1)

On July 1, 2016, Lex Co. purchased 600 of the $1,000 face value, 8% bonds of Zenon, Inc., for $630,000 (a 7% effective interest rate). The bonds, which mature on July 1, 2021, pay interest semiannually on January 1 and July 1. Lex used the effective interest method of amortization and appropriately recorded the bonds as non-trading. On Lex's December 31, 2016 statement of financial position, what would be the carrying value of the bonds?

2)

Martin Corporation is planning to issue 20,000 shares of its own $12 par value ordinary shares for two acres of land to be used as a building site.

What general rule should be applied to determine the amount at which the land should be recorded?

3)

Lindsay Corporation has issued 2,000 ordinary shares and 400 preference shares for a lump sum of $72,000 cash.

Instructions

(a) Give the entry for the issuance assuming the par value of the ordinary shares was $5 and the fair value $30, and the par value of the preference shares was $40 and the fair value $50. (Each valuation is on a per share basis and there are ready markets for each class of shares.)

(b) Give the entry for the issuance assuming the same facts as (a) above except the preference shares have no ready market and the ordinary shares have a fair value of $25 per share.