ACC222 : Principles of Accounting It NAME ( PRINT ) Rogney Thomas Makeup for Exam #2 DATE 5- 13- 19 PROBLEM I On January 2, 2007, Yenn Corporation issued &-year bonds with a face value of $5,000,000 and a stated interest rate of 12%, payable semiannually on June 30 and December 31. current yield rate on such bonds is 10%. Table values are : The Present value of 1 for & periods at 12% Present value of 1 for 8 periods at 10% 404 467 Present value of 1 for 16 periods at 6%- 394 Present value of 1 for 16 periods at 5%- 458 Present value of annuity for 16 periods at 5% 10.838 Present value of annuity for 8 periods at 12% 4.968 Present value of annuity for 16 periods at 6%- -10.106 Present value of annuity for 8 periods at 10% 5.335 Required: Using the Present Value tables , and the effective interest method, determine the Following: (Show all calculations !) The issue price of the bond issue. Record the bond issue on January 2, 2007. Prepare the amortization schedule for four (4 ) periods. Record the first interest payment on June 30, 2007. 5) Prepare the entry to accrue for interest on August 31, 2007. PROBLEM II Stonehurst Corporation was authorized to issue 100,000 shares of $5 par value common stock and 12,000 shares of $100 par value, non-cumulative, 6% preferred stock on July 15, 2007. Stock-related transactions for the corporation were as follows: July 15 Issued 7,000 shares of common stock at $9 per share in connection with the organization of the corporation. 17 Issued 20,000 shares of common stock at $10 per share 25 Issued 6,000 shares of preferred stock at par value for cash. 27 Issued 9,000 shares of common stock in exchange for a Building valued at $100,000. The market price per share of common stock is known to be $13. Aug. 1 Issued 8,000 shares of common stock for $50,000 in cash 3 Purchased 3,000 shares of common stock for the treasury at $13 per share. 12 Declared dividends for one month on the outstanding preferred stock, and $0.05 per share on common stock , payable on August 20 to stockholders of record on August 15. Required: Prepare entries in journal form without explanations to record ALL the transactions. APROBLEM III Circle TRUE or FALSE in each of the following: 1) The stated rate of interest is used to determine the cash interest on the bond payable TRUE FALSE 2) Bond payable are long-term debts issued to multiple lenders called bondholders. TRUE FALSE 3 ) The amount the borrower must pay back to the bondholders on the maturity date is called the carrying value. TRUE FALSE 4) The interest rate that investors demand in order to loan their money is called the market interest rate TRUE FALSE 5) Discount on Bond Payable is a contra account to Bond Payable. TRUE FALSE
