Penn Foster 061518Thehonest
1. On March 1, 2011, Navy Corporation used excess cash to purchase U.S. Treasury bonds for $103,000 plus accrued interest. The appropriate interest rate is 6%. Interest on these bonds is payable on January 1 and July 1 of each year. Navy’s investment is accounted for as held to maturity. The fair value of the Treasury bonds is $104,000 at year end. Required: Prepare the appropriate journal entries to record the transactions for the year, including any year-end adjustments. Show calculations, rounded to the nearest dollar.
2. Ontario resources, a natural energy supplier, borrow $80 million cash on November 1, 2011 , to fund a geological survey. The loan was made by Quebec Banque under a short-term credit line. Ontario Resources issued a 9-month, 12% promissory note with interest payable at maturity. Ontario Resources? financial period is the calendar year.
A. Prepare the journal entry for the issuance of the note by Ontario Resources.
B. Prepare the appropriate adjusting entry for the note by Ontario Resources on December31, 2011. Show calculation.
C. Prepare the journal entry for the payment of the note at maturity. Show calculation
3. On January 1, 2011 Bishop Company issued 10% bonds dated January 1, 2011, with a face amount of 20million. The bonds mature in 2020 (10 years). For bonds of similar risk and maturity, the market yield is 12%. Interest is paid semiannually on June 30 and December 31.
A. Determine the price of the bonds at January 1, 2011
B. Prepare the journal entry to record the bond issuance by Bishop on January 1, 2011.
C. Prepare the journal entry to record interest on June 30, 2011, using the effective interest method.
D. Prepare the journal entry to record interest on December 31, 2011, using the effective interest method.
4. On January 1, 2011 Holbrook Company leased a building under a 3-year operating lease. The annual rental payments are $ 68,000 on January 1, 2011 the inception of the lease, and $5000 January 1 of 2012 and 2013. Holbrook made structural modifications to the building costing $90,000 before occupying the building. The useful life of the building and the modifications is 30 years with no expected residual value.
Required: Prepare the appropriate journal entries for Holbrook Company for 2011. Holbrook?s fiscal year is the calendar year, and the company uses straight-line depreciation.
5. At the end of preceding year, world industries had a deferred tax asset of $17,500,000 attributable to its only temporary difference of $50,000,000 for estimated expenses. At the end of the current year, the temporary difference is $45,000,000. At the beginning of the year was no valuation account for the deferred tax asset. At year-end, world industries now estimates that it?s more likely than not that one-third of the deferred tax asset will never be realized. Taxable income is $ 12,000,000 for the current year, and the tax rate is 30% for all years.
Required: Prepare journal entries to record world Industries?s income tax expense for the current year. Show well-labeled supporting computations for each component of the journal entries.
6. Vrable Corporation has a defined benefit pension plan. Two alternative possibilities for pension-related data for the current calendar year are shown below.
Case 1 case 2
Net loss (gain), Jan.1
$240, 00 $(230,000)
Loss (gain) on plan assets (8,000) (6,000)
Loss (gain) on PBO (17,000) (12,000)
ABO, Jan 1 (1,900,000) (1,700,000)
PBO, Jan 1 (2,500,000) (1,700,000)
Plan assets, Jan 1 2,100,000 2,000,000
Average remaining service period
of active employees (years) 10 12
Required: For each independent case, calculate amortization of the net loss or gain that should be included as a component of pension expense for the current year.
7. During its first year of operations, Criswell Inc. completed the following transactions relating to shareholders? equity.
Jan. 5: Issued 300,000 of its common shares for $8 per share and 3,000 preferred shares at $110
Feb. 12: Issued 300,000 of common stock in exchange for equipment with a known cash price of $310,000
The articles of incorporation authorize 5,000,000 shares with a par value of $1 per share of common and 1,000,000 preferred shares with a par value of $100 per share.
Required: Record the above transactions in general journal form.
8. On December 31, 2010, Brisbane Company had 100,00 shares of common stock outstanding and 30,000 shares of 7%, $50 par, cumulative preferred stock outstanding. On February 28, 2011, Brisbane purchased 24,000 of common stock on the open market as treasure stock paying $$40 per share. Net income for 2011 was $180,905. Also outstanding during the year were fully vested incentive stock options giving key personnel the option to buy 50,000 common shares at $40. The market price of the common shares averaged $50 during 2011.
Required: Compute Brisbane?s basic and diluted earnings per share for 2011.
9. Johnson Company receives royalties on a patent it developed several years ago. Royalties are %5 of net sales, receivable on September 30 for sales from January through June and receivable on March 31 for sales from July through December. The patent rights were distributed on July 1, 2010, and Johnson accrued royalty revenue of $50,000 on December 31, 2010, as follows.
Receivable ? royalty revenue 50,000
Royalty revenue 50,000
Johnson received royalties of $65,000 on March 31, 2011, and $90,000 on September 30, 2011. The patent user indicated to Johnson that sales subject to royalties for the second half of 2011 should be $600,000.
Required: Prepare any journal entries Johnson should record during 2011 related to the royalty revenue.
10. Partial balance sheets and additional information are listed below for Sowell Company.
Partial Balance Sheets
As of December 31
Assets 2011 2010
Cash $40,000 $20,000
Accounts receivable 70,000 85,000
Account Payable $54,000 $62,000
Net income was $88,000.
Depreciation expense was $19,000.
Required: prepare the operating activities section of the statement of cash flows for 2011 using the indirect method
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Answer each of the following 10 questions. Show all work. Each answer Is worth 10 points.
1. On March 1, 2011, Navy Corporation used excess cash to …5 years ago