# correction need it

OnJanuary 1,

2013

, JWS Corporation issued \$

771,000

of 9% bonds, due in 8 years. The bonds were issued for \$

729,219

, and pay interest each July 1 and January 1. JWS uses the effective-interest method.
Prepare the company’s journal entries for

(a

)

the January 1 issuance,

(b)

the July 1 interest payment, and

(c)

the

D

A

ssume an effective-interest rate of

10

%.
(Round answers to 0 decimal places, e.g. \$38,548. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

N

o.

Account Titles and Explanation

Debit

Credit

(a)

(b)

(c)

Wasserman Corporation issued 10-year bonds on January 1, 2013. Costs associated with the bond issuance were \$191,800. Wasserman uses the straight-line method to amortize bond issue costs.
Prepare the December 31, 2013, entry to record 2013 bond issue cost amortization.
(Round answers to 0 decimal places, e.g. \$38,548. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Account Titles and Explanation

Debit

Credit

Samson Corporation issued a 5-year, \$

92,800

, zero-interest-bearing note to Brown Company on January 1, 2013, and received cash of \$

46,138

. The implicit interest rate is 15%.
Prepare Samson’s journal entries for (a) the January 1 issuance and (b) the December 31 recognition of interest.
(Round answers to 0 decimal places, e.g. \$38,548. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Account Titles and Explanation

Debit

Credit

(b)

No.

(a)

Foreman Company issued \$

756,000

of 10%, 20-year bonds on January 1, 2013, at 102. Interest is payable semiannually on July 1 and January 1. Foreman Company uses the effective-interest method of amortization for bond premium or discount. Assume an effective yield of 9.7705%.
Prepare the journal entries to record the following.
(Round answers to 0 decimal places, e.g. \$38,548. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

 (a) The issuance of the bonds. (b) The payment of interest and related amortization on July 1, 2013. (c) The accrual of interest and the related amortization on December 31, 2013.

No.

Account Titles and Explanation

Debit

Credit

(a)

(b)

(c)

On January 1, 20

12

, Osborn Company sold 11% bonds having a maturity value of \$

843,000

for \$

943,973

, which provides the bondholders with a 8% yield. The bonds are dated January 1,

2012

, and mature January 1, 2017, with interest payable December 31 of each year. Osborn Company allocates interest and unamortized discount or premium on the effective-interest basis.
(a) Prepare the journal entry at the date of the bond issuance.
(Round answers to 0 decimal places, e.g. \$38,548. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Account Titles and Explanation

Debit

Credit

(b) Prepare a schedule of interest expense and bond amortization for 2012–

2014

.
(Round answers to 0 decimal places, e.g. \$38,548.)

Schedule of

Interest Expen

se

Effective-Interest Method

Date

Cash

Paid

Interest

Expense

Amortized

Carrying
Amount of Bonds

1/1/12

\$

\$

\$

\$

12/31/12

12/31/13

12/31/14

(c) Prepare the journal entry to record the interest payment and the amortization for 2012.
(Round answers to 0 decimal places, e.g. \$38,548. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Account Titles and Explanation

Debit

Credit

(d)

Prepare the journal entry to record the interest payment and the amortization for 2014.
(Round answers to 0 decimal places, e.g. \$38,548. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Account Titles and Explanation

Debit

Credit

The following amortization and interest schedule reflects the issuance of 11-year bonds by Capulet Corporation on January 1,

2006

, and the subsequent interest payments and charges. The company’s year-end is December 31, and financial statements are prepared once yearly.

Amortization Schedule

Year

Cash

Interest

Amount
Unamortized

Carrying
Value

1/1/2006

\$

17,8

96

132,804

2006

\$

15,070

\$

15,936

17,030

133,670

2007

15,070

16,040

16,060

134,640

2008

15,070

16,157

14,973

135

,727

2009

15,070

16,287

13,756

136,944

2010

15,070

16,433

12,393

138,307

2011

15,070

16,597

10,

866

139

,834

2012

15,070

16,780

9,156

141,544

2013

15,070

16,985

7,

24

1

143,459

2014

15,070

17,215

5,096

145,604

2015

15,070

20,166

150,700

(a) Indicate whether the bonds were issued at a premium or a discount.
(b) Indicate whether the amortization schedule is based on the straight-line method or the effective-interest method.
(c) Determine the stated interest rate and the effective-interest rate.
(Round answers to 0 decimal places, e.g. \$38,548.)

%

 The stated rate % The effective rate

(d) On the basis of the schedule above, prepare the journal entry to record the issuance of the bonds on January 1, 2006.
(Round answers to 0 decimal places, e.g. \$38,548. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Account Titles and Explanation

Debit

Credit

(e)

On the basis of the schedule above, prepare the journal entry to reflect the bond transactions and accruals for 2006. (Interest is paid January 1.)
(Round answers to 0 decimal places, e.g. \$38,548. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Account Titles and Explanation

Debit

Credit

(f)

On the basis of the schedule above, prepare the journal entries to reflect the bond transactions and accruals for 2013. Capulet Corporation does not use reversing entries.
(Round answers to 0 decimal places, e.g. \$38,548. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date

Account Titles and Explanation

Debit

Credit

Jan. 1, 2013

Dec. 31, 2013

Novak Corporation is preparing its 2012 statement of cash flows, using the indirect method. Presented below is a list of items that may affect the statement. Using the code below, indicate how each item will affect Novak’s 2012 statement of cash flows.

Code Letter

Effect

A

Added to net income in the operating section

D

Deducted from net income in the operating section

R-I

Cash receipt in investing section

P-I

Cash payment in investing section

R-F

Cash receipt in financing section

P-F

Cash payment in financing section

N

Noncash investing and financing activity

(a)

Purchase of land and building.

(b)

Decrease in accounts receivable.

(c)

Issuance of stock.

(d)

Depreciation expense

.

(e)

Sale of land at book value.

(f)

Sale of land at a gain.

(g)

Payment of dividends.

(h)

Increase in accounts receivable.

(i)

Purchase of available-for-sale investment.

(j)

Increase in accounts payable.

(k)

Decrease in accounts payable.

(l)

Loan from bank by signing note.

(m)

Purchase of equipment using a note.

(n)

Increase in inventory.

(o)

Issuance of bonds.

(p)

Retirement of bonds payable.

(q)

Sale of equipment at a loss.

(r)

Purchase of treasury stock.

Bloom Corporation had the following 2012 income statement.

Sales

\$209,620

Cost of goods sold

118,970

Gross profit

90,650

Operating expenses (includes depreciation of \$24,940)

54,020

Net income

\$36,

63

0

The following accounts increased during 2012: Accounts Receivable \$11,030;

Inventory

\$10,310; Accounts Payable \$14,820. Prepare the cash flows from operating activities section of Bloom’s 2012 statement of cash flows using the direct method.

\$

\$

\$

 Bloom Corporation Statement of Cash Flows-Direct Method (Partial) For the Year 2012

=

(\$209,620 – \$11,030)

=

\$

198,590

Cash payment to suppliers

=

(\$118,970 + \$10,310 – \$14,820)

=

\$

114,460

Cash payment for operating expenses

=

(\$54,020 – \$24,940)

=

\$

29,080

Loveless Corporation had the following 2012 income statement.

Revenues

\$102,933

Expenses

58,460

\$

44,473

In 2012, Loveless had the following activity in selected accounts.

Accounts Receivable

1/1/12

21,440

Revenues

102,933

12/31/12

35,093

Write-offs

1,010

Collections

88,270

Allowance for Doubtful Accounts

Write-offs

1,010

1/1/12

1,248

1,762

12/31/12

2,000

(a) Prepare Loveless’s cash flows from operating activities section of the statement of cash flows using the direct method.

\$

\$

 Loveless Corporation Statement of Cash Flows-Direct Method (Partial) For the Year 2012

(b) Prepare Loveless’s cash flows from operating activities section of the statement of cash flows using the indirect method.
(If an amount reduces the account balance then enter with negative sign.)

\$

\$

 Loveless Corporation Statement of Cash Flows-Indirect Method (Partial) For the Year 2012

(a)

Cash paid for expenses

=

(\$58,460 – \$1,762)

=

\$

56,698

(b)

Increase in net accounts receivable

=

(\$33,093* – \$20,192**)

=

\$

12,901

* (\$35,093 – \$2,000) = \$33,093

** (\$21,440 – \$1,248) = \$20,192

Norman Company’s income statement for the year ended December 31, 2012, contained the following condensed information.

Service revenue

\$831,780

Operating expenses (excluding depreciation)

\$627,170

Depreciation expense

60,370

Loss on sale of equipment

20,580

708

,120

Income before income taxes

123

,660

Income tax expense

39,850

Net income

\$83,810

Norman’s balance sheet contained the following comparative data at December 31.

2012

2011

Accounts receivable

\$37,420

\$58,130

Accounts payable

46,480

32,000

Income taxes payable

3,710

8,060

(Accounts payable pertains to operating expenses.)
Prepare the operating activities section of the statement of cash flows using the direct method.

\$

\$

\$

NORMAN COMPANY
Statement of Cash Flows (Partial)
For the Year Ended December 31, 2012

Norman Company’s income statement for the year ended December 31, 2012, contained the following condensed information.

Service revenue

\$842,220

Operating expenses (excluding depreciation)

\$620,990

Depreciation expense

56,270

Loss on sale of equipment

23,980

701,240

Income before income taxes

140,980

Income tax expense

41,940

Net income

\$

99,040

Norman’s balance sheet contained the following comparative data at December 31.

2012

2011

Accounts receivable

Accounts payable

Income taxes payable

 \$37,810 \$59,540 45,130 31,690 4,200 8,960

(Accounts payable pertains to operating expenses.)
Prepare the operating activities section of the statement of cash flows using the indirect method.
(If an amount reduces the account balance then enter with negative sign.)

NORMAN COMPANY
Statement of Cash Flows (Partial)
For the Year Ended December 31, 2012

\$

\$

\$

Adjustments to reconcile net income to

Condensed financial data of Fairchild Company for 2012 and 2011 are presented below.

FAIRCHILD COMPANY
COMPARATIVE BALANCE SHEET
AS OF DECEMBER 31, 2012 AND 2011

2012

2011

Cash

\$1,805

\$1,097

Receivables

1,753

1,301

Inventory

1,594

1,919

Plant assets

1,901

1,696

Accumulated depreciation

(1,191

)

(1,167

)

Long-term investments (held-to-maturity)

1,306

1,475

\$7,168

\$6,321

Accounts payable

\$1,

205

\$794

Accrued liabilities

205

246

Bonds payable

1,410

1,637

Common stock

1,900

1,698

Retained earnings

2,448

1,

946

\$7,168

\$6,321

FAIRCHILD COMPANY
INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 2012

Sales

\$6,845

Cost of goods sold

4,708

Gross margin

2,137

924

Income from operations

1,213

Other revenues and gains

Gain on sale of investments

96

Income before tax

1,309

Income tax expense

534

Net income

\$

775

During the year, \$63 of common stock was issued in exchange for plant assets. No plant assets were sold in 2012. Cash dividends were \$273.
Prepare a statement of cash flows using the indirect method.
(If an amount reduces the account balance then enter with negative sign.)

FAIRCHILD COMPANY
Statement of Cash Flows
For the Year Ended December 31, 2012
(Indirect Method)

\$

Adjustments to reconcile net income to

\$

\$

\$

Depreciation expense

=

(\$1,191 – \$1,167)

=

\$24

Sale of held-to-maturity investments

=

[(\$1,475 – \$1,306) + \$96]

=

\$

265

Purchase of plant assets

=

[(\$1,901 – \$1,696) – \$63]

=

(\$142)

Issuance of capital stock

=

[(\$1,900 – \$1,698) – \$63]

=

\$139

Interest Expense

37,671

129

Discount

on B

Cash

37,800

Interest Expen

37,665

135

Interest Payab

le

37,800

41,781

Cash
943,973

Bonds Payable

843,000

100973

943973

92,730

75,518

17,212

926,761

92,730
Bonds Payable

74141

18,589

908,172

92,730

72654

20,076

888,095

Interest Expense
75,518
17,212
Cash
92,730
771,000
Interest Expen

72,654

20,076
Cash
92,730
Discount

Effective interest method

10
Interest Expense
12
Cash
132,804

Discount on B

17,896
Bonds Payable

150,000

Interest Expen

36,461

15,936
Discount on B
866
Interest Payab

15070

Interest Payab
15,070
Cash
15,070
Interest Expen

16,985

Discount on B

Discount on Bonds Payable

1,915

Interest Payab

15050

P-I

A

R-F

A

R-I

R-I

and D

P-F

D
P-I
A
D

1,766

R-F
N
D
R-F
P-F
R-I

and A

P-F

Cash Flows from Operating Activities

198,590
Cash

Cash Payment to Suppliers

114,460

Cash Payment for Operating Expenses

29,080

143,540

Cash Flows from Operating Activities

55,050

Cash Flows from Operating Activities
88,270

Cash Paid for Expenses

56,698
Cash Flows from Operating Activities

31,572

Cash Flows from Operating Activities

34,695

Net Income

44,473

Increase in Net Accounts Receivable

12,901
Cash Flows from Operating Activities
31,572
Cash Flows from Operating Activities

Cash Receipts from Customers

852,490

Cash Payments for Operating Expenses

Interest Expen

612,690

Taxes Paid

44,200

656,890

Cash Flows from Operating Activities

195,600

Cash Flows from Operating Activities
Net Income
99,040

36,549

Depreciation expense

56,270

Loss on Sale of Equipment

23,980

Decrease in Accounts Receivable

21,730

Increase in Accounts Payable

13,440

Decrease in Income Taxes Payable

-4,760

110,660

Cash Flows from Operating Activities

209,700

Cash Flows from Operating Activities
Net Income
Discount on Bonds Payable
775

Gain on Sale of Investments

-96

Increase in Receivables

-452

Decrease in Inventory

325

Depreciation Expense

24
Increase in Accounts Payable

411

Decrease in Accrued Liabilities

-41

171

1,854

Cash Flows from Operating Activities
946

Cash Flows from Investing Activities

Purchase of Plant Assets

-142

Sale of Held-to-Maturity Investments

265
Cash Flows from Investing Activities
123

Retirement of Bonds Payable

Interest Payable

-227

Issuance of Capital Stock

139

Payment of Cash Dividends

-273

Cash Flows from Financing Activities

-361

Net Increase in Cash

708

Cash at Beginning of Period

1097

Cash at End of Period

1805

Noncash Investing and Financing Activities

Issuance of Common Stock for Plant Assets

34,695
63
Cash

Debt Expenses

19,180

Debt Issue Co

19,180
Cash
46,138

Discount on Notes Payable

46,662

729,219

Note Payable

92,800

Interest expen

6,921

Discount on Notes Payble

6,921
Cash

771,120

Bonds Payable
756,000