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Licemer1 [7]
2 years ago
11

On January 1, 2021, White Water issues $570,000 of 7% bonds, due in 10 years, with interest payable annually on December 31 each

year. Assuming the market interest rate on the issue date is 7%, the bonds will issue at $570,000. Record the bond issue on January 1, 2021, and the first two interest payments on December 31, 2021, and December 31, 2022.
Required:
1. Complete the first three rows of an amortization schedule.
Date Cash Paid Interest Expense Increase in Carrying Value Carrying Value
01/01/2021
12/31/2021
12/31/2022
2. Record the bond issue on January 1, 2021, and the first two interest payments on December 31, 2021, and December 31, 2022.
Business
1 answer:
monitta2 years ago
6 0

Answer:

White Water

1. Schedule

Date            Cash Paid     Interest Expense   Increase in Carrying value  FV

01/01/2021 0                                                                           $570,000.00

12/31/2021    $39,900.0       $39,900.00     0                       $570,000.00

12/31/2022  $39,900.0       $39,900.00     0                       $570,000.00

2. January 1, 2021:

Debit Cash $570,000

Credit 7% Bonds Payable $570,000

To record the issue of bonds for cash.

December 31, 2021:

Debit Interest Expense $39,900

Credit Cash $39,900

To record the first interest payment.

December 31, 2022:

Debit Interest Expense $39,900

Credit Cash $39,900

To record the second interest payment.

Explanation:

a) Data and Calculations:

Face value of 7% bonds = $570,000

Proceeds from the bond issue = $570,000

No premiums, no discounts on bonds.

Coupon interest rate = 7%

Market interest rate = 7%

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Answer:

The investment in Son Corp. should be reported on Pops' December 31, 2018 balance sheet at $1,920,000 ($10 * 192,000).

Explanation:

There is no indication that the fair price of the shares of Son Corp. has changed from its original cost of $10.  Therefore, the investment in Son Corp. can only be reported on the balance sheet of Pops' at the cost price on acquisition.  But, assuming that the price has fluctuated over the period, the investment would have been valued at the current market price multiplied by the number of shares.

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3 years ago
Pharma Company produces various medicines in capsule form. At the beginning of the month of March, it had 5,000 units that were
levacccp [35]

Answer:

Pharma Company

1. Weighted Average method:

Weighted Average Method:

Equivalent units of production:

Started and completed this period 55,000

Ending WIP                                        10,000

Total equivalent unit produced =   65,000

Total cost of production:

Beginning WIP =  $150,000

Current period     600,000

Total cost =        $750,000

Cost per equivalent unit = $11.54 ($750,000/65,000)

Cost assigned to:

Units completed = 55,000 * $11.5385 = $634,617

Ending WIP =         10,000 * $11.5385 =     115,385

Total cost of production =                     $750,002

Cost Reconciliation:

Beginning WIP = $150,000

Completed units  600,000

Total costs =      $750,000

Ending WIP =         115,385

Cost assigned to

  production        634,617

2. FIFO method:

Explanation:

a) Data and Calculations:

                                   Units    Completion %         Cost

Beginning WIP =       5,000       2,000 (40%)     $150,000

Current completion (WIP)         3,000 (60%)

Completed            55,000     55,000 (100%)     600,000

Ending WIP           20,000      10,000 (50%)

Weighted Average Method:

Equivalent units of production:

Beginning WIP                                     3,000

Started and completed this period 55,000

Ending WIP                                        10,000

Total equivalent unit produced =   68,000

Total cost of production:

Current period     600,000

Cost per equivalent unit = $8.82 ($600,000/68,000)

Cost assigned to:

Beginning WIP =  

Units completed

Beginning WIP =          $150,000

=    3,000 * $8.82 =       $26,460

= 55,000 * $8.82 =       485,100

Ending WIP:

= 10,000 * $8.82 =         88,200

Total cost of production = $749,760

Cost Reconciliation:

Beginning WIP (40%) = $150,000

WIP completed (60%)      26,460

Completed units            485,100

Ending WIP =                   88,200

Total cost =                 $749,760

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Explanation:

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