Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

I am needing the adjusting entries for the following problems. Thank you for any assistance you might be able to give. 9 On 12/31/14, ABC

I am needing the adjusting entries for the following problems. Thank you for any assistance you might be able to give.

9 On 12/31/14, ABC issued 5,000 shares of $3 par value common stock at the closing market price of $7 per share. Advise on ABC's journal entry

to reflect the issuance of the stock on 12/31/14.

10 On 7/1/14, ABC sold 12% bonds having a maturity value of $800,000 for $861,771, resulting in an effective yield of 10%.The bonds are

dated 7/1/14, and mature 7/1/19.Interest is payable semiannually on July 1 and January 1.ABC uses the effective interest method of

amortization for bond premium or discount.Record the adjusting entry for the accrual of interest and the related amortization on 12/31/14.

Hint:Develop an abbreviated amortization schedule to accurately determine the interest expense.

11 The following information is available for ABC Corporation at 12/31/14 regarding its investments in stocks of other companies.

Securities Cost Fair Value

2,200 shares of Toyota Corporation Common Stock$100,000$ 125,000

1,100 shares of G.M. Corporation Common Stock$67,000 $34,000

$167,000$ 159,000

Prepare the adjusting entry (if any) for 2014, assuming the securities are classified as trading.

12 On 1/1/14, ABC Corporation purchased, as a held-to-maturity investment, $200,000 of the 8%, 5-year bonds of Intuit Corporation for $177,824,

which provides an 11% return. Advise on ABC's 12/31/14 journal entry to reflect the receipt of annual interest and discount amortization.

Assume the bond investment pays interest annually on 12/31 each year and that effective interest amortization is used.

Note: Notice that a discount account is not used for this investment.Therefore, for purposes of this adjusting entry, amortize the discount directly to the

investment account.

13 ABC Corporation prepares an aging schedule on 12/31/14 that estimates total uncollectible accounts at $25,000.Assuming that the allowance method is used,

prepare the entry to record bad debt expense.

14 On 1/1/14, ABC Corporation signed a 5-year noncancelable lease for a delivery vehicle.The terms of the lease called for ABC to Corporation to make

annual payments of $10,503 at the beginning of each year, starting January 1, 2014.The delivery vehicle has an estimated useful life of 6 years and a $7,000

unguaranteed residual value.The delivery vehicle reverts back to the lessor at the end of the lease term.ABC Corporation uses the straight-line method

of depreciation for the delivery vehicle.ABC Corporation's incremental borrowing rate is 10%, and the Lessor's implicit rate is unknown.No entries have yet

been made concerning this lease arrangement.After determining the type of lease arrangement (capital or operating), prepare the necessary multiple-part journalentry for 2014 for ABC Corporation.(Hints:You will need to compute the present value of the minimum lease payments and 4 separate sub-entries for

this lease transaction.Also, for Statement of Cash Flow purposes, the principal portion of lease payments are correctly categorized as a financing activity.)

15 ABC Corporation provides a defined benefit pension plan for its employees.A combination adjusting entry should be made to correctly account for this type of pensionplan given the following items of information for the 2014 plan year, including the recording of pension expense and the employer's contribution to the pension plan in 2014. Note: Use the summary entry method as demonstrated and discussed in the chapter lectures on pension accounting to prepare the adjusting entry.

Pension asset/liability (January 1) $0

Actual return on plan assets $40,000

Expected return on plan assets $20,000

Contributions (funding) in 2014 $37,000

Fair value of plan assets (December 31) $75,000

Settlement rate 10%

Projected benefit obligation (January 1) $0

Service cost $60,000

Benefits paid in 2014 $0

*For purposes of financial statement presentation, consider Pension Expense as an operating item and any resulting Pension Asset/Liability as long-term in nature.

16 On December 31, 2014, ABC Corporation issued 1,000 shares of restricted stock to its Chief Financial Officer.ABC stock had a fair value (closing market price) of $10 per share on December 31, 2014.Additional information is as follows:

a. The service period related to the restricted stock is 2 years.

b. Vesting occurs if the CFO stays with the company for a two-year period.

c. The par value of the common stock is $3 per share.

Make the appropriate accounting entry as of the grant date, 12/31/14.Note: use the alternative method as described in your textbook for deferred compensation.

Done after preparing the Income Statement except for the Income taxes line: (You need to calculate Income Before Income Taxes in order to calcualte total Income Tax Expense)

17 Corporate taxes are due in four estimated quarterly payments on April 15, June 15, September 15, and December 15.

However, for the purposes of this ABC illustration, we will assume that estimates are not paid, and that the tax is paid in full

on the return's March 15, 2015 due date.

ABC's income tax rate is 40%.The entire year's income tax expense was estimated at the beginning of 2014 to be $69,600,

so January through November income tax expense recognized amounts to $63,800 (11/12 months).

Since we are assuming estimates are not made during the year, the balance in Income taxes payable represents

tax accrued for January through November.Assume no deferred tax assets or deferred tax liabilities.

Based on the income before income taxes figure from the income statement, record December's income tax expense

so that the entire year's total tax expense is correct.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial & Managerial Accounting

Authors: Jan Williams, Sue Haka, Mark Bettner, Joseph Carcello

15th Edition

0073526991, 9780073526997

More Books

Students also viewed these Accounting questions

Question

1. Background knowledge of the subject and

Answered: 1 week ago

Question

2. The purpose of the acquisition of the information.

Answered: 1 week ago