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sertanlavr [38]
3 years ago
13

On January 1, a company issues bonds dated January 1 with a par value of $250,000. The bonds mature in 5 years. The contract rat

e is 9%, and interest is paid semiannually on June 30 and December 31. The market rate is 8% and the bonds are sold for $260,148. The journal entry to record the issuance of the bond is: Multiple Choice Debit Cash $250,000; debit Premium on Bonds Payable $10,148; credit Bonds Payable $260,148. Debit Cash $260,148; credit Premium on Bonds Payable $10,148; credit Bonds Payable $250,000. Debit Bonds Payable $250,000; debit Bond Interest Expense $10,148; credit Cash $260,148. Debit Cash $260,148; credit Bonds Payable $260,148. Debit Cash $260,148; credit Discount on Bonds Payable $10,148; credit Bonds Payable $250,000.
Business
1 answer:
lutik1710 [3]3 years ago
8 0

Answer:

Debit Cash $260,148; credit Premium on Bonds Payable $10,148; credit Bonds Payable $250,000

Explanation:

The journal entry is shown below:

Cash $260,148

       To Bond payable $250,000

       To Premium on bonds payable $10,148

(Being the issuance of the bond is recorded)

While recording this we debited the cash as cash is received and credited the bond payable as it increased the liabilities and the difference is credited to the premium on bonds payable i.e $10,148

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Segmented Income Statement Gorman Nurseries Inc. grows poinsettias and fruit trees in a green house/nursery operation. The follo
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Answer:

Poinsettias records a loss of $118,125            

Fruit Trees records a profit of $92,325        

The company therefore records an overall $25,800 loss

NB: See the workings below see the assumption mad to allocate common expenses since none is given in the question.

Explanation:

Variable costing income statement is a type of income statement that records variable cost separately first to determine the contribution margin and thereafter record the fixed cost which is further split into direct fixed expenses and common expenses.

The segmented income statement for Gorman Nurseries for the coming year can therefore be presented as follows:

Gorman Nurseries Inc.

Segmented Income Statement

For the coming year

Particulars                        Poinsettias ($)     Fruit Trees ($)    Total ($)

Sales                                         970,000           3,100,000        4,070,000

Variable COGS                       (460,000)         (1,630,000)     (2,090,000)

Variable selling exp. (w1.)  <u>       (38,800)  </u>     <u>     (124,000) </u>    <u>    (162,800)  </u>

Contribution margin                 471,200            1,346,000      1,817,200

Direct fixed overhead             (160,000)          (200,000)       (360,000)

Direct fixed S $ Admn exp.  <u>   (146,000) </u>     <u>       (87,000) </u>    <u>    (233,000) </u>

Segment margin                       165,200           1,059,000      1,224,200

Common fixed overh. (w2a)     (176,077)           (623,923)     (800,000)

Common S $ Admn ex (w2b)  <u> (107,248)  </u>      <u>   (342,752) </u>    <u>  (450,000) </u>

Segment Net Income (loss)   <u> (118,125)  </u>       <u>       92,325 </u>    <u>    (25,800) </u>

Workings:

w1. Variable selling expenses = Sales * Commission percentage

Poinsettias = $970,000 * 4% = $38,8000

Fruit Trees = $3,100,000 * 4% = $124,000

w2. Allocation of common expenses using the following assuptions:

a) Use cost of goods sold (COGS) to allocate Common fixed overhead:

Poinsettias = (460,000 / 2,090,000) * $800,000 = $176,077

Fruit Trees = (1,630,000 / 2,090,000) * $800,000 = $623,923

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Poinsettias = (970,000 / 4,070,000) * $450,000 = $176,077

Fruit Trees = (3,100,000 / 4,070,000) * $450,000 = $623,923

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