The following transactions were completed by Hobson Inc., whose fiscal year is the calendar year:
2010
July 1. Issued $10,000,000 of 10-year, 15% callable bonds dated july1, 2010, at an effective of 11, receiving cash of $12,390,085. Interest is payable semi annually on December 31 and June 30. Oct. 1. Borrowed $225,000 as a six year, 8% installment note from Titan Bank. The note requires annual payments of $48,671, with the first payment occurring on September 30, 2011. Dec. 31. Accrued $4,500of interest on the installment note. The interest is payable on the date of the next installment note payment. Dec. 31. Paid the semiannual interest of the bond. Dec. 31. Recorded bond premium amortization of $119,504, which was determined using the straight line method. Dec. 31. Closed the interest expense account. 2011 June 30. Paid the semiannual interest of the bond. Sept. 30. Paid the annual payment of the note, which consist of interest of $18,000 and principal of $30, 671. Dec. 31. Accrued $3,887 of interest on the installment note. The interest is payable on the date of the next installment note payment. Dec. 31. Paid the semiannual interest of the bond. Dec. 31. Recorded bond premium amortization of $239,008, which was determined using the straight line method. Dec. 31. Closed the interest expense account. 2012 June 30. Recorded the redemption of the bonds, which were called at101,5. the balance in the bond premium account is $1,912,069 after payment of interest and amortization of premium have been recorded.(Record the redemption only) Sept. 30. Paid the second annual payment on the note, which consist of interest of $15,546 and principal of $33,125 Instructions:
1. Journalize the entries to record the foregoing transactions.
2. Indicate the amount of the interest expense in 2010 and 2011
3. Determine the carrying amount of the bonds as of December 31, 2011.
Click here for the solution: The following transactions were completed by Hobson Inc., whose fiscal year is the calendar year
Showing posts with label fiscal year. Show all posts
Showing posts with label fiscal year. Show all posts
Sunday, September 13, 2015
Thursday, August 13, 2015
You are provided with the following transactions that took place during a recent fiscal year
P12-1A You are provided with the following transactions that took place during a recent fiscal year.
Transaction Where Reported on Statement Cash Inflow, Outflow, or No Effect?
a. Recorded depreciation expense on the plant assets.
b. Recorded and paid interest expense.
c. Recorded cash proceeds from a sale of plant assets.
d. Acquired land by issuing common stock.
e. Paid a cash dividend to preferred stockholders.
f. Distributed a stock dividend to common stockholders.
g. Recorded cash sales.
h. Recorded sales on account.
i. Purchased inventory for cash.
j. Purchased inventory on account.
Distinguish among operating, investing, and financing activities.
Instructions
Complete the table, indicating whether each item (1) should be reported as an operating (O) activity, investing (I) activity, financing (F) activity, or as a noncash (NC) transaction reported in a separate schedule, and (2) represents a cash inflow or cash outflow or has no cash flow effect. Assume use of the indirect approach.
Click here for the solution: You are provided with the following transactions that took place during a recent fiscal year
Transaction Where Reported on Statement Cash Inflow, Outflow, or No Effect?
a. Recorded depreciation expense on the plant assets.
b. Recorded and paid interest expense.
c. Recorded cash proceeds from a sale of plant assets.
d. Acquired land by issuing common stock.
e. Paid a cash dividend to preferred stockholders.
f. Distributed a stock dividend to common stockholders.
g. Recorded cash sales.
h. Recorded sales on account.
i. Purchased inventory for cash.
j. Purchased inventory on account.
Distinguish among operating, investing, and financing activities.
Instructions
Complete the table, indicating whether each item (1) should be reported as an operating (O) activity, investing (I) activity, financing (F) activity, or as a noncash (NC) transaction reported in a separate schedule, and (2) represents a cash inflow or cash outflow or has no cash flow effect. Assume use of the indirect approach.
Click here for the solution: You are provided with the following transactions that took place during a recent fiscal year
Wednesday, July 15, 2015
The empirical evidence reveals that very few firms change their standard prices and standard quantities during the fiscal year
P 12–6: Changing Standards
The empirical evidence reveals that very few firms change their standard prices and standard quantities during the fiscal year. Most firms have the following policy, “We set our standards before the fiscal year begins and we NEVER, NEVER change them during the year (except when we have to).”
Required:
a. Evaluate the “never change” policy. Does it make any sense? Why would firms adopt such a policy?
b. When would you expect firms to change their standards during the fiscal year?
Click here for the solution: The empirical evidence reveals that very few firms change their standard prices and standard quantities during the fiscal year
The empirical evidence reveals that very few firms change their standard prices and standard quantities during the fiscal year. Most firms have the following policy, “We set our standards before the fiscal year begins and we NEVER, NEVER change them during the year (except when we have to).”
Required:
a. Evaluate the “never change” policy. Does it make any sense? Why would firms adopt such a policy?
b. When would you expect firms to change their standards during the fiscal year?
Click here for the solution: The empirical evidence reveals that very few firms change their standard prices and standard quantities during the fiscal year
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