Intermediate Accounting II ACCT311, Section 4082 Exam #1 (Take Home) Chapters 13, 14, 15 & 16 Due July 17th, 2013 AT THE BEGINNING OF CLASS #1 Merkley Company’s balance sheet shows: Common stock, $20 par $3,000,000 Paid in capital in excess of par 1,050,000 Retained earnings 750,000 Instructions Record the following transactions by the cost method. (a) Bought 6,000 shares of its common stock at $29 a share. (b) Sold 3,000 treasury shares at $30 a share. (c) Sold 1,500 shares of treasury stock at $26 a share.
#2 On June 1, 2011, Moses Bottle Company sold $1,000,000 in long term bonds for $877,600. The bonds will mature in 10 years and have a stated interest rate of 8% and a yield rate of 10%. The bonds pay interest annually on May 31 of each year. The bonds are to be accounted for under the effective interest method.
Instructions (a) Construct a bond amortization table for this problem to indicate the amount of interest expense and discount amortization at each May 31. Include only the first four years. Make sure all columns and rows are properly labeled. (Round to the nearest dollar.) (b) The sales price of $877,600 was determined from present value tables. Specifically explain how one would determine the price using present value tables. (c) Assuming that interest and discount amortization are recorded each May 31, prepare the adjusting entry to be made on December 31, 2013. (Round to the nearest dollar.)
Attachments:
DOC011.pdf