Saint MBA560 module 4 homework
Question # 00020250
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Updated on: 07/19/2014 02:55 AM Due on: 07/30/2014
Exercise 7-38 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.
Required
a. Prepare an amortization table as shown below 7-38 template on the excel sheet:
b. What item(s) in the table would appear on the 2014 balance sheet?
c. What item(s) in the table would appear on the 2014 income statement?
d. What item(s) in the table would appear on the 2014 statement of cash flows?
P8-19
Midwest Corp completed the following transactions in 2012, the first year of 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 treasury stock for $15 per share.
4. Declared a five percent dividend on preferred stock.
5. Sold 300 shares of treasury 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 sheet as of December 31, 2012.
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.
Required
a. Prepare an amortization table as shown below 7-38 template on the excel sheet:
b. What item(s) in the table would appear on the 2014 balance sheet?
c. What item(s) in the table would appear on the 2014 income statement?
d. What item(s) in the table would appear on the 2014 statement of cash flows?
P8-19
Midwest Corp completed the following transactions in 2012, the first year of 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 treasury stock for $15 per share.
4. Declared a five percent dividend on preferred stock.
5. Sold 300 shares of treasury 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 sheet as of December 31, 2012.
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Solution: Saint MBA560 module 4 homework