The following transactions were completed by Hobson Inc., whose fiscal year is the calendar year

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

ACC 225 P07-05A You have just taken over the accounting for Choi Enterprises, whose annual accounting period ends December 31

ACC 225 P07-05A

You have just taken over the accounting for Choi Enterprises, whose annual accounting period ends December 31. The company’s previous accountant journalized its transactions through December 15 and posted all items that required posting as individual amounts (see the journals and ledgers in the Working Papers). The company’s transactions beginning on December 16 follow (terms for all its credit sales are 2/10, n/30):

Dec. 16 Sold merchandise on credit to Hanna Seppa, Invoice No. 916, for $7,700 (cost is $4,600).
17 Received a $1,040 credit memorandum from Funk Company for the return of merchandise received on December 15.

AND SO ON

31 Issued Check No. 626 to Jamie Inman, the company’s only sales employee, in payment of her $2,020 salary for the last half of December.
31 Issued Check No. 627 to Access Electric Company in payment of its $710 December electric bill.
31 Cash sales for the last half of the month are $29,600 (cost is $11,200). (Cash sales are recorded daily but are recorded only twice in this problem to reduce repetitive entries.)

Required
1. Record these transactions in the journals provided in the working papers.
2. Verify that amounts that should be posted as individual amounts to the general ledger accounts have been posted, including posting to the customer and creditor accounts. (Such items are immediately posted.) Foot and crossfoot the journals and make the month-end postings.
3. Prepare a December 31 trial balance and prove the accuracy of the subsidiary ledgers by preparing schedules of both accounts receivable and accounts payable.


Click here for the solution: ACC 225 P07-05A You have just taken over the accounting for Choi Enterprises, whose annual accounting period ends December 31

Cato, Inc. is a calendar-year corporation whose financial statements for 2009 and 2010 included errors as follows

Cato, Inc. is a calendar-year corporation whose financial statements for 2009 and 2010 included errors as follows:

Year Ending Inventory Depreciation Expense
2009 $162,000 overstated $135,000 overstated
2010 54,000 understated 45,000 understated

Assume that purchases were recorded correctly and that no correcting entries were made at December 31, 2009, or at December 31, 2010. Ignoring income taxes, by how much should Cato's retained earnings be retroactively adjusted at January 1, 2011?

Click here for the solution: Cato, Inc. is a calendar-year corporation whose financial statements for 2009 and 2010 included errors as follows