Financial Accounting II
Take-home Exam (Chaps. 14, 15, and 16)
Please mark your answers directly on the exam. You must show your work step-by-step as it relates to each problem-
Use additional paper if needed. Points will not be awarded if the handwriting is not legible.
On the first day of the current fiscal year, $1,500,000 of 10-year, 8% bonds, with interest payable semiannu-
ally, were sold for $1,225,000.
Present entries to record the following transactions for the current fiscal year:
Issuance of the bonds.
First semiannual interest payment.
Amortization of bond discount for the year, using the straight-line method of amortization.
Present entries to record the selected transactions described below:
Issued $3,250,000 of 10-year, 8% bonds at 97.
Amortized bond discount for a full year, using the straight-line method.
Called bonds at 98.
The bonds were carried at $3,175,500 at the time of the redemption.
A company issued $2,000,000 of 30-year, 8% callable bonds on April 1, 2008, with interest payable on April
1 and October 1.
The fiscal year of the company is the calendar year.
Journalize the entries to record the fol-
lowing selected transactions:
Issued the bonds for cash at their face amount.
Paid the interest on the bonds.
Called the bond issue at 103, the rate provided in the bond indenture.
(Omit entry for
payment of interest.)
Prepare the journal entry to issue $100,000 bonds which sold for $94,000.
Prepare the journal entry to issue $100,000 bonds which sold for $104,000.
Indicate the section where each of the following items would be reported on the corporation balance sheet:
Use the following abbreviations to report the relevant balance sheet section:
CA = Current Assets
I = Investments
PPE = Property, Plant, and Equipment
IA = Intangible Assets
CL = Current Liabilities
LTL = Long-Term Liabilities
PIC = Paid-In Capital