hwk 11.. need 12-1, 12-7, 12-9 solved
573 Chapter 12 Long-Term Liabilities: Bonds and Notes Exercises EX 12-1 Effect of financing on earnings per share Domanico Co., which produces and sells biking equipment, is financed as follows: OBJ.1 a. $1.64 Bonds payable, 8% (issued at face amount) Preferred $5 stock, $10 par Common stock, $20 par $10,000,000 10,000,000 10,000,000 Income tax is estimated at 40% of income. Determine the earnings per share of common stock, assuming that the income before bond interest and income tax is (a) $10,500,000, (b) $11,800,000, and (c) $13,000,000. SHOW ME HOV EX 12-7 Entries for issuing bonds and amortizing premium by straight-line method OBJ, 2, 3 Lerner Corporation wholesales repair products to equipment manufacturers. On April 1, 2016, Lerner Corporation issued $12,000,000 of five-year, 8% bonds at a market (effec- tive) interest rate of 6%, receiving cash of $13,023,576. Interest is payable semiannually on April 1 and October 1. Journalize the entries to record the following: a. Issuance of bonds on April 1, 2016. b. First interest payment on October 1, 2016, and amortization of bond premium for six SHOW ME HOw months, using the straight-line method. (Round to the nearest dollar) c. Explain why the company was able to issue the bonds for $13,023,576 rather than for the face amount of $12,000,000 EX 12-8 Entries for issuing and calling bonds; loss Adele Corp., a wholesaler of music equipment, issued $22,000,000 of 20-year, 7% call- able bonds on March 1, 2016 at their face amount, with interest payable on March 1 and September 1. The fiscal year of the company is the calendar year. Journalize the entries to record the following selected transactions: OBJ. 3 SHOW ME HOW 2016 Mar. 1. Issued the bonds for cash at their face amount. Sept.1. Paid the interest on the bonds. 2020 Sept.1. Called the bond issue at 102, the rate provided in the bond indenture (Omit entry for payment of interest.) EX 12-9 Entries for issuing and calling bonds; gain Emil Corp. produces and sells wind-energy-driven engines. To finance its operations, Emil Corp. issued $15,000,000 of 20-year, 996 callable bonds on May 1, 2016 at their face amount, with interest payable on May 1 and November 1. The fiscal year of the company is the calendar year. Journalize the entries to record the following selected transactions: OBJ. 3 SHOW ME HOw 2016 May 1. Issued the bonds for cash at their face amount. Nov. 1. Paid the interest on the bonds. 2022 Nov. 1. Called the bond issue at 96, the rate provided in the bond indenture Omit entry for payment of interest.) 573 Chapter 12 Long-Term Liabilities: Bonds and Notes Exercises EX 12-1 Effect of financing on earnings per share Domanico Co., which produces and sells biking equipment, is financed as follows: OBJ.1 a. $1.64 Bonds payable, 8% (issued at face amount) Preferred $5 stock, $10 par Common stock, $20 par $10,000,000 10,000,000 10,000,000 Income tax is estimated at 40% of income. Determine the earnings per share of common stock, assuming that the income before bond interest and income tax is (a) $10,500,000, (b) $11,800,000, and (c) $13,000,000. SHOW ME HOV EX 12-7 Entries for issuing bonds and amortizing premium by straight-line method OBJ, 2, 3 Lerner Corporation wholesales repair products to equipment manufacturers. On April 1, 2016, Lerner Corporation issued $12,000,000 of five-year, 8% bonds at a market (effec- tive) interest rate of 6%, receiving cash of $13,023,576. Interest is payable semiannually on April 1 and October 1. Journalize the entries to record the following: a. Issuance of bonds on April 1, 2016. b. First interest payment on October 1, 2016, and amortization of bond premium for six SHOW ME HOw months, using the straight-line method. (Round to the nearest dollar) c. Explain why the company was able to issue the bonds for $13,023,576 rather than for the face amount of $12,000,000 EX 12-8 Entries for issuing and calling bonds; loss Adele Corp., a wholesaler of music equipment, issued $22,000,000 of 20-year, 7% call- able bonds on March 1, 2016 at their face amount, with interest payable on March 1 and September 1. The fiscal year of the company is the calendar year. Journalize the entries to record the following selected transactions: OBJ. 3 SHOW ME HOW 2016 Mar. 1. Issued the bonds for cash at their face amount. Sept.1. Paid the interest on the bonds. 2020 Sept.1. Called the bond issue at 102, the rate provided in the bond indenture (Omit entry for payment of interest.) EX 12-9 Entries for issuing and calling bonds; gain Emil Corp. produces and sells wind-energy-driven engines. To finance its operations, Emil Corp. issued $15,000,000 of 20-year, 996 callable bonds on May 1, 2016 at their face amount, with interest payable on May 1 and November 1. The fiscal year of the company is the calendar year. Journalize the entries to record the following selected transactions: OBJ. 3 SHOW ME HOw 2016 May 1. Issued the bonds for cash at their face amount. Nov. 1. Paid the interest on the bonds. 2022 Nov. 1. Called the bond issue at 96, the rate provided in the bond indenture Omit entry for payment of interest.)
