GB 112/212 MANAGERIAL ACC. W/ACCESS >C<
GB 112/212 MANAGERIAL ACC. W/ACCESS >C<
17th Edition
ISBN: 9781260218831
Author: Libby
Publisher: MCG CUSTOM
Question
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Chapter A, Problem 11E

1.

To determine

Journalize the purchase of bond investment on July 1.

2.

To determine

Journalize the receipt of semiannual interest on December 31.

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On January 1, Jim Shorts Corporation issued bonds for $580 million. This bond issue was originally issued at premium. During the same year, $1,500,000 of the bond premium was amortized. On a statement of cash flows prepared using the indirect method, Jim Shorts Corporation should report: O that $1.5 million to be added to net income O An investing activity of $580 million. O A financing activity of $300 million. O that $1.5 million to be deducted from net income
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Lewis Co. produces and sells aviation equipment. On the first day of its fiscal year, Lewis Co. issued $70,000,000 of three-year, 10% bonds at a market (effective) interest rate of 12%, with interest payable semiannually. Compute the following: a.  The amount of cash proceeds from the sale of the bonds. Use the tables of present values in Exhibit 8 and Exhibit 10. Round to the nearest dollar.$ b.  The amount of discount to be amortized for the first semiannual interest payment period, using the interest method. Round to the nearest dollar.$ c.  The amount of discount to be amortized for the second semiannual interest payment period, using the interest method. Round to the nearest dollar.$ d.  The amount of the bond interest expense for the first year. Round to the nearest dollar.$

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