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.
