ACCT 221 Week 2 Problems

Offered Price: $ 15.00 Posted on: 09/01/2016 01:36 AM Due on: 09/01/2016
Question # 00375686 Subject Accounting Topic Accounting Tutorials: 1
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1. There are three problems this week. Click on the tabs at the bottom of the spreadsheet to access each one.

On 1/1/2015, Starburst Company issued 10-year bonds with a face value of $500,000 at 102. The bonds carry a stated interest rate of 7%, with
interest payable semi-annually on January 1 and July 1. Starburst uses the straight-line method of amortizing bond premium or discount.

(a) Prepare the journal entry to record the issuance of the bonds
(b) Prepare the journal entry to record payment of interest on July 1, 2015.
(c) Prepare the adjusting entry to record the accrual of interest on December 31, 2015
(d) Prepare the balance sheet presentation for the bond on 12/31/2015
(e) Prepare the balance sheet presentation for the bond on 12/31/2016
2. Black, Inc. management occasionally invests idle cash in stocks which are not intended to be held long term.
Management treats these investments as trading securities.

1-5-2015 Purchased 2,500 shares of Eversilver Corporation common stock which constitutes less than 10% of the outstanding
shares of the company for $54.00 per share cash plus a total broker commission of $200.
6-15-2015 Received a cash dividend of $1.50 per share.
12-15-2015 Received a cash dividend of $1.60 per share.
12-31-2015 The market value of the stock is $60 per share as of year end and a commission of $200 would apply to sell the shares.
1-22-2016 Sold 1,000 shares of Eversilver Corporation common stock for $62 per share minus $120 commission.


Instructions: Prepare Journal entries for the above transactions.
3. On 1/1/2015, White Corporation acquired 50,000 shares of the outstanding common stock of Gold Company for $12.00 per share.
The following events occurred during the year.

15-06-2015 Gold declared and paid $0.50 per share cash dividend.
10-12-2015 Gold declared and paid $0.55 per share cash dividend.
31-12-2015 Gold reported net income for the year of $325,000. The market price of Gold common stock was $25 per share on the last day of the year.

Instructions:
(a) Prepare the journal entries for White in 2015, assuming that the purchase of Gold stock constituted less than 10% of Gold's outstanding shares.
White treats this investment as available-for-sale securities

(b) Prepare the journal entries for White in 2015, assuming that the purchase of Gold stock constituted 30% of Gold's outstanding shares.
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  1. ACCT 221 Week 2 Problems

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