2024 The Jeff Co issued $100,000, six year bonds, carrying a coupon rate of ten percent (10%), interest payable annually on December 31 each year. Assignment Help
Prepare journal entries for the following FOUR events use straight line amortization 01 01 07 The Jeff Co 2023
Prepare journal entries for the following FOUR events (use straight-line amortization). 01/01/07 The Jeff Co issued $100,000, six year bonds, carrying a coupon rate of ten percent (10%), interest payable annually on December 31 each year. Assume that the net proceeds from the issue of the bond were $112,000. 12/31/07 Recognize the first interest payment. 12/31/08 Recognize the second interest payment. 01/01/09 Redeem (ie, buy back) twenty percent (20%) of the bonds outstanding for $18,500. II. Is it better for a company to issue bonds at a discount or at a premium? Explain your answer. III. Use the data from Problem V. For the most recent year (2008) calculate the following ratios. Current ratio Inventory turnover Rate of return on total assets Accounts receivable turnover (assume all sales are on account) Debt ratio IV. Prepare journal entries for ABC Co’s following events. 05/12/08 Received charter authorizing ABC Co to issue 20,000 shares of common stock at a par value of $2 per share. 06/03/08 Issued 8,000 shares of stock, receiving $40,000. 06/04/08 Paid the law firm of Lobello for their services to help organize the company by sending them two thousand shares of stock. 11/15/08 Declared a cash dividend of $2 per share, payable on 01/15/09, to holders of record as of 12/15/08. 12/15/08 Make the appropriate entry. 12/31/08 Make any necessary adjusting entry. 01/15/09 Make the appropriate entry. 06/12/09 Declared a ten percent (10%) stock dividend, payable on 7/15/09 (ignore the date of record for this event). The market value of the stock is $15 per share. 07/15/09 Make the appropriate entry. 08/15/09 Declared a two-for-one stock split. The market value of the stock is $15 per share. 09/15/09 Declared and paid a cash dividend of $2 per share (pretend this happens all in one day). 10/01/09 Purchased 1,000 shares of treasury stock for a total price of $30,000. 10/15/09 Declared and paid a cash dividend of $2 per share. 11/15/09 Reissued 400 shares of treasury stock at $32 each. 12/15/09 Reissued the remaining treasury stock at $10 per share. V. Required Prepare a cash flow statement for 2008 with clear documentation (ie, show your work) for each section of the statement. Use either the direct or the indirect method. Additional information There were no write-offs of delinquent accounts during the year. A building was sold during the year for $80. Comparative balance sheets and an income statement for 2008 are presented below for NLeash Company. NLeash Company Comparative Balance Sheets and Income Statement For the Years 2007 and 2008 Balance Sheets 2008 2007 Assets Cash 200 185 Accounts Receivable 350 290 Allowance for bad debts (45) (25) Inventory 260 135 Land 600 500 Buildings 295 250 Accumulated Depreciation- Buildings (65) (80) Total Assets 1,595 1,255 Liabilities & Owner’s Equity Liabilities Accounts Payable 400 305 Wages Payable 70 67 Dividends Payable 30 47 Taxes Payable 50 46 Long-term bonds payable 100 100 Discount on bonds payable (8) (10) Total liabilities 642 555 Owner’s Equity Common Stock 650 500 Retained Earnings 303 200 Total Owner’s Equity 953 700 Total Liabilities & Owner’s Equity 1,595 1,255 Income Statement (2008) Revenue 1,200 Cost of Goods Sold 750 Gross Margin 450 Operating Expenses Wage expense 200 Depreciation expense 30 Bad debt expense 20 Bond interest expense 10 Total operating expenses 260 Net Operating Income 190 Gain on sale of building 40 Net income before tax 230 Income tax 69 Net income after tax 161 ==================================================================== ANSWER SHEET (16 points) 01/01/07 12/31/07 12/31/08 01/01/09 II. (9 points) III. (15 points) Current ratio Inventory turnover Rate of return on total assets A/R turnover (assume all sales on account) Debt ratio IV. (30 point) Account Title Debit Credit 05/12/08 06/03/08 06/04/08 11/15/08 12/15/08 12/31/08 01/15/09 06/12/09 07/15/09 08/15/09 09/15/09 10/01/09 10/15/09 11/15/09 12/15/09 V. (30 points)