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26.
Common Stock, $10 par value
1,000,000
APIC
9,000,000
Retained earnings
2,750,000
Accumulated comprehensive income, net of $25,000 deferred tax
75,000
Total Stockholders' equity
12,825,000
Net income
1,000,000
Dividends declared and paid
700,000
Unrealized gain from available for sale securities
10,000
Change in accounting estimate
200,000
*
Correction of an error; prior year income was overstated by
50,000
Unrealized loss form trading securities
(40,000)
*
Effective income tax rate
25%
Sold 1,000 shares for
100,000
I.
*
II.
SHOW THE EQUITY SECTION OF THE BALANCE SHEET AS OF 12/31/06
The following is from the balance sheet of TRULY, Inc. as of December 31, 2005:
DURING THE YEAR ENDED DECEMBER 31, 2006, THE FOLLOWING ACTIVITY TOOK PLACE:
BASED ON THE ABOVE INFORMATION, PREPARE THE STATEMENT OF STOCKHOLDERS' EQUITY
AND COMPREHENSIVE INCOME FOR THE YEAR ENDED DECEMBER 31, 2006
NOTE:
The unrealized loss from trading securities and the change in accounting estimate were both already
subject to the tax provision and included in the net income noted above.
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View Full Document27.
The following summarizes the terms of a bond and other information necessary to answer the question which follows.
Face value of bond
10,000,000
Stated rate
8%
3
periods
0.7938
3
periods
0.7118
Term in years
3
PV of a lump sum at 1% rate
36
periods
0.7872
36
periods
0.6989
Market rate
12%
Compounding period
Annual, normal
Monthly interest payment
800,000
3
periods
2.5771
3
periods
2.4018
36
periods
31.9099
36
periods
30.1075
i.
Compute the value which these bonds would sell at on the market on date of issuance based on the above conditions.
ii.
Present the journal entry required by the company issuing the bonds on the date of issuance.
iii.
Present the journal entry required by the company issuing the bonds at the end of the first year.
iv.
Present the journal entry required by the company issuing the bonds at the end of the second year.
v.
What will the balance of any premium or discount be at the end of 3 years for these bonds?
PV of a lump sum at 8% rate
PV of ord. annuity at 8% rate
PV of ord. annuity at .667% rate
PV of a lump sum at 12% rate
PV of ord. annuity at 12% rate
PV of ord. annuity at 1% rate
PV of a lump sum at .667% rate
28.
a)
Extraordinary loss due to a hurrinadoquakefire natural disaster which cost the company $100,000 in cash.
b)
c)
d)
e)
Sell $200,000 of goods to customers on credit.
Record the appropriate journal entry for each item of activity listed below please.
Assume that the effective tax rate is
25% in all instances (when to include that in your JE is for you to determine!) and that all amounts presented exclude
any tax effect.
Cumulative effect of changing from straight line to a more accelerated depreciation would have resulted in $20,000
more depreciation in all prior years combined.
Recording an additional amount of depreciation expense due to a change in estimate this year.
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 Spring '08
 anderson

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