Unformatted text preview: CH10&CH11 實習作業 1. Tuber Company issued $1,000,000, 10%, 2‐year bonds which pay interest semiannually. Compute the amount at which the bonds would sell if investors required a rate of return of 8%. 2. On July 1, 2010, Remington Chemical Company issued $4,000,000 face value,10%,10‐year bonds at $4,543,627.This price resulted in an 8% effective‐interest rate on the bonds. Remington uses the effective‐interest method to amortize bond premium or discount. The bonds pay semiannual interest on each July 1 and January 1. (Round all computations to the nearest dollar.) (a) Prepare the journal entries to record the following transactions. (1) The issuance of the bonds on July 1, 2010. (2) The accrual of interest and the amortization of the premium on December 31, 2010. (3) The payment of interest and the amortization of the premium on July 1, 2011, assuming no accrual of interest on June 30. (4) The accrual of interest and the amortization of the premium on December 31, 2011. (b) Provide the answers to the following questions in letter form. (1) What amount of interest expense is reported for 2011? (2) Would the bond interest expense reported in 2011 be the same as, greater than, or less than he amount that would be reported if the straight‐line method of amortization were used? (3) Determine the total cost of borrowing over the life of the bond. (4) Would the total bond interest expense be greater than, the same as, or less than the total interest expense if the straight‐line method of amortization were use 3. Jinkens Corporation sold $4,000,000, 8%, 10‐year bonds on January 1, 2010.The bonds were dated January 1, 2010, and pay interest on July 1 and January 1. Jinkens Corporation uses the straight‐line method to amortize bond premium or discount. Assume no interest is accrued on June 30. Instructions (a) Prepare all the necessary journal entries to record the issuance of the bonds and bond interest expense for 2010, assuming that the bonds sold at 103. (b) Prepare journal entries as in part (a) assuming that the bonds sold at 96. (c) Show balance sheet presentation for each bond issue at December 31, 2010 4. Horner Corporation is authorized to issue 1,000,000 ordinary shares with a $5 par value. During 2011, its first year of operation, the company has the following share transactions. Jan. 1 Issued 500,000 ordinary shares at $6 per share. Jan. 15 Paid the government $2,000 for incorporation fees. Jan. 30 Attorneys for the company accepted 500 ordinary shares as payment for legal services rendered in helping the company incorporate. The legal services are estimated to have a value of $7,000. July 2 Issued 100,000 shares for land. The land had an asking price of $900,000. The stock is currently selling on a national exchange at $8 per share. Sept.5 Purchased 15,000 shares for the treasury at $9 per share. Dec. 6 Sold 11,000 treasury shares at $11 per share. Instructions Journalize the transactions for Horner Corporation. 5. Palmaro Corporation has been authorized to issue 20,000 shares of $100 par value, 10%, noncumulative preferred stock and 1,000,000 shares of no‐par common stock. The corporation assigned a $2.50 stated value to the common stock. At December 31, 2010, the ledger contained the following balances pertaining to stockholders’ equity. Preferred Stock $120,000 Paid‐in Capital in Excess of Par Value—Preferred 20,000 Common Stock 1,000,000 Paid‐in Capital in Excess of Stated Value—Common 1,800,000 Treasury Stock—Common (1,000 shares) 13,000 Paid‐in Capital from Treasury Stock 500 Retained Earnings 82,000 The preferred stock was issued for land having a fair market value of $140,000.All common stock issued was for cash. In November, 1,500 shares of common stock were purchased for the treasury at a per share cost of $13. In December, 500 shares of treasury stock were sold for $14 per share. No dividends were declared in 2010. Instructions (a) Prepare the journal entries for the: (1) Issuance of preferred stock for land. (2) Issuance of common stock for cash. (3) Purchase of common treasury stock for cash. (4) Sale of treasury stock for cash. ...
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- Spring '11
- Treasury Stock, bond interest expense, Paid‐in capital, straight‐line method