Problem 1. Villarente Company issued 5-year $200,000 face valuebonds at 95 on January 1, 2012. The stated interest rate on these bonds is 9%,and the effective interest rate is 10.33%. Use the effective interest ratemethod to complete the amortization schedule below.Problem 2. Allen Corporation was organized on July 15, 2012. It wasauthorized to issue 150,000 shares of $25 par value common stock and 50,000shares of 6% cumulative preferred stock. The preferred stock had a stated valueof $50 per share. The following stock transactions relate to Allen Corporation. ·Issued55,000 shares of common stock for $33 per share.·Issued2,750 shares of the class A preferred stock for $62 per share.·Issued27,500 shares of common stock for $35 per share. Required: 1) Indicate the effect of each of these transactions on Allen’s financialstatements. Include dollar amounts in the model, below. After recording thethree transactions, calculate column totals.2) After these transactions have been recorded, what is the total amount ofstockholders’ equity?3) After these transactions have been recorded, how many shares of common stockare outstanding?
Problem 1. Villarente Company issued 5-year $200,000 face
bonds
and the effective interest rate is 10.33%. Use the effective interest rate
method to complete the amortization schedule below.
Problem 2. Allen Corporation was organized on July 15, 2012. It was
authorized to issue 150,000 shares of $25 par value common stock and 50,000
shares of 6% cumulative
of $50 per share. The following stock transactions relate to Allen Corporation.
·
Issued
55,000 shares of common stock for $33 per share.
·
Issued
2,750 shares of the class A preferred stock for $62 per share.
·
Issued
27,500 shares of common stock for $35 per share.
Required:
1) Indicate the effect of each of these transactions on Allen’s financial
statements. Include dollar amounts in the model, below. After recording the
three transactions, calculate column totals.
2) After these transactions have been recorded, what is the total amount of
3) After these transactions have been recorded, how many shares of common stock
are outstanding?
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The bond amortisation schedule represents the carrying value of bond, interest payment, interest expense and amortisation of discount or premium.
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