12:54 1of 5 Done PARTI , tatar! As Calar | ( Hit TN trang thu having ai . his all sury To Teaser 4 - hta karuttler 21, Itain them Papare atts at - III PART II Raporomis por la parte We plate www atig. the ICM Camchat.com 502 30 41 militan nie 4 Tad Auto 100 reless - il state Shem. The Os fundam Gepers Mittle my L. Razus un, while work 10 graduallmale at vid Foto Hem by the din lehet Sonde under the theme Oy .. bud DO 21.2. than Ie. 124 ay turtheat at www IN putem Ahow Art Tulang Ravul took the proceeds from dissolving the partnership and purchased a corporation selling electrical parts used for large production companies. He employs several people. but is looking to expand his operations further. In addition to expanding the sales of electrical parts, he also wants to start selling heating, ventilation and air conditioning (HVAC) parts and machinery through a separate division of the company called 'HVAC Parts & Machinery Currently, Razal owns all the shares in the corporation. To raise the needed cast, he decides to offer common and preferred shares for sale to investors starting in 2021. Below is the balance sheet at the end of 2020. Assets Cash Accounts Receivable Prepaid Insurance Inventory Property, Plant & Equipment Accumulated Depreciation Holister Electric Inc. Balance Sheet As at December 31, 2020 Liabilities S25.000 Accounts Payable 13.500 Uneamed Revenue 3.600 Bank Loan 72.000 Total Liabilities 210.000 Shareholders' Equity 5.000 Common Shares. 90.000 issued Retained Earnings Total Shareholder's Equity $299.100 Liabilities & Owner's Equity $12.200 5.200 26.000 43,400 90.000 165.2009 255.200 $299,100 Total Assets At 2020. Razul has authorized 150,000 common shares and 10,000 preferred shares. The preferred shares will be cumulative and pay $5 dividends. The 90,000 shares issued were issued to Karal. He will maintain control of the company and sit on the board of directors Transactions during 2021 a) On January 1, Holister purchased a strategic investment of 12,000 shares in Gregor Inc. for Sit per share. This represents 40% of Gregor Ine.common shares. On December 31, Gregor Inc. declares and pays a $60,000 dividend and reports a net income of $400,000 Holister will use the equity method to record this investment b) On January 1, Ramal has located a few private investors that wish to purchase shares in the new corporation. Some want common shares, while other are interested in preferred shares. Holister Electric Inc, issued 30.000 common shares for $75,000 cash and issued 3.000 preferred shares for $12.000 cash. c) On March 1, Holister Electric Inc. issued and sold S150,000, 6 year bonds with an interest rate of 7%. The market rate at the time of issue was 8%. Any premium or discount on the bond is amortized using the effective interest rate method. Interest will be paid annually on February 28. The Present value of 1 and annuity of 1 of 8% for 6 periods are 0.6302 and 4.6229,respectively. Use a 4 decimal factor for the bond calculation d) on April 1, the company has extra cash on hand and would like to investit in short-term bonds issued by Gamma Ltd. The company bought 20, $1,000 short term (one-year) bonds at par on this date and intended to sell these bonds before maturity. The interest rate on the bond is 9%, payable annually at March 31. On December 31, 2021, cach bond was trading in the market at $1.020. On January 1, 2022, all bonds were sold for $21.000 e) On July 1, Holister purchased a $50,000, 5 year bond paying Interest is paid every 6 months on December 31 and June 30. The company plans to hold onto the band until it matures On November 23, the company purchased 2,000 shares of Daenerys Inc. at $19 per share for the purpose of trading. The states are less than 4% of the total shares of Daenerys Inc. and are a non-strategic investment. By December 31, the price per share had gone up to $22 per share g) During 2021, Holister Electric Inc. has performed well, so the board of directors decided to pay dividends On November 30, 2021, the company declared cash dividends of S50,000, which will be paid out on December 15, 2021. Che the cash dividend method and close cash dividends at the end of the year Prepare the journal entries for the issue of shares, issue of the bonds and the dividends, plus all the investments made during the year 2021 Also prepare adjustments at year end to accrue interest on the bond and to record change to any applicable investments Date Account Title and Explanation DR CR 12:54 1of 5 Done PARTI , tatar! As Calar | ( Hit TN trang thu having ai . his all sury To Teaser 4 - hta karuttler 21, Itain them Papare atts at - III PART II Raporomis por la parte We plate www atig. the ICM Camchat.com 502 30 41 militan nie 4 Tad Auto 100 reless - il state Shem. The Os fundam Gepers Mittle my L. Razus un, while work 10 graduallmale at vid Foto Hem by the din lehet Sonde under the theme Oy .. bud DO 21.2. than Ie. 124 ay turtheat at www IN putem Ahow Art Tulang Ravul took the proceeds from dissolving the partnership and purchased a corporation selling electrical parts used for large production companies. He employs several people. but is looking to expand his operations further. In addition to expanding the sales of electrical parts, he also wants to start selling heating, ventilation and air conditioning (HVAC) parts and machinery through a separate division of the company called 'HVAC Parts & Machinery Currently, Razal owns all the shares in the corporation. To raise the needed cast, he decides to offer common and preferred shares for sale to investors starting in 2021. Below is the balance sheet at the end of 2020. Assets Cash Accounts Receivable Prepaid Insurance Inventory Property, Plant & Equipment Accumulated Depreciation Holister Electric Inc. Balance Sheet As at December 31, 2020 Liabilities S25.000 Accounts Payable 13.500 Uneamed Revenue 3.600 Bank Loan 72.000 Total Liabilities 210.000 Shareholders' Equity 5.000 Common Shares. 90.000 issued Retained Earnings Total Shareholder's Equity $299.100 Liabilities & Owner's Equity $12.200 5.200 26.000 43,400 90.000 165.2009 255.200 $299,100 Total Assets At 2020. Razul has authorized 150,000 common shares and 10,000 preferred shares. The preferred shares will be cumulative and pay $5 dividends. The 90,000 shares issued were issued to Karal. He will maintain control of the company and sit on the board of directors Transactions during 2021 a) On January 1, Holister purchased a strategic investment of 12,000 shares in Gregor Inc. for Sit per share. This represents 40% of Gregor Ine.common shares. On December 31, Gregor Inc. declares and pays a $60,000 dividend and reports a net income of $400,000 Holister will use the equity method to record this investment b) On January 1, Ramal has located a few private investors that wish to purchase shares in the new corporation. Some want common shares, while other are interested in preferred shares. Holister Electric Inc, issued 30.000 common shares for $75,000 cash and issued 3.000 preferred shares for $12.000 cash. c) On March 1, Holister Electric Inc. issued and sold S150,000, 6 year bonds with an interest rate of 7%. The market rate at the time of issue was 8%. Any premium or discount on the bond is amortized using the effective interest rate method. Interest will be paid annually on February 28. The Present value of 1 and annuity of 1 of 8% for 6 periods are 0.6302 and 4.6229,respectively. Use a 4 decimal factor for the bond calculation d) on April 1, the company has extra cash on hand and would like to investit in short-term bonds issued by Gamma Ltd. The company bought 20, $1,000 short term (one-year) bonds at par on this date and intended to sell these bonds before maturity. The interest rate on the bond is 9%, payable annually at March 31. On December 31, 2021, cach bond was trading in the market at $1.020. On January 1, 2022, all bonds were sold for $21.000 e) On July 1, Holister purchased a $50,000, 5 year bond paying Interest is paid every 6 months on December 31 and June 30. The company plans to hold onto the band until it matures On November 23, the company purchased 2,000 shares of Daenerys Inc. at $19 per share for the purpose of trading. The states are less than 4% of the total shares of Daenerys Inc. and are a non-strategic investment. By December 31, the price per share had gone up to $22 per share g) During 2021, Holister Electric Inc. has performed well, so the board of directors decided to pay dividends On November 30, 2021, the company declared cash dividends of S50,000, which will be paid out on December 15, 2021. Che the cash dividend method and close cash dividends at the end of the year Prepare the journal entries for the issue of shares, issue of the bonds and the dividends, plus all the investments made during the year 2021 Also prepare adjustments at year end to accrue interest on the bond and to record change to any applicable investments Date Account Title and Explanation DR CR