Question: Journalize issuance of the bond and the

> Ember Company purchased a building with a market value of $280,000 and land with a market value of $55,000 on January 1, 2018. Ember Company paid $15,000 cash and signed a 25-year, 12% mortgage payable for the balance. Requirements: 1. Journalize the Ja

> On January 1, 2018, Lake man-Fay signed a $1,500,000, 15-year, 7% note. The loan required Lake man-Fay to make annual payments on December 31 of $100,000 principal plus interest. Requirements: 1. Journalize the issuance of the note on January 1, 2018. 2

> On December 31, 2018, when the market interest rate is 6%, Benson Realty issues $700,000 of 6.25%, 10-year bonds payable. The bonds pay interest semiannually. Benson Realty received $713,234 in cash at issuance. Requirements: 1. Prepare an amortization

> David is entering high school and is determined to save money for college. David feels he can save $5,000 each year for the next four years from his part-time job. If David is able to invest at 6%, how much will he have when he starts college?

> Jackson Corporation has the following amounts as of December 31, 2018. Compute the debt to equity ratio at December 31, 2018. Total assets $ 55,250 Total liabilities 22,750 Total equity 32,500

> Power Company issued a $1,000,000, 5%, 5-year bond payable at face value on January 1, 2018. Interest is paid semiannually on January 1 and July 1. Requirements: 1. Journalize the issuance of the bond payable on January 1, 2018. 2. Journalize the paymen

> When using the periodic inventory system, which inventory costing method(s) always produces the same result as when using the perpetual inventory system?

> Bond prices depend on the market rate of interest, stated rate of interest, and time. Determine whether the following bonds payable will be issued at face value, at a premium, or at a discount: a. The market interest rate is 8%. Idaho issues bonds payab

> What is the difference between the stated interest rate and the market interest rate?

> Explain each of the key factors that the time value of money depends on.

> In regard to a bond discount or premium, what is the effective-interest amortization method?

> How does compound interest differ from simple interest?

> What is an annuity?

> What does the debt to equity ratio show, and how is it calculated?

> What are the two categories of liabilities reported on the balance sheet? Provide examples of each.

> What does it mean when a company calls a bond?

> What is the journal entry to retire bonds at maturity?

> Consider the December transactions for Crystal Clear Cleaning that were presented in Chapter 5. (Cost data have been removed from the sale transactions.) Crystal Clear uses the perpetual inventory system. Requirements: 1. Prepare perpetual inventory re

> Which principle states that businesses should use the same accounting methods and procedures from period to period?

> What type of account is Premium on Bonds Payable? What is its normal balance? Is it added to or subtracted from the Bonds Payable account to determine the carrying amount?

> What type of account is Discount on Bonds Payable? What is its normal balance? Is it added to or subtracted from the Bonds Payable account to determine the carrying amount?

> In regard to a bond discount or premium, what is the straight-line amortization method?

> What is the carrying amount of a bond?

> Why would a company choose to issue bonds instead of issuing stock?

> When a bond is issued, what is its present value?

> When does a premium on bonds payable occur?

> When does a discount on bonds payable occur?

> What is a bond payable?

> What is a mortgage payable?

> At the beginning of the January 2019, Canyon Canoe Company decided to carry and sell T-shirts with its logo printed on them. Canyon Canoe Company uses the perpetual inventory system to account for the inventory. During February 2019, Canyon Canoe Company

> What is an amortization schedule?

> Where is the current portion of notes payable reported on the balance sheet?

> Sleep Well, Inc. is authorized to issue 9%, 10-year bonds payable. On January 1, 2018, when the market interest rate is 10%, the company issues $500,000 of the bonds. The bonds pay interest semiannually. Requirements: 1. How much cash did the company re

> Ari Goldstein issued $300,000 of 11%, five-year bonds payable on January 1, 2018. The market interest rate at the date of issuance was 10%, and the bonds pay interest semiannually. Requirements: 1. How much cash did the company receive upon issuance of

> The accounting records of Compass Wireless include the following as of December 31, 2018: Requirements: 1. Report these liabilities on the Compass Wireless balance sheet, including headings and totals for current liabilities and long-term liabilities.

> On January 1, 2018, Electricians Credit Union (ECU) issued 8%, 20-year bonds payable with face value of $400,000. The bonds pay interest on June 30 and December 31. The issue price of the bonds is 104. Journalize the following bond transactions: a. Issu

> On January 1, 2018, Doctors Credit Union (DCU) issued 7%, 20-year bonds payable with face value of $200,000. The bonds pay interest on June 30 and December 31. Requirements: 1. If the market interest rate is 5% when DCU issues its bonds, will the bonds

> Johnny’s Hamburgers issued 8%, 10-year bonds payable at 85 on December 31, 2018. At December 31, 2020, Johnny reported the bonds payable as follows: Johnny pays semiannual interest each June 30 and December 31. Requirements: 1. Answe

> The following transactions of Great Value Pharmacies occurred during 2018 and 2019: Requirements: 1. Journalize the transactions in the Great Value Pharmacies general journal. Round to the nearest dollar. Explanations are not required. 2. Prepare the li

> Relaxation, Inc. is authorized to issue 7%, 10-year bonds payable. On January 1, 2018, when the market interest rate is 12%, the company issues $300,000 of the bonds. The bonds pay interest semiannually. Requirements: 1. How much cash did the company re

> How is days’ sales in inventory calculated, and what does it measure?

> Brad Nelson, Inc. issued $600,000 of 7%, six-year bonds payable on January 1, 2018. The market interest rate at the date of issuance was 6%, and the bonds pay interest semiannually. Requirements: 1. How much cash did the company receive upon issuance of

> The accounting records of Pack Leader Wireless include the following as of December 31, 2018: Requirements: 1. Report these liabilities on the Pack Leader Wireless balance sheet, including headings and totals for current liabilities and long-term liabi

> On January 1, 2018, Educators Credit Union (ECU) issued 8%, 20-year bonds payable with face value of $1,000,000. These bonds pay interest on June 30 and December 31. The issue price of the bonds is 109. Journalize the following bond transactions: a. Iss

> On January 1, 2018, Nurses Credit Union (NCU) issued 8%, 20-year bonds payable with face value of $600,000. The bonds pay interest on June 30 and December 31. Requirements: 1. If the market interest rate is 7% when NCU issues its bonds, will the bonds b

> Danny’s Hamburgers issued 6%, 10-year bonds payable at 90 on December 31, 2018. At December 31, 2020, Danny reported the bonds payable as follows: Danny’s pays semiannual interest each June 30 and December 31. Requi

> The following transactions of Johnson Pharmacies occurred during 2018 and 2019: Requirements: 1. Journalize the transactions in the Johnson Pharmacies general journal. Round to the nearest dollar. Explanations are not required. 2. Prepare the liabiliti

> Bill and Edna had been married two years and had just reached the point where they had enough savings to start investing. Bill’s uncle Dave told them that he had recently inherited some very rare railroad bonds from his grandmother’s estate. He wanted to

> Use the Target Corporation financial statements to answer the following questions. Visit http://www.pearsonhighered.com/Horngren to view a link to Target Corporation’s Fiscal 2015 Annual Report. Requirements: 1. How much was Target Corporation’s long-te

> Interest rates determine the present value of future amounts. (Round to the nearest dollar.) Requirements: 1. Determine the present value of 10-year bonds payable with face value of $86,000 and stated interest rate of 14%, paid semiannually. The market

> Right Now Electronic Center began October with 100 units of merchandise inventory that cost $70 each. During October, the store made the following purchases: Right Now uses the periodic inventory system, and the physical count at October 31 indicates t

> Ludwig Corporation has the following data as of December 31, 2018: Compute the debt to equity ratio at December 31, 2018. Total Current Liabilities $ 36,210 Total Stockholders' Equity 24 Total Current Assets 58,200 Other Assets 36,800 Long-term Lia

> At December 31, MediStat Precision Instruments owes $52,000 on Accounts Payable, Salaries Payable of $12,000, and Income Tax Payable of $10,000. MediStat also has $300,000 of Bonds Payable that were issued at face value that require payment of a $35,000

> Pediatric Dispensary borrowed $390,000 on January 2, 2018, by issuing a 15% serial bond payable that must be paid in three equal annual installments plus interest for the year. The first payment of principal and interest comes due January 2, 2019. Comple

> CoastalView Magazine issued $600,000 of 15-year, 5% callable bonds payable on July 31, 2018, at 94. On July 31, 2021, CoastalView called the bonds at 101. Assume annual interest payments. Requirements: 1. Without making journal entries, compute the carr

> On January 1, 2018, Roberts Unlimited issues 8%, 20-year bonds payable with a face value of $240,000. The bonds are issued at 104 and pay interest on June 30 and December 31. Requirements: 1. Journalize the issuance of the bonds on January 1, 2018. 2. J

> Anderson Company issued $70,000 of 10-year, 9% bonds payable on January 1, 2018. Anderson Company pays interest each January 1 and July 1 and amortizes discount or premium by the straight-line amortization method. The company can issue its bonds payable

> On June 30, Daughtry Limited issues 8%, 20-year bonds payable with a face value of $130,000. The bonds are issued at 86 and pay interest on June 30 and December 31. Requirements: 1. Journalize the issuance of the bonds on June 30. 2. Journalize the semi

> SB Electronics is considering two plans for raising $4,000,000 to expand operations. Plan A is to issue 9% bonds payable, and plan B is to issue 500,000 shares of common stock. Before any new financing, SB Electronics has net income of $350,000 and 300,0

> Kellerman Company purchased a building and land with a fair market value of $550,000 (building, $425,000, and land, $125,000) on January 1, 2018. Kellerman signed a 20-year, 6% mortgage payable. Kellerman will make monthly payments of $3,940.37. Round to

> Consider the following note payable transactions of Caleb Video Productions. Requirements: 1. Journalize the transactions for the company. 2. Considering the given transactions only, what are Caleb Video Productions’ total liabilities

> Antique Carpets’s books show the following data. In early 2020, auditors found that the ending merchandise inventory for 2017 was understated by $8,000 and that the ending merchandise inventory for 2019 was overstated by $9,000. The end

> Raffie’s Kids, a nonprofit organization that provides aid to victims of domestic violence, low-income families, and special-needs children, has a 30-year, 5% mortgage on the existing building. The mortgage requires monthly payments of $3,000. Raffie’s bo

> The following questions are not related. Requirements: 1. Duncan Brooks needs to borrow $500,000 to open new stores. Brooks can borrow $500,000 by issuing 5%, 10-year bonds at 96. How much will Brooks actually receive in cash under this arrangement? How

> UnitedHealth Group Incorporated is a diversified health and well-being company dedicated to helping people live healthier lives. The company operates under two distinct platforms: health benefits (UnitedHealthcare) and health services (Optum). Requireme

> Samuel Industries has three employees. Each employee earns two vacation days a month. Samuel pays each employee a weekly salary of $1,250 for a five-day workweek. Requirements: 1. Determine the amount of vacation expense for one month. 2. Journalize the

> On December 31, Weston Company estimates that it will pay its employees a 5% bonus on net income after deducting the bonus. The company reports net income of $64,000 before the calculation of the bonus. The bonus will be paid on January 15 of the next ye

> Macintosh Company has monthly salaries of $26,000. Assume Macintosh pays all the standard payroll taxes, no employees have reached the payroll tax limits, total income tax withheld is $2,000, and the only payroll deductions are payroll taxes. Journalize

> Lily Carter works for JDK all year and earns a monthly salary of $12,100. There is no overtime pay. Lily’s income tax withholding rate is 10% of gross pay. In addition to payroll taxes, Lily elects to contribute 5% monthly to United Way. JDK also deducts

> Lucy Rose works at College of Fort Worth and is paid $12 per hour for a 40-hour workweek and time-and-a-half for hours above 40. Requirements: 1. Compute Rose’s gross pay for working 60 hours during the first week of February. 2. Rose is single, and her

> On December 31, 2017, Franklin purchased $13,000 of merchandise inventory on a one-year, 9% note payable. Franklin uses a perpetual inventory system. Requirements: 1. Journalize the company’s purchase of merchandise inventory on December 31, 2017. 2. Jo

> On July 5, Williams Company recorded sales of merchandise inventory on account, $55,000. The sales were subject to sales tax of 4%. On August 15, Williams Company paid the sales tax owed to the state from the July 5 transaction. Requirements: 1. Journal

> Some of L and K Electronics’s merchandise is gathering dust. It is now December 31, 2018, and the current replacement cost of the ending merchandise inventory is $32,000 below the business’s cost of the goods, which was $98,000. Before any adjustments at

> Trail Runner guarantees its snowmobiles for three years. Company experience indicates that warranty costs will be approximately 5% of sales. Assume that the Trail Runner dealer in Colorado Springs made sales totaling $600,000 during 2018. The company rec

> Abernathy Electronics reported the following amounts on its 2018 income statement: Year Ended December 31, 2018 Net income ………..…….………………………………………………$ 45,000 Income tax expense ………………………………………………………6,750 Interest expense …………………………….………………………………3,750 W

> Freeman Motors, a motorcycle manufacturer, had the following contingencies. a. Freeman estimates that it is reasonably possible but not likely that it will lose a current lawsuit. Freeman’s attorneys estimate the potential loss will be $4,500,000. b. Fr

> On January 1, Irving Company purchased equipment of $280,000 with a long-term note payable. The debt is payable in annual installments of $56,000 due on December 31 of each year. At the date of purchase, how will Irving Company report the note payable?

> On June 1, Hunting Man Magazine collected cash of $63,000 on future annual subscriptions starting on July 1. Requirements: 1. Journalize the transaction to record the collection of cash on June 1. 2. Journalize the transaction required at December 31, t

> Rios Raft Company had the following liabilities. a. Accounts Payable b. Note Payable due in 3 years c. Salaries Payable d. Note Payable due in 6 months e. Sales Tax Payable f. Unearned Revenue due in 8 months g. Income Tax Payable Determine whether eac

> What are the two main controls for payroll? Provide an example of each.

> List the required employee payroll withholding deductions, and provide the tax rate for each.

> What is the difference between gross pay and net pay?

> How is sales tax recorded? Is it considered an expense of a business? Why or why not?

> Steel It began January with 55 units of iron inventory that cost $35 each. During January, the company completed the following inventory transactions: Requirements: 1. Prepare a perpetual inventory record for the merchandise inventory using the FIFO in

> What is a current liability? Provide some examples of current liabilities.

> How is the times-interest-earned ratio calculated, and what does it evaluate?

> Curtis Company is facing a potential lawsuit. Curtis’s lawyers think that it is reasonably possible that it will lose the lawsuit. How should Curtis report this lawsuit?

> What is a contingent liability? Provide some examples of contingencies.

> When do businesses record warranty expense, and why?

> What payroll taxes is the employer responsible for paying?

> How might a business use a payroll register?

> Coltrane Company has a $5,000 note payable that is paid in $1,000 installments over five years. How would the portion that must be paid within the next year be reported on the balance sheet?

> What do short-term notes payable represent?

> How do unearned revenues arise?

> Exercise World began January with merchandise inventory of 90 crates of vitamins that cost a total of $5,850. During the month, Exercise World purchased and sold merchandise on account as follows: Requirements: 1. Prepare a perpetual inventory record,

> What are the three main characteristics of liabilities?

> The income statement for Vermont Communications follows. Assume Vermont Communications signed a 3-month, 3%, $6,000 note on June 1, 2018, and that this was the only note payable for the company. Requirements: 1. Fill in the missing information for Verm

> The following transactions of Belkin Howe occurred during 2018: Requirements: 1. Journalize required transactions, if any, in Howe’s general journal. Explanations are not required. 2. What is the balance in Estimated Warranty Payable

> The following transactions of Philadelphia Pharmacies occurred during 2017 and 2018: Journalize the transactions in Philadelphia’s general journal. Explanations are not required. 2017 Purchased computer equipment at a cost of $7,0

> Liam Wallace is general manager of Moonwalk Salons. During 2018, Wallace worked for the company all year at a $13,400 monthly salary. He also earned a year-end bonus equal to 5% of his annual salary. Wallace’s federal income tax withheld during 2018 was