Brief Exercise 15-7

Prepare the journal entries that the lessee should make to record the following transactions.(Credit account titles are automatically indented when amount is entered. Do not indent manually.)

1.The lessee makes a lease payment of $86,590to the lessor in an operating lease transaction.

2. Imhoff Company leases a new building from Noble Construction, Inc. The present value of the lease payments is $682,100. The lease qualifies as a capital lease.

Brief Exercise 15-8

Presented below are long-term liability items for Lind Company at December 31, 2014.

Bonds payable, due 2016 $455,000

Lease liability 68,030

Notes payable, due 2019 74,550

Discount on bonds payable 36,400

Prepare the long-term liabilities section of the balance sheet for Lind Company.(For Bonds Payable, Notes Payable and Mortgage payable enter the account name only and do not provide any additional descriptive information e.g. due 2019.)

Exercise 15-2

Gilliland Airlines is considering two alternatives for the financing of a purchase of a fleet of airplanes. These two alternatives are:

1.Issue115,500shares of common stock at $30per share. (Cash dividends have not been paid nor is the payment of any contemplated.)

2.Issue8%, 10-year bonds at face value for $3,465,000.

It is estimated that the company will earn $836,000before interest and taxes as a result of this purchase. The company has an estimated tax rate of30% and has114,700shares of common stock outstanding prior to the new financing.

Determine the effect on net income and earnings per share for these two methods of financing.(Round earnings per share to 2 decimal places, e.g. 2.25.)

Exercise 15-5 (Part Level Submission)

Laudie Company issued $344,000of8%, 10-year bonds on January 1, 2014, at face value. Interest is payable semiannually on July 1 and January 1.

Prepare the journal entry to record the issuance of the bonds.(Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Exercise 15-10

Jernigan Co. receives $264,000when it issues a $264,000,12%, mortgage note payable to finance the construction of a building at December 31, 2014. The terms provide for semiannual installment payments of $22,000on June 30 and December 31.

Prepare the journal entries to record the mortgage loan and the first two installment payments.(Round answers to 0 decimal places, e.g. 15,250. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Problem 15-2A (Part Level Submission)

Asquith Electric sold $490,000,14%, 10-year bonds on January 1, 2014. The bonds were dated January 1 and paid interest on January 1 and July 1. The bonds were sold at101.

Prepare the journal entry to record the issuance of the bonds on January 1, 2014.(Credit account titles are automatically indented when amount is entered. Do not indent manually.)