(1) Journalize transactions 1 14 The corporations tax rate is 40 Transactions occurring in 2018 but not considered in the trial balance above or in the current net income of 79,000 are as follows On July 1st, the corporation entered into a lease agreement for a machine that qualifies as a capital lease The lease calls for annual lease payments of $26,269 over a six year lease term, with the first payment at July 1st, the lease's inception The interest rate is 5 (Round your answer to the nearest whole dollar) On July 1st, the corporation sold a $15,000, 5 year bond with a stated rate of 8 The effective yield on the bonds is 10 Interest on the bond is paid semiannually on January 1st and July 1st The company uses the effective interest method to amortize any bond discount or premium (Round your answer to the nearest whole dollar) On September 20th, the company sold its shares in Hobokin Company, resulting in a loss of $1,000 (pretax) See the portfolio tables below When its president died, on October 8th, the corporation realized $110,000 from an insurance policy The cash surrender value of this policy had been carried on the books as an investment in the amount of $10,000 (the gain is nontaxable) On November 1st, Tri Star, Inc filed a suit against the corporation, seeking damages for patent infringement Legal counsel believes that it is probable that the company will lose the lawsuit to Tri Star and it is reasonably estimable that the corporation will have to pay Tri Star $10,000 On November 15th, the corporation disposed of its wholesale division at a loss of $5,000 before taxes The wholesale operations were shut down at the beginning of the year This transaction meets the criteria for discontinued operations The assets associated with this sale are being classified as Assets Held For Sale The corporation decided to change its method of inventory pricing from average cost to the FIFO method The effect of this change on prior years is to increase 2016 income by $60,000 and decrease 2017 income by $20,000 before taxes The FIFO method has been used for 2018 The tax rate on these items is 40 On December 18th, the corporation purchased 2,000 shares of its own common stock at $20 a share On December 20th, the corporation paid off the current portion of the note payable along with the $15,000 in interest that had been accrued 2 10 December 31st, interest on the lease has accrued December 31st, interest on the bonds has accrued The companys products carry a one year warranty against manufacturers defects Warranty costs are expected to be 1 of net sales At the beginning of 2017, the corporation purchased a piece of equipment for $54,000, salvage value of $9,000, and that had a useful life of 6 years The bookkeeper used straight line depreciation for 2017 and 2018 However, in 2018, the bookkeeper failed to deduct the salvage value in computing the depreciation base (an error was made) The journal entry for this year's depreciation has already been made, but a correcting entry is required to fix the mistake Adjust the Trading securities and AFS securities to their respective fair values See the portfolio tables below To help you along with this problem, please note the following The Hobokin Company AFS Securities had an unrealized loss of 3,000 reported at the end of 2017 that was aggregated into Accumulated Other Comprehensive Income on the balance sheet When the Hobokin shares are sold on September 20, 2018 (see transaction 3), the unrealized loss has to be reversed, in order to avoid double counting the loss (unrealized through AOCI and realized through RE) on the balance sheet Here is the entry to show the reversal Fair Value Adjustment AFS 3,000 Accumulated Other Comprehensive Income 3,000 Now, you are ready to prepare the 2018 adjusting entry for AFS securities (The one for Trading securities is less complicated )

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(1) Journalize transactions 1 14. The corporations tax rate is 40%. Transactions occurring in 2018 but not considered in the trial balance above or in

(1) Journalize transactions 1 14. The corporations tax rate is 40%.

Transactions occurring in 2018 but not considered in the trial balance above or in the current net income of 79,000 are as follows:

On July 1st, the corporation entered into a lease agreement for a machine that qualifies as a capital lease. The lease calls for annual lease payments of $26,269 over a six-year lease term, with the first payment at July 1st, the lease's inception. The interest rate is 5%. *(Round your answer to the nearest whole dollar).
On July 1st, the corporation sold a $15,000, 5-year bond with a stated rate of 8%. The effective yield on the bonds is 10%. Interest on the bond is paid semiannually on January 1st and July 1st. The company uses the effective-interest method to amortize any bond discount or premium. *(Round your answer to the nearest whole dollar).
On September 20th, the company sold its shares in Hobokin Company, resulting in a loss of $1,000 (pretax). See the portfolio tables below.
When its president died, on October 8th, the corporation realized $110,000 from an insurance policy. The cash surrender value of this policy had been carried on the books as an investment in the amount of $10,000 (the gain is nontaxable).
On November 1st, Tri-Star, Inc. filed a suit against the corporation, seeking damages for patent infringement. Legal counsel believes that it is probable that the company will lose the lawsuit to Tri-Star and it is reasonably estimable that the corporation will have to pay Tri-Star $10,000.
On November 15th, the corporation disposed of its wholesale division at a loss of $5,000 before taxes. The wholesale operations were shut down at the beginning of the year. This transaction meets the criteria for discontinued operations. The assets associated with this sale are being classified as Assets Held-For-Sale.
The corporation decided to change its method of inventory pricing from average cost to the FIFO method. The effect of this change on prior years is to increase 2016 income by $60,000 and decrease 2017 income by $20,000 before taxes. The FIFO method has been used for 2018. The tax rate on these items is 40%.
On December 18th, the corporation purchased 2,000 shares of its own common stock at $20 a share.
On December 20th, the corporation paid off the current portion of the note payable along with the $15,000 in interest that had been accrued.

10. December 31st, interest on the lease has accrued.

December 31st, interest on the bonds has accrued.
The companys products carry a one-year warranty against manufacturers defects.Warranty costs are expected to be 1% of net sales.
At the beginning of 2017, the corporation purchased a piece of equipment for $54,000, salvage value of $9,000, and that had a useful life of 6 years. The bookkeeper used straight-line depreciation for 2017 and 2018. However, in 2018, the bookkeeper failed to deduct the salvage value in computing the depreciation base (an error was made). The journal entry for this year's depreciation has already been made, but a correcting entry is required to fix the mistake.
Adjust the Trading securities and AFS securities to their respective fair values. See the portfolio tables below. To help you along with this problem, please note the following: The Hobokin Company AFS Securities had an unrealized loss of 3,000 reported at the end of 2017 that was aggregated into Accumulated Other Comprehensive Income on the balance sheet. When the Hobokin shares are sold on September 20, 2018 (see transaction #3), the unrealized loss has to be reversed, in order to avoid double-counting the loss (unrealized through AOCI and realized through RE) on the balance sheet. Here is the entry to show the reversal:

Fair Value Adjustment - AFS 3,000 Accumulated Other Comprehensive Income 3,000

Now, you are ready to prepare the 2018 adjusting entry for AFS securities. (The one for Trading securities is less complicated.)