At December 31, 2010, Cord Company's plant asset and accumulated depreciation and amortization accounts had balances as follows

P11-2 Comprehensive problem; Chapters 10 and 11

At December 31, 2010, Cord Company's plant asset and accumulated depreciation and amortization accounts had balances as follows:

Depreciation is computed to the nearest month and residual values are immaterial. Transactions during 2011 and other information:

AND SO ON

a. On January 6, 2011, a plant facility consisting of land and building was acquired from King Corp. in exchange for 25,000 shares of Cord's common stock. On this date, Cord's stock had a fair value of $50 a share. Current assessed values of land and building for property tax purposes are $187,500 and $562,500, respectively.
b. On March 25, 2011, new parking lots, streets, and sidewalks at the acquired plant facility were completed at a total cost of $192,000. These expenditures had an estimated useful life of 12 years.
c. The leasehold improvements were completed on December 31, 2007, and had an estimated useful life of eight years. The related lease, which would terminate on December 31, 2013, was renewable for an additional four-year term. On April 29, 2011, Cord exercised the renewal option.
d. On July 1, 2011, machinery and equipment were purchased at a total invoice cost of $325,000. Additional costs of $10,000 for delivery and $50,000 for installation were incurred.
e. On August 30, 2011, Cord purchased a new automobile for $12,500.
f. On September 30, 2011, a truck with a cost of $24,000 and a carrying amount of $9,100 on date of sale was sold for $11,500. Depreciation for the nine months ended September 30, 2011, was $2,650.
g. On December 20, 2011, a machine with a cost of $17,000 and a book value of $2,975 at date of disposition was scrapped without cash recovery.

Required:
1. Prepare a schedule analyzing the changes in each of the plant asset accounts during 2011. This schedule should include columns for beginning balance, increase, decrease, and ending balance for each of the plant asset accounts. Do not analyze changes in accumulated depreciation and amortization.
2. For each asset category, prepare a schedule showing depreciation or amortization expense for the year ended December 31, 2011. Round computations to the nearest whole dollar.


Click here for the solution: At December 31, 2010, Cord Company's plant asset and accumulated depreciation and amortization accounts had balances as follows

E14-5 Assume the same information as in E14-4, except that Foreman Company uses the effective-interest method of amortization for bond premium or discount

E14-5 (Entries for Bond Transactions—Effective-Interest) Assume the same information as in E14-4, except that Foreman Company uses the effective-interest method of amortization for bond premium or discount. Assume an effective yield of 9.7705%.

Instructions
Prepare the journal entries to record the following. (Round to the nearest dollar.)
(a) The issuance of the bonds.
(b) The payment of interest and related amortization on July 1, 2011.
(c) The accrual of interest and the related amortization on December 31, 2011.

Click here for the solution: Assume the same information as in E14-4, except that Foreman Company uses the effective-interest method of amortization for bond premium or discount

Prepare a debt amortization schedule for a bond issued at discount

Prepare a debt amortization schedule for a bond issued at discount. Assume that the bond matures in 12 years with market interest rate at time of issue—10% annually and 5% semiannually. The stated interest rate is 8%. The interest is paid semiannually.

Click here for the solution: Prepare a debt amortization schedule for a bond issued at discount