Week 3 Assignment in WileyPLUS
P9-7A E10-5 E10-8 E10-13 E10-22 E10-24 BYP10-1 BYP10-2 P10-9A P10-13A
IFRS 10-4
E10-5 During the month of March, Olinger Company’s
employees earned wages of $67,800. Withholdings related to these wages were
$5,187 for Social Security (FICA), $7,945 for federal income tax,
$3,284 for state income tax, and $424 for union dues. The company
incurred no cost related to these earnings for federal unemployment tax but
incurred $742 for state unemployment tax.
Prepare the necessary March 31 journal entry to record salaries and
wages expense and salaries and wages payable. Assume that wages earned during
March will be paid during April. (Credit account titles are automatically indented
when amount is entered. Do not indent manually.)
Date Account
Titles and Explanation Debit Credit
Mar. 31
Prepare the entry to record the company’s payroll tax expense. (Credit account
titles are automatically indented when amount is entered. Do not indent
manually.)
Date Account Titles and Explanation Debit Credit
Mar. 31
E10-8 On August 1, 2014, Ortega Corporation issued
$813,600, 7%, 10-year bonds at face value. Interest is payable
annually on August 1. Ortega’s year-end is December 31.
Prepare journal entries to record the issuance of the bonds. (Credit account
titles are automatically indented when amount is entered. Do not indent
manually.)
Date Account
Titles and Explanation Debit Credit
Aug. 1
Prepare journal entries to record the accrual of interest on December
31, 2014. (Credit account titles are automatically indented
when amount is entered. Do not indent manually.)
Date Account
Titles and Explanation Debit Credit
Dec. 31
Prepare journal entries to record the payment of interest on August 1,
2015. (Credit account titles are automatically indented
when amount is entered. Do not indent manually.)
Date Account
Titles and Explanation Debit Credit
Aug. 1
E10-13 Romine Company issued
$530,700 of 9%, 10-year bonds on January 1, 2014, at face value.
Interest is payable annually on January 1.
Prepare the journal entries to record the issuance of the bonds. (Credit account
titles are automatically indented when amount is entered. Do not indent
manually.)
Date Account
Titles and Explanation Debit Credit
Jan. 1,
2014
Prepare the journal entries to record the accrual of interest on
December 31, 2014. (Credit account titles are automatically indented
when amount is entered. Do not indent manually.)
Date Account
Titles and Explanation Debit Credit
Dec. 31,
2014
Prepare the journal entries to record the payment of interest on January
1, 2015. (Credit account titles are automatically indented
when amount is entered. Do not indent manually.)
Date Account
Titles and Explanation Debit Credit
Jan. 1, 2015
Prepare the journal entries to record the redemption of the bonds at
maturity, assuming interest for the last interest period has been paid and
recorded. (Credit account titles are automatically indented
when amount is entered. Do not indent manually.)
Date Account
Titles and Explanation Debit Credit
Jan. 1,
2024
E10-22 Cole Corporation issued
$432,000, 7%, 25-year bonds on January 1, 2014, for $385,887. This
price resulted in an effective-interest rate of 8% on the bonds. Interest
is payable annually on January 1. Cole uses the effective-interest method to
amortize bond premium or discount.
Prepare the schedule using effective-interest method to amortize bond
premium or discount of Cole Corporation. (Round answers to 0
decimal places, e.g. 125.)
Interest Periods Interest to Be Paid Interest Expense to
Be Recorded Discount Amortization Unamortized Discount Bond Carrying Value
Issue date
1
2
Prepare the journal entries to record the issuance of the bonds. (Round answers
to 0 decimal places, e.g. 125. Credit account titles are automatically indented
when amount is entered. Do not indent manually.)
Date Account Titles and Explanation Debit Credit
Jan. 1,
2014
Prepare the journal entries to record the accrual of interest and the
discount amortization on December 31, 2014. (Round answers
to 0 decimal places, e.g. 125. Credit account titles are automatically indented
when amount is entered. Do not indent manually.)
Date Account Titles and Explanation Debit Credit
Dec. 31,
2014
Prepare the journal
entries to record the payment of interest on January 1, 2015. (Round answers
to 0 decimal places, e.g. 125. Credit account titles are automatically indented
when amount is entered. Do not indent manually.)
Date Account Titles and Explanation Debit Credit
Jan. 1,
2015
E10-24 Nance Co. receives $306,800 when it issues a
$306,800, 8%, mortgage note payable to finance the construction of a
building at December 31, 2014. The terms provide for semiannual installment
payments of $17,742 on June 30 and December 31.
Prepare the schedule using effective-interest method to amortize bond
premium or discount of Nance Co. (Round answers to 0 decimal places, e.g. 125.)
Semiannual
Interest Period Cash Payment Interest Expense Reduction of Principal Principal Balance
Issue date
6/30/15
12/31/15
Prepare the journal entries to record the mortgage loan. (Round answers
to 0 decimal places, e.g. 125. Credit account titles are automatically indented
when amount is entered. Do not indent manually.)
Date Account
Titles and Explanation Debit Credit
Dec. 31,
2014
Prepare the journal entries to record the first two installment
payments. (Round answers to 0 decimal places, e.g. 125. Credit
account titles are automatically indented when amount is entered. Do not indent
manually.)
Date Account Titles and Explanation Debit Credit
First
Installment Payment
June 30,
2015
Second
Installment Payment
Dec. 31,
2015
Broadening Your Perspective 10-1
The financial statements of Tootsie Roll are
presented below.
Answer the following questions.
What were Tootsie Roll’s total current liabilities at December 31, 2011? (Enter amount
in thousands.
Current
liabilities as at December 31, 2011
What was the increase/decrease in Tootsie Roll’s total current
liabilities from the prior year? (Enter amount in thousands.)
Change in
current liabilities
How much were the accounts payable at December 31, 2011? (Enter amount
in thousands.)
Accounts
payable
BYP10-2 The Hershey Company
Broadening Your Perspective 10-2
The financial statements of The Hershey
Company and Tootsie Roll are
presented below.
NOTE 6—OTHER INCOME (EXPENSE), NET: Other income (expense), net is
comprised of the following:
2011 2010 2009
Interest
and dividend income $1,087 $879 $1,439
Gains
(losses) on trading securities relating to deferred compensation plans293,3644,524
Interest
expense (121) (142) (243)
Impairment
of equity method investment. _ _ (4,400)
Equity
method investment loss (194) (342) (233)
Foreign
exchange gains (losses) 2,098 4,090 951
Capital
gains (losses) (277) (28) (38)
Miscellaneous,
net 274 537 100
$2,946 $8,358 $2,100
As of December 31, 2009, management determined that the carrying value
of an equity method investment was impaired as a result of accumulated losses
from operations and review of future expectations. The Company recorded a
pre-tax impairment charge of $4,400 resulting in an adjusted carrying value of
$4,961 as of December 31, 2009. The fair value was primarily assessed using the
present value of estimated future cash flows.
Based on the information contained in these financial statements,
compute the current ratio for 2011 for each company. (Round answers
to 2 decimal places, e.g. 15.25.)
Hershey Tootsie
Roll
Current
ratio: 1 :1
Based on the information contained in these financial statements,
compute the following 2011 ratios for each company. (Round answers
to 1 decimal places, e.g. 15.2% or 15.2 times.)
(1) Debt
to assets.
(2) Times
interest earned. (Hershey’s total interest expense for 2011 was $94,780,000.
See Tootsie Roll’s Note 6 for its interest expense.)
Hershey Tootsie
Roll
Debt to
assets % %
Times
interest earned times times
P9-7A In recent years, Farr Company has purchased three
machines. Because of frequent employee turnover in the accounting department, a
different accountant was in charge of selecting the depreciation method for
each machine, and various methods have been used. Information concerning the
machines is summarized in the table below.
Machine Acquired Cost Salvage Value Useful Life(in years) Depreciation Method
1 Jan. 1, 2012 $128,000 $34,400 9 Straight-line
2 July 1, 2013 81,000 11,600 5 Declining-balance
3 Nov. 1, 2013 79,890 7,290 7 Units-of-activity
For the declining-balance method, Farr Company uses the double-declining
rate. For the units-of-activity method, total machine hours are expected to
be 33,000. Actual hours of use in the first 3 years were: 2013, 750;
2014, 3,510; and 2015, 5,240.
Compute the amount of accumulated depreciation on each machine at
December 31, 2015.
MACHINE 1 MACHINE
2 MACHINE 3
Accumulated
Depreciation at December 31
If machine 2 was purchased on April 1 instead of July 1, what would be
the depreciation expense for this machine in 2013? In 2014?
2013 2014
Depreciation
Expense
P10-9A Wempe Co. sold $3,367,000, 8%, 10-year bonds on January
1, 2014. The bonds were dated January 1, 2014, and pay interest on January 1.
The company uses straight-line amortization on bond premiums and discounts.
Financial statements are prepared annually.
Prepare the journal entries to record the issuance of the bonds assuming
they sold at: (1) 105 and (2) 96. (Credit account titles are automatically
indented when amount is entered. Do not indent manually.)
No. Date
Account Titles and Explanation Debit Credit
1. 1/1/14
2. 1/1/14
Prepare amortization tables for issuance of the bonds sold
at 105 for the first three interest payments.
|
Annual
Interest Periods |
Interest
to
Be Paid |
Interest
Expense
to Be Recorded |
Premium
Amortization |
Unamortized
Premium |
Bond
Carrying Value |
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|
Issue
date
|
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|
1
|
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|
2
|
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|
3
|
Prepare amortization tables for issuance of the bonds sold
at 96 for the first three interest payments.
|
Annual
Interest Periods |
Interest
to
Be Paid |
Interest
Expense
to Be Recorded |
Premium
Amortization |
Unamortized
Premium |
Bond
Carrying Value |
|||||
|
Issue
date
|
||||||||||
|
1
|
||||||||||
|
2
|
||||||||||
|
3
|
Prepare the journal entries to record interest expense for 2014 under
both of the bond issuances assuming they sold at: (1) 105 and
(2) 96. (Credit
account titles are automatically indented when amount is entered. Do not indent
manually.)
No. Date Account Titles and Explanation Debit Credit
1. 12/31/14
2. 12/31/14
Show the long-term liabilities balance sheet presentation for issuance
of the bonds sold at 105 at December 31, 2014.
WEMPE Co.
Balance Sheet (Partial)
December 31, 2014
Balance Sheet (Partial)
December 31, 2014
Show the long-term liabilities balance sheet presentation for issuance
of the bonds sold at 96 at December 31, 2014.
WEMPE Co.
Balance Sheet (Partial)
December 31, 2014
Balance Sheet (Partial)
December 31, 2014
P10-13A Grace Herron has just approached a venture capitalist for
financing for her new business venture, the development of a local ski hill. On
July 1, 2013, Grace was loaned $198,000 at an annual interest rate
of 7%. The loan is repayable over 5 years in annual installments
of $48,290, principal and interest, due each June 30. The first payment is due
June 30, 2014. Grace uses the effective-interest method for amortizing debt.
Her ski hill company’s year-end will be June 30.
Prepare an amortization schedule for the 5 years, 2013–2018. (Round answers to 0 decimal places, e.g.
125.)
Period Cash Payment Interest Expense Principal Reduction Balance
July 1,
2013
June 30,
2014
June 30,
2015
June 30,
2016
June 30,
2017
June 30,
2018
*
* Amount may be off due to rounding.
Prepare all journal entries for Grace Herron for the first 2 fiscal
years ended June 30, 2014, and June 30, 2015. (Round answers to 0 decimal places, e.g.
125. Credit account titles are automatically indented when amount is entered.
Do not indent manually.)
Date Account Titles and Explanation Debit Credit
July 1/13
June
30/14
June
30/15
Show the balance sheet presentation of the note payable as of June 30,
2015. (Hint: Be sure to distinguish between the current and long-term
portions of the note.) (Round
answers to 0 decimal places, e.g. 125.)
GRACE HERRON
Balance Sheet (Partial)
June 30, 2015
Balance Sheet (Partial)
June 30, 2015
IFRS 10-4 Ratzlaff Company issues €2 million, 10-year, 8%
bonds at 97, with interest payable on July 1 and January 1.
Prepare the journal entry to record the sale of these bonds on January
1, 2014. (Credit account titles are automatically indented
when the amount is entered. Do not indent manually.)
Date Account
Titles and Explanation Debit Credit
Jan. 1
Assuming instead that the above bonds sold for 104, prepare the journal
entry to record the sale of these bonds on January 1, 2014. (Credit account
titles are automatically indented when the amount is entered. Do not indent
manually.)
Date Account
Titles and Explanation Debit Credit
Jan. 1
TUTORIAL PREVIEW
2014
(a) Aug. 1 Cash................................................................. 813,600
Bonds
Payable.................................... 813,600
(b) Dec. 31 Interest
Expense.......................................... 23,730
Interest
Payable ($813,600 X 7% X 5/12) ................. 23,730
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