Answer each of the following 10 questions. Show all work. Each answer Is worth 10 points.
\n1.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 On March 1, 2011, Navy Corporation used excess cash to purchase U.S. Treasury bonds
\nfor $103,000 plus accrued interest. The appropriate interest rate is 6. Interest on these bonds is payable on January 1 and July 1 of each year. Navy\u2019s investment is accounted for as held to maturity. The fair value of the Treasury bonds is $104,000 at year end.
\nRequired: Prepare the appropriate journal entries to record the transactions for the year,
\nincluding any year-end adjustments. Show calculations, rounded to the nearest dollar.
\n2.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Ontario Resources, a natural energy supplier, borrowed $80 million cash on November 1,
\n2011, to fund a geological survey. The Joan was made by Quebec Banque under a short-term credit line. Ontario Resources issued a s-month, 12 promissory note with interest payable at maturity. Ontario Resources\u2019 fiscal period is the calendar year.
\nRequired:
\nA Prepare the journal entry for the issuance of the note by Ontario Resources.
\nB.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Prepare the appropriate adjusting entry for the note by Ontario Resources on December 31, 2011. Show calculations.
\nC. Prepare the journal entry for the payment of the note at maturity. Show calculations.
\n3.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 On January 1, 2011, Bishop Company issued 10 bonds dated January 1, 2011, with a
\nface amount of $20 million. The bonds mature in 2020 (10 years). For bonds of similar risk
\nand maturity, the market yield is 12. Interest is paid semiannually on June 30 and December 31.
\nRequired:
\nA.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Determine the price of the bonds at January 1, 2011.
\nB.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Prepare the journal entry to record the bond issuance by Bishop on January 1, 2011.
\nC.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Prepare the journal entry to record interest on June 30, 2011, using the effective interest method.
\nD.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Prepare the journal entry to record interest on December 31,2011, using the effective
\ninterest method.
\n4.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 On January 1, 2011, Holbrook Company leased a building under a 3-year operating lease.
\nThe annual rental payments are $68,000 on January 1, 2011, the inception of the lease, and $50,000 January 1 of 2012 and 2013. Holbrook made structural modifications to the building costing $90,000 before occupying the building. The useful life of the building and the modifications is 30 years with no expected residual value.
\nRequired: Prepare the appropriate journal entries for Holbrook Company for 2011.
\nHolbrook\u2019s fiscal year is the calendar year, and the company uses straight-line depreciation.
\n5.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 At the end of the preceding year, World Industries had a deferred tax asset of $17,500,000
\nattributable to its only temporary difference of $50,000,000 for estimated expenses. At the end of the current year, the temporary difference is $45,000,000. At the beginning of the year there was no valuation account for the deferred tax asset. At year-end, World Industries now estimates that it\u2019s more likely than not that one-third of the deferred tax asset will never be realized. Taxable income is $12,000,000 for the current year, and the tax rate is 30 for a\/l years.
\nRequired: Prepare journal entries to record World Industries\u2019 income tax expense for the current year. Show well-labeled supporting computations for each component of the journal entries.
\n6.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Vrable Corporation has a defined benefit pension plan. Two alternative possibilities for
\npension-related data for the current calendar year are shown below:
\n\u00a0
\n\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Case 1 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Case 2
\nNet loss (gain), Jan. 1 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 $240,00 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 $(230,000)
\nLoss (gain) on plan assets \u00a0\u00a0\u00a0\u00a0 (8,000) \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 (6,000)
\nLoss (gain) on PBO \u00a0\u00a0 (17,000) \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 12,000
\nABO, Jan 1 \u00a0\u00a0\u00a0 (1,900,000) \u00a0\u00a0\u00a0 (1,500,000)
\nPSO, Jan 1 \u00a0\u00a0\u00a0\u00a0 (2,500,000) \u00a0\u00a0\u00a0 (1,700,000)
\nPlan assets, Jan 1 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 2,100,000 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 2,000,000
\nAverage remaining service period \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
\nof active employees (years) \u00a0 10 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 12
\nRequired: For each independent case, calculate amortization of the net loss or gain that
\nshould be included as a component of pension expense for the current year.
\n7.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 During its first year of operations, Criswell Inc. completed the following transactions relating to shareholders\u2019 equity.
\nJan. 5: \u00a0Issued 300,000 of its common shares for $8 per share and 3,000 preferred shares at $110
\nFeb. 12:
\nIssued 50,000 shares of common stock in exchange for equipment with a known cash price of $310,000
\nThe articles of incorporation authorize 5,000,000 shares with a par value of $1 per share of common and 1,000,000 preferred shares with a par value of $100 per share.
\nRequired: Record the above transactions in general journal form.
\n8.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 On December 31, 2010, Brisbane Company had 100,000 shares of common stock outstanding and 30,000 shares of 7, $50 par, cumulative preferred stock outstanding.
\nOn February 28, 2011, Brisbane purchased 24,000 shares of common stock on the open market as treasury stock paying $40 per share. Brisbane sold 6,000 treasury shares on September 30, 2011, for $45 per share. Net income for 2011 was $180,905. Also outstanding during the year were fully vested incentive stock options giving key personnel the option to buy 50,000 common shares at $40. The market price of the common shares averaged $50 during 2011.
\nRequired: Compute Brisbane\u2019s basic and diluted earnings per share for 2011.
\n9.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Johnson Company receives royalties on a patent it developed several years ago. Royalties
\nare 5 of net sales, receivable on September 30 for sales from January through June and receivable on March 31 for sales from July through December. The patent rights were distributed on July 1, 2010, and Johnson accrued royalty revenue of $50,000 on December 31, 2010, as follows:
\n\u00a0
\nReceivable-royalty revenue 50,000
\nRoyalty revenue 50,000
\n\u00a0
\nJohnson received royalties of $65,000 on March 31, 2011, and $90,000 on September 30, 2011. The patent user indicated to Johnson that sales subject to royalties for the second half of 2011 should be $600,000. Required: Prepare any journal entries Johnson should record during 2011 related to the
\nroyalty revenue.
\n\u00a0
\n10. Partial balance sheets and additional information are listed below for Sowell Company.
\nSowell Company Partial Balance Sheets as of December 31
\nAssets\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 2011\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 2010
\nCash \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 $40,000\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 $20,000\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
\nAccounts receivable \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 70,000 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 85,000
\nInventory \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 40,000 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 35,000
\n\u00a0LiabilitiesAccounts payable \u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 54,000 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 $62,000
\n\u00a0
\nNet income was $88,000.
\nDepreciation expense was $19,000.
\n\u00a0
\nRequired: Prepare the operating activities section of the statement of cash flows for 2011 using the indirect method.
\n\u00a0
\n\u00a0
\n\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"
Answer each of the following 10 questions. Show all work. Each answer Is worth 10 points. 1.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 On March 1, 2011, Navy Corporation used excess…<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-147597","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/academicwritersbay.com\/answers\/wp-json\/wp\/v2\/posts\/147597","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/academicwritersbay.com\/answers\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/academicwritersbay.com\/answers\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/academicwritersbay.com\/answers\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/academicwritersbay.com\/answers\/wp-json\/wp\/v2\/comments?post=147597"}],"version-history":[{"count":0,"href":"https:\/\/academicwritersbay.com\/answers\/wp-json\/wp\/v2\/posts\/147597\/revisions"}],"wp:attachment":[{"href":"https:\/\/academicwritersbay.com\/answers\/wp-json\/wp\/v2\/media?parent=147597"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/academicwritersbay.com\/answers\/wp-json\/wp\/v2\/categories?post=147597"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/academicwritersbay.com\/answers\/wp-json\/wp\/v2\/tags?post=147597"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}