2. On January 1, 2020, Novatpa Company purchased $1,000,000, 6% bonds of Aguirre Co. for $947,574. The bonds were purchased to yield 8% interest. Interest is payable semiannually on July 1 and January 1. The bonds mature on January 1, 2023. Novotna Company uses the effective-interest method to amortize discount or premium. Assume the bond is classified as available for sale. The fair value of Aguirre bonds is $960,686 on December 31, 2020 and $975,122 on December 31, 2021. Prepare the necessary adjusting entry on December 31, 2021
Q: What is the average daily balance for this account? $ How much interest is owed this month? $ How…
A: The average daily balance is the balance at the end of each day divided by the number of days in the…
Q: Alejandro Kirk
A: The main advantage of using the ABC method is its impact on profitability, it helps in improving…
Q: Highland Company produces a lightweight backpack that is popular with college students. Standard…
A: Introduction: Variable overhead refers to production variable costs that vary in response to output…
Q: What are the factors that determine whether the company should use cash acquisition or stock…
A: Cash Acquisition refers to the acquisition or proposal by one company to another company to buy…
Q: Yoshi Company completed the following transactions and events involving its delivery trucks. Year…
A: Depreciation is the non-cash expense which is reported in the books to record the regular usage of…
Q: ABC (S) Pte Ltd, incorporated in 2010, is in the business of manufacturing tyres. For the year ended…
A: Taxable income: It implies to the income that is earned by a business or any individual and subject…
Q: Which of the following included in the buyer's cost? A. All the descriptions are tight. B. Insurance…
A: Inventory cost refers to the cost that is related to the business associated with the holding…
Q: Dior, Christian and Jovani have capital balances of P240,000, P400,000 and P144,000, respectively…
A: The partnership comes into existence when two or more persons agree to do the business and further…
Q: Ten years ago you purchased a small apartment complex for $900,000. You borrowed $700,000 at 5…
A: Purchase price: 900,000 Sale price: 1,250,000 Borrowed amount:700,000 Original depreciation…
Q: Ramirez Company installs a computerized manufacturing machine in its factory at the beginning of the…
A: Depreciation represents the reduction in the value of an asset over a useful life of the asset. It…
Q: On January 6, Year 1, Mount Jackson Corporation purchased a tract of land for a factory site for…
A: The capitalization cost of land includes the cost of demolition of the building, real estate, and…
Q: Required: 1. Compute the operating income for the first year under full costing. 2. Compute the…
A: Full Costings :— it is also known as Absorption Costing. It is Costing system which treats all…
Q: QUESTION 1 Ginobili has forecast sales to be $120100 in February, $151200 in March, $162700 in…
A: Budgeted cash receipts refer to the cash that is received as cash and expected to collect on the…
Q: Kando Company incurs a $9.00 per unit cost for Product A, which it currently manufactures and sells…
A: Introduction: Incremental analysis, also known as the relevant cost approach, marginal analysis, or…
Q: The equipment reverts back to the lessor at the end of the lease term. How much is interest expense…
A: The lease agreement is a contract between the two parties in which one party rents it assets to the…
Q: b. 15800 is not correct - what is the correct answer?
A: Materials inventory refers to the aggregate cost of all the component parts that are presently in…
Q: What are the characteristics and importance of the budget?
A: In the context of the given question, we are required to explain the characteristics and importance…
Q: If a fixed asset, such as a computer, were purchased on January 1st for $2,482 with an estimated…
A: Depreciation is charged on the depreciable fixed assets based on their useful life. Salvage value…
Q: Onslow Company purchased a used machine for $240,000 cash on January 2. On January 3, Onslow paid…
A: Fixed asset is required to record at acquisition cost. Acquisition cost of asset include all…
Q: output-specifically, to 3. Assign costs to the department's the units transferred out and to the…
A: In this Case, the company is using weighted average process costing and it has two production…
Q: When budgeting, how do we go about figuring out what our costs are for the coming year?
A: A budget is a schedule that shows estimated revenues and expenses for a specific future period.…
Q: Assuming the Workmans file a joint tax return, determine their gross income minus expenses on the…
A: 1. Determination of Gross Income when Ryan's files joint return. S.NO PARTICULARS AMOUNT ($)…
Q: Dimsdale Sports, a merchandising company, reports the following balance sheet at December 31.…
A: A cash budget enlists the expected total cash receipts and payments during a specific period and…
Q: Dimsdale Sports, a merchandising company, reports the following balance sheet at December 31.…
A: Every business organization's are required t maintain the capital expenditure budget so as to run…
Q: Express the Balance Sheets/Financial Position and Income Statement in common-size percents, using…
A: A full-size income statement is an income statement where each line item is expressed as a…
Q: The following transactions pertains to Bahrain Company for 2021: a) Materials purchased on account,…
A: The direct costs incurred are debited to work in process account. The indirect costs are debited to…
Q: Abbeville Company manufactures faucets in a small manufacturing facility. The faucets are made from…
A: Variances shows the amount of difference between the costs estimated that is standard cost and the…
Q: Lane Company manufactures a single product that requires a great deal of hand labor. Overhead cost…
A: Disclaimer: “Since you have posted a question with multiple sub-parts, we will solve the first three…
Q: Sunland Company borrowed $760,000 on December 31, 2019, by issuing an $760,000, 9% mortgage note…
A: Journal entry is the entry that records the financial transactions initially. The transactions are…
Q: The accounts below appear in the December 31, 2018 trial balance of Utah Jazz Corporation:…
A: Shareholder's equity can be calculated by using the following formula: SE = Share capital + Retained…
Q: Cullumber Company acquired 28% of the outstanding common stock of Grinwold Inc. on January 1, 2020,…
A: The cost method adjust the investment on the basis of fair value of investment. The equity method…
Q: Myers Company uses a flexible budget for manufacturing overhead based on direct labor hours.…
A: The flexible budget report compares the actual costs incurred and budgeted costs at actual…
Q: what are 5 legal standards/rules that are related to the extractive industries that can advance…
A: 5 legal standards/rules that are related to the extractive industries that can advance sustainable…
Q: Kauffman Market has a gross profit percentage of 40%. It is expecting an additional $3,000 in…
A: Introduction: Gross profit is the sum of net sales less the cost of goods sold. It displays the…
Q: Auditors are required to document their understanding of internal control. Procedure’s manuals,…
A: Internal Control System It is important for the Auditors to examine the process of the internal…
Q: he Pacific Division of Cullumber Industries reported the following data for the current year. Sales…
A: Return on investment is one of the profitability ratio which is being used in business. This shows…
Q: ou have just been hired by FAB Corporation, the manufacturer of a revolutionary new garage door…
A: Cost Formula Actual Cost in March Utilities $16,800 + $0.16 per machine-hour $ 21,800…
Q: 10. A furniture company has provided the following data for the year 2010 and 2011
A: Cost Accounting - A perpetual inventory accounting system, the cost accounting system is…
Q: Question 5 Witherspoon Inc. has compiled the following data in order to put together their first…
A: As per the given information: Sales (units)January - 55,000February - 48,000March - 41,000April -…
Q: Baskin Promotions, Incorporated sells T-shirts decorated for a variety of concert performers. The…
A: Performance Report :— It is a report prepared to compare budgeted cost Or budgeted revenue for…
Q: Required Calculate the efficiency variance for variable setup overhead costs. Calculate the rate…
A: Variable and fixed overhead variance analysis is the quantitative difference between budgeted and…
Q: Question 3.4 Safety First Inc. produces baby products, including car seats for children from 0-2…
A: Note: As per the instructions provided to us only the first 3 requirements are answered.
Q: Brembo, an Italian automotive braking-systems supplier, has three alternative carbon ceramic…
A: Preferred Creditors - According to the relevant insolvency legislation, a lender with the authority…
Q: As of January 1 of the current year, Phyllis Company had accounts receivable of $50,000. The sales…
A: A cash budget is an estimation of income and expenditures on the basis of past performance or…
Q: Required a. Write up the General Journal for the month b. Write yup the Respective Ledger accounts…
A: Record Keeping is an important part of the Business. Journal is used to record the transactions at…
Q: SANOFI Company uses a flexible budget for manufacturing overhead based on direct labor hours.…
A: The flexible budget is prepared on to compare the actual results with flexible data of production.…
Q: Puzzles Company sells merchandise with a 1-year warranty. In Year 1, sales consist will average $16…
A: Provision for warrenty expense is calculated on the estimated number repair during the year.
Q: On July 1, 2020, Molly's Greenhouse purchased a new delivery truck for $96,000. She paid a $20,000…
A: The monetary value of an asset decreases over time due to use, wear and tear or obsolescence. This…
Q: On December 31, Strike Company traded in one of its batting cages for another one that has a cost of…
A: Introduction: A transaction is a commercial occurrence that results in a monetary impact on the…
Q: Interstate Manufacturing is considering either replacing one of its old machines with a new machine…
A: In order to determine the net present value, the present value of cash outflow are required to be…
Step by step
Solved in 2 steps
- On January 1, 2019, Brewster Company issued 2,000 of its 5-year, 1,000 face value, 11% bonds dated January 1 at an effective annual interest rate (yield) of 9%. Brewster uses the effective interest method of amortization. On December 31, 2023, Brewster extinguished the 2,000 bonds early through acquisition in the open market for 1,980,000. On July 1, 2022, Brewster issued 5,000 of its 6-year, 1,000 face value, 10% convertible bonds dated July 1 at an effective annual interest rate (yield) of 12%. The bonds are convertible at the option of the investor into Brewsters common stock at a ratio of 10 shares of common stock for each bond. Brewster uses the effective interest method of amortization. On July 1, 2023, an investor in Brewsters convertible bonds tendered 1,500 bonds for conversion into 15,000 shares of Brewsters common stock, which had a market value of 105 per share at the date of the conversion. Required: 1. Using the information about Brewster, answer the following questions: a. Were the 11% bonds issued at par, at a discount, or at a premium? Why? b. Is the amount of interest expense for the 11% bonds using the effective interest method of amortization higher in the first or second year of the life of the bond issue? Why? 2. Using the information about Brewster, explain the following: a. How is a gain or loss on early extinguishment of debt determined? Does the early extinguishment of the 11% bonds result in a gain or loss? Why? b. How does Brewster report the early extinguishment of the 11% bonds on the 2023 income statement? 3. Based on the information provided about Brewster, answer the following questions: a. Does recording the conversion of the 10% convertible bonds into common stock under the book value method affect net income? What is the rationale for the book value method? b. Does recording the conversion of the 10% convertible bonds into common stock under the market value method affect net income? What is the rationale for the market value method?Bats Corporation issued 800,000 of 12% face value bonds for 851,705.70. The bonds were dated and issued on April 1, 2019, are due March 31, 2023, and pay interest semiannually on September 30 and March 31. Bats sold the bonds to yield 10%. Required: 1. Prepare a bond interest expense and premium amortization schedule using the straight-line method. 2. Prepare a bond interest expense and premium amortization schedule using the effective interest method. 3. Prepare any adjusting entries for the end of the fiscal year, December 31, 2019, using the: a. straight-line method of amortization b. effective interest method of amortization 4. Assume the company retires the bonds on June 30, 2020, at 103 plus accrued interest. Prepare the journal entries to record the bond retirement using the: a. straight-line method of amortization b. effective interest method of amortizationRefer to the information in RE 13-3. Assume that on December 31, 2019, Wolfpack received interest on the Todd Corporation bonds. Wolfpack uses the straight-line method to amortize premiums and discounts. Prepare the December 31 journal entry to record the receipt of the interest. On July 1, 2019, Wolfpack Corporation purchases securities which it intends to buy and sell frequently. These securities consisted of todd Corporation 10%, 5-year bonds with a face value of 20,000 which were purchased for 18,500. Prepare the july 1 journal entry to record the purchase of these trading securities.
- Held-to-Maturity Securities and Amortization of a Discount On January 1, 2019, Kelly Corporation acquired bonds with a face value of 500,000 for 483,841.79, a price that yields a 10% effective annual interest rate. The bonds carry a 9% stated rate of interest, pay interest semiannually on June 30 and December 31, are due December 31, 2022, and are being held to maturity Required: Prepare journal entries to record the purchase of the bonds and the first two interest receipts using the: 1. straight-line method of amortization 2. effective interest method of amortizationWilbury Corporation issued 1 million of 13.5% bonds for 985,071.68. The bonds are dated and issued October 1, 2019, are due September 30, 2020, and pay interest semiannually on March 31 and September 30. Assume an effective yield rate of 14%. Required: 1. Prepare a bond interest expense and discount amortization schedule using the straight-line method. 2. Prepare a bond interest expense and discount amortization schedule using the effective interest method. 3. Prepare adjusting entries for the end of the fiscal year December 31, 2019, using the: a. straight-line method of amortization b. effective interest method of amortization 4. If income before interest and income taxes of 30% in 2020 is 500,000, compute net income under each alternative. 5. Assume the company retired the bonds on June 30, 2020, at 98 plus accrued interest. Prepare the journal entries to record the bond retirement using the: a. straight line method of amortization b. effective interest method of amortization 6. Compute the companys times interest earned (pretax operating income divided by interest expense) for 2020 under each alternative.Refer to the information in RE13-5. Assume that on December 31, 2019, the investment in Smith Corporation bonds has a market value of 12,500. Prepare the year-end journal entry to record the unrealized gain or loss.