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Prepare journal entries for the following FOUR events (use straight-line amortization)

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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. Required;Prepare 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 information;There 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 Company;Comparative Balance Sheets and;Income Statement;For the Years 2007 and 2008;Balance Sheets;2008;2007;Assets;Cash;200;185;Accounts;Receivable;350;290;Allowance for bad;debts;(45);(25);Inventory;260 135;Land;600;500;Buildings;295 250;Accumulated Depreciation- Buildings;(65) (80);Total Assets;1,595 1,255;Liabilities & Owner?s Equity;Liabilities;Accounts Payable;400;305;Wages Payable;70;67;Dividends Payable;30;47;Taxes Payable;50 46;Long-term bonds;payable;100;100;Discount on bonds;payable;(8);(10);Total liabilities;642 555;Owner?s Equity;Common Stock;650;500;Retained Earnings;303;200;Total Owner?s;Equity;953 700;Total Liabilities & Owner?s;Equity 1,595;1,255;Income Statement (2008);Revenue;1,200;Cost of Goods Sold;750;Gross Margin;450;Operating Expenses;Wage expense;200;Depreciation;expense;30;Bad debt expense;20;Bond interest;expense;10;Total operating;expenses;260;Net Operating;Income;190;Gain on sale of;building;40;Net income before;tax;230;Income tax;69;Net income after;tax;161;====================================================================;ANSWER SHEET

 

Paper#52719 | Written in 18-Jul-2015

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