MBA-560 Module 4

Please see the attachment for full problem description.

Effective interest amortization for a bond premium
On January 1, 2012, Crume Incorporated issued bonds with a face value of $100,000 a stated rate of interest of 9 percent, and a five year term to maturity. Interest is payable in cash on December 31 of each year. The effective rate of interest was 8 percent at the time the bonds were issued. The bonds sold for $103,993. Crume used the effective interest rate method to amortize bond discount.

Cash Payment Interest Expense Premium Amortization Carrying Value
January 1, 2012 103,993
December 31, 2012 9,000 8,319 681 103,312
December 31, 2013 ? ? ? ?
December 31, 2014 ? ? ? ?
December 31, 2015 ? ? ? ?
December 31, 2016 ? ? ? ?
Total 45,000 41,007 3,993

b. What time(s) in the table would appear on the 2014 balance sheet?

c. What time(s) in the table would appear on the 2014 income statement?

d. What time(s) in the table would appear on the 2014 statement of cash flows?

Problem 8-19

midwest corp completed the following tranactions in 2012 the first year or operation

1. issued 20,000 shares of 10$ par common stock at par.

2.issued 2,000 shares of 30$ stated value preferred stock at 32$ per share

3.purchased 500 shares of common stock as tresuary stock for 15$ per share.

4.declared a five percent dividend on preferrred stock.

5.sold 300 shares of tresuary stock for 18$ per share.

6.paid the cash dividend on preferred stock that was declared in event four

7. earned cash service revenue of 75,000 and incurred cash operating expenses of 42,000

8.appropriated 6,000 of retained earnings

required

a. organize the transaction in accounts under an accounting equation

b.prepare the stockholders equity section of the balance sheer as of december 31 2012