Accounting Project

I need help with parts 2 and 3 for this project.

ACCT 2200

Part I
On January 1, 2011, a company sells a 3-year bond with a face value of $48,000 and a stated interest rate of 8%. Because the market interest rate is 6%, the company receives $50,566 for the bond. The company uses the effective interest method of amortization. Fill in Table A. Fill in Table B assuming the market interest rate is 10%, and the company received only $45,613 for the bond and the company uses the effective-interest method.

Table A

Period
ended

Cash
paid

Interest
expense

Amortized
premium

Bonds
payable

Premium on
bonds payable

Carrying
value

01/01/11

12/31/11

12/31/12

12/31/13

Table B

Period
ended

Cash
paid

Interest
expense

Amortized
discount

Bonds
payable

Discount on
bonds payable

Carrying
value

01/01/11

12/31/11

12/31/12

12/31/13

Part II
On January 1, 2010, ABC issues $40 million of 8% bonds, due in 15 years, with interest payable semi-annually on June 30 and December 31 each year.

Requirement 1:

If the market rate is 7%, will the bonds issue at face amount, a discount, or a premium? Calculate the issue price.

Requirement 2:

If the market rate is 8%, will the bonds issue at face amount, a discount, or a premium? Calculate the issue price.

Requirement 3:

If the market rate is 9%, will the bonds issue at face amount, a discount, or a premium? Calculate the issue price.

Part III

April 1, 2009—XYZ Corp. today announced that its Board of Directors has declared a cash dividend of $1.18 per share on its 505,500 outstanding preferred shares. The dividend will be paid on May 31, 2009, to preferred shareholders of record at the close of business on May 26, 2009. The Board of Directors also announced a 100% common stock dividend will occur on May 31, 2009, on its 1,010,000 outstanding $0.01 par common stock for stockholders of record on May 26, 2009.

Requirement 1:

Prepare any journal entries that XYZ Corp. should make as the result of information in the preceding report.

Part IV
AAA Inc. is developing its annual financial statements at December 31, 2011. The statements are complete except for the statement of cash flows. The completed comparative balance sheets and income statements are summarized.

2011

2010

Balance Sheet

Cash

50,200

73,000

Accounts receivable

80,100

70,200

Merchandise inventory

60,900

66,000

Property and equipment

110,600

60,100

Less: Accumulated depreciation

(29,400

)

(14,100

)

272,400

255,200

Accounts payable

$

10,100

$

12,200

Wages payable

2,100

1,000

Notes payable, long-term

50,900

60,300

Contributed capital

100,100

80,100

Retained earnings

109,200

101,600

$

272,400

$

255,200

Income Statement

Sales

$

200,900

Cost of good sold

110,200

Depreciation expense

15,300

Other expenses

50,400

Net income

$

25,000

Additional Data:

a.

Bought equipment for cash, $50,500.

b.

Paid $9,400 on long-term note payable.

c.

Issued new shares of stock for $20,000 cash.

d.

Cash dividends of $17,400 were declared and paid.

e.

Accounts payable are exclusively related to inventory purchases on credit.

f.

Tax expense ($4,000) and interest expense ($3,000) were paid in full at the end of both years and are included in other expenses.

(a)

Prepare the statement of cash flows for 2011 using the indirect method.

Part V
The financial information below presents operating revenue and expenses for 2011 as well as the starting and ending balances for relevant asset and liability accounts that changed during the year:

Sales revenue

$

909,972

Depreciation expense

$

3,226

Cost of goods sold

445,623

Selling, general & administrative expenses

91,386

Interest expense

12,492

Income tax expense

143,136

Accounts receivable 12/31/2010

65,325

Accounts receivable 12/31/2011

67,900

Accounts payable 12/31/2010

16,590

Accounts payable 12/31/2011

17,321

Prepaid expenses 12/31/2010

4,147

Prepaid expenses 12/31/2011

3,865

Inventory 12/31/2010

7,872

Inventory 12/31/2011

6,531

Required:
Calculate the net cash flow from operating activities in 2011 using the direct method.

Still stressed with your coursework?
Get quality coursework help from an expert!