Fairway Gold Corp. owns equity-method investments in several companies. Suppose Fairway paid $14,000,000 to acquire a 40 percent investment in Minebuilder Ltd. Further, assume Minebuilder Ltd. reported net income of $1,780,000 for the first year and declared and paid cash dividends of $875,000. Calculate the balance in the Investment in Minebuilder Ltd. Common Shares account. Assume that after all the above transactions took place, Fairway Gold Corp. sold its entire investment in Minebuilder Ltd. common shares for $16,500,000. Journalize the sale of the investment. Disregard broker commissions on sale. Calculate the balance in the Investment in Minebuilder Ltd. Common Shares account. (Leave any unused cells blank.) Investment in Minebuilder Ltd. Common Shares Balance Journalize the sale of the investment. (Record debits first, then credits. Explanations are not required.) Date Journal Entry Accounts Debit Credit Table 12-3 Mariah and Brittney have formed a partnership and invested $140,000 and $160,000, respectively. They have agreed to share profits as follows: 1) The first $30,000 is to be allocated according to their original capital contributions to the partnership. 2) Mariah is to receive $40,000 and Brittney is to receive $45,000 for service. 3) The remainder is to be allocated 5:3, respectively. Refer to Table 12-3. Assuming the business incurs a net loss of $36,000, Brittney's capital account will be: A. credited for $4,375 B. credited for $40,375 C. debited for $94,375 D. debited for $56,625 Onerumor Inc. issued $9,920,000 of 7 percent, 20-year bonds at a premium. The bonds are retired prior to maturity at 101. The book value of the bonds is $10,456,000 at this time. Onerumor Inc. amortizes bond premiums using the effective-interest method. Required 1. Was the contract rate on the bonds at the time of issuance greater or less than the market rate of interest? Explain. 2. Prepare the journal entry to record the retirement of the bonds. 3. Assume that the bonds were redeemed at maturity. Would the total cash interest paid be different if the company used the straight-line method of amortization of premiums? Explain. Requirement 1. Was the contract rate on the bonds at the time of issuance greater or less than the market rate of interest? Explain. for the interest rate. The contract rate on the bonds is the market rate of interest at the time of issuance. This means that bond purchasers were willing to pay Requirement 2. Prepare the journal entry to record the retirement of the bonds. (Record debits first, then credits. Exclude explanations from journal entries.) Date Journal Entry Accounts Debit Credit Requirement 3. Assume that the bonds were redeemed at maturity. Would the total cash interest paid be different if the company used the straight-line method of amortization of premiums? Explain. The straight-line method of amortizing the premium would the total cash paid for interest. Interest payments are paid at the over the life of the bond. Therefore, amount of interest is paid at each interest period. Compare Retro Pro Corp. and House Fitters Inc. (Click the icon to view the income statement information.) 1. Convert their income statements to common size. 2. Which company earns more net income? 3. Which company's net income is a higher percentage of its net sales? 1. Convert their income statements to common size. (Round all percentages to one decimal place, X.X%.) Retro Pro Corp. and House Fitters Inc. Common-Size Income Statements Net sales Cost of goods sold Other expenses Net income Retro Pro Corp. House Fitters Inc. % % 2. Which company earns more net income? earns more net income. 3. Which company's net income is a higher percentage of its net sales? net income is a higher percentage of net sales. Income statement information Net sales Cost of goods sold Other expenses Net income - (Amounts in thousands) Retro Pro Corp. House Fitters Inc. 25,000 $ 60,000 19,000 33,000 4,500 24,900 1,500 $ 2,100 Print Done Brown's Salvage Auto purchased a delivery truck on January 1, 2017, costing $65,000, with an estimated residual value of $7,500 and an estimated useful life of 5 years. Suppose Brown's Salvage Auto sold the truck on December 31, 2019, for $35,500 cash, after using the truck for three full years. Amortization for 2019 has already been recorded. Make the journal entry to record Brown's Salvage Auto's sale of the truck under straight-line amortization. (Do not round intermediary calculations. Only round your answers to the nearest dollar. Record debits first, then credits. Exclude explanations from journal entries.) Date Dec 31, 2019 General Journal Accounts Debit Credit Suppose Hard Metal purchases land and a building for $181,000 on October 1, 2020. Hard Metal obtains a mortgage at an annual rate of 8.5 percent and will make monthly payments for 20 years. Using the instalment payment schedule, journalize the entry for the second mortgage payment, which is made on December 1, 2020. (Click the icon to view the instalment payment schedule.) Complete the journal entry below. (Record debits first, then credits. Exclude explanations from journal entries. Round amounts to the nearest dollar.) Journal Entry Date Accounts and Explanations Dec. 1 Debit Credit Instalment Payment Schedule Partial Mortgage Instalment Payment Schedule Blended Mortgage Payments A B C Blended 8.5% Interest Mortgage Monthly for the Month Mortgage (Preceding D x Period Payment 0.085/12) Reduction in Principal (A-B) Balance (Preceding D - Current C) Oct 1, 2020 $ 181,000 Nov 1, 2020 $ 1,571 $ 1,282 289 180,711 Dec 1, 2020 1,571 1,280 291 180,420 Jan 1, 2021 1,571 1,278 293 180,127 Print Done X