entry.12/31/08 Make any necessary adjusting entry.01/15/09 Make the appropriate entry.06/12/09 Declared a ten percent (10%) stock dividend, payable on 7/15/09 (ignore the date of record for this event). The market value of the stock is $15 per share.07/15/09 Make the appropriate entry.08/15/09 Declared a two-for-one stock split. The market value of the stock is $15 per share.09/15/09 Declared and paid a cash dividend of $2 per share (pretend this happens all in one day).10/01/09 Purchased 1,000 shares of treasury stock for a total price of $30,000.10/15/09 Declared and paid a cash dividend of $2 per share.11/15/09 Reissued 400 shares of treasury stock at $32 each.12/15/09 Reissued the remaining treasury stock at $10 per share.V. RequiredPrepare a cash flow statement for 2008 with clear documentation (ie, show your work) for each section of the statement. Use either the direct or the indirect method.Additional informationThere were no write-offs of delinquent accounts during the year.A building was sold during the year for $80.Comparative balance sheets and an income statement for 2008 are presented below for NLeash Company.NLeash CompanyComparative Balance Sheets and Income StatementFor the Years 2007 and 2008Balance Sheets 2008 2007AssetsCash 200 185Accounts Receivable 350 290Allowance for bad debts (45) (25)Inventory 260 135Land 600 500Buildings 295 250Accumulated Depreciation- Buildings (65) (80)Total Assets 1,595 1,255Liabilities & Owner?s EquityLiabilitiesAccounts Payable 400 305Wages Payable 70 67Dividends Payable 30 47Taxes Payable 50 46Long-term bonds payable 100 100Discount on bonds payable (8) (10)Total liabilities 642 555Owner?s EquityCommon Stock 650 500Retained Earnings 303 200Total Owner?s Equity 953 700Total Liabilities & Owner?s Equity 1,595 1,255Income Statement (2008)Revenue 1,200Cost of Goods Sold 750Gross Margin 450Operating ExpensesWage expense 200Depreciation expense 30Bad debt expense 20Bond interest expense 10Total operating expenses 260Net Operating Income 190Gain on sale of building 40Net income before tax 230Income tax 69Net income after tax 16112/31/0801/15/0906/12/0907/15/0908/15/0909/15/0910/01/0910/15/0911/15/0912/15/09V. (30 points)

 

Paper#51855 | Written in 18-Jul-2015

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