Unformatted text preview: CH10 實習作業 1. 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 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. Hutton Cape Company, which prepares annual financial statements, is preparing adjusting entries on December 31. Analysis indicates the following: 1. The company is the defendant in an employee discrimination lawsuit involving $50,000 of damages. Legal counsel believes it is unlikely that the company will have to pay any damages. 2. Employees are entitled to one day's vacation for each month worked. The company employs 50 people who earn $120 per day and 25 who earn $160 per day. All employees worked the entire year. 3. The company is a defendant in a $500,000 product liability lawsuit. Legal counsel believes that the company probably will have to pay the amount requested. 4. The company has a defined‐benefit pension plan in which total pension expense for December is $50,000. The company funds one half of the expense and records a liability or the balance due. Instructions Prepare any adjusting entries necessary at the end of the year. 4. Venuchi Company needs $10,000 on January 1, 2015. It is starting a fund to produce that amount. Instructions Compute the amount that must be invested in the fund to produce a $10,000 balance on January 1, 2015, if: (a) The initial investment is made January 1, 2010, and the fund earns 6% per year. (b) The initial investment is made January 1, 2012, and the fund earns 6% per year. (c) The initial investment is made January 1, 2010, and the fund earns 10% per year. (d) The initial investment is made January 1, 2012, and the fund earns 10% per year. ...
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- Spring '11
- initial investment, Prepare journal entries, bond interest expense, Hutton Cape Company, straight‐line method, Remington Chemical Company