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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.




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 ratio;Inventory turnover;Rate of return on total assets;Accounts receivable turnover (assume all sales are on account);Debt ratio;IV. 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;(16 points);01/01/07;12/31/07;12/31/08;01/01/09;II. (9 points);III. (15 points);Current ratio;Inventory turnover;Rate of return on total assets;A/R turnover (assume all sales on account);Debt ratio;IV. (30 point) Account Title Debit Credit;05/12/08;06/03/08;06/04/08;11/15/08;12/15/08;12/31/08;01/15/09;06/12/09;07/15/09;08/15/09;09/15/09;10/01/09;10/15/09;11/15/09;12/15/09;V. (30 points)


Paper#74207 | Written in 18-Jul-2015

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