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Please complete the attached questions! I need a 100% to pass class! Que.1 On January 1, 2015, Bravo issued $400,000 of 6% bonds. The bonds
Please complete the attached questions! I need a 100% to pass class!
Que.1 On January 1, 2015, Bravo issued $400,000 of 6% bonds. The bonds were issued at 98 and pay interest semiannually on July 1 and December 31 each year. On September 1, 2015, Bravo issued for $530,000 cash, 500 7% five-year nonconvertible bonds dated September 1, 2015. Each $1,000 bond had a detachable stock purchase warrant to purchase20 shares of $3 par value stock for $10 per share. Immediately after issuance, the warrants had a market value of $45,000, and the bonds were selling at 102 without the warrant. On January 1, 2011, Bravo issued 100 ten-year convertible bonds. Each $1,000 bond is convertible into 20 shares of Bravo's $10 par value common stock. The bonds were issued at 105 when the common stock traded for $40 per share. The bonds pay interest annually. The conversion features of the bond are not beneficial. On October 1, 2015, half of the bonds were tendered for conversion when the common stock was trading at $62 per share. Bravo uses the book value method to account for the conversion. At the time of conversion, the bonds had a carrying value of $104,300. Bravo does not elect the fair value option for reporting these financial liabilities. Prepare the journal entries for the bond transactions during 2015. 1. January 1, 2015 Issue bonds 2. September 1, 2015 Issue bonds with detachable warrants 3. October 1, 2015 Conversion of bonds Que. 2 Bravo Co.'s stockholders' equity account balances at December 31, year 5, were as follows: Common Stock $800,000 Additional Paid in capital $1,600,000 Retained Earnings $1,845,000 The following 2016 transactions and other information relate to the stockholders' equity accounts: > Bravo had 400,000 authorized shares of $5 par common stock, of which 160,000 shares were issued and outstanding. > On March 5, 2016, Bravo acquired 5,000 shares of its common stock for $10 per share to hold as treasury stock. > The shares were originally issued at $15 per share. Bravo uses the cost method to account for treasury stock. Treasury stock is permitted in Bravo's state of incorporation. > On July 15, 2016, Bravo declared and distributed a property dividend of inventory. The inventory had a $75,000 carrying value and a $60,000 fair market value. > On January 2, 2011, Bravo granted stock options to employees to purchase 20,000 shares of Bravo's common stock at $18 per share, which was the market price on that date. The options may be exercised within a three-year period beginning January 2, 2016. The measurement date is the same as the grant date. On October 1, 2016, employees exercised all 20,000 options when the market value of the stock was $25 per share. Bravo issued new shares to settle the transaction. The stock options were accounted for in accordance with the intrinsic value method, which was in effect at the time. > Bravo's net income for 2016 was $240,000. Prepare journal entries for the following transactions in 2016. 1. Treasury stock purchased on March 5, 2016 2. Declaration and distribution of a property dividend on July 15, 2016 3. Issue of common stock on October 1, 2016 Que.3 Bravo Construction Company uses the percentage-of-completion method of accounting. In 2015, Brovo began work under a contract with a contract price of $1,500,000. Other details follow: Cost Incurred during the year 2015 2016 $980,000 $1,375,000 Estimated Cost to complete, as of December 420,000 31 0 Billings to date 800,000 1,500,000 Collections to date 250,000 1,500,000 Prepare all required general journal entries for 2015. (Use 12/31/15 as transaction dates.) Que.4 Warren Buffet, an investor in Alpha Co., asked you for advice on the propriety of Alpha's financial reporting for two of its investments. Assume that Alpha does not elect the fair value option for reporting its financial assets and liabilities. You obtained the following information related to the investments from Alpha's December 31, 2015 financial statements: > 20% ownership interest in Beta Co., represented by 200,000 shares of outstanding common stock purchased on January 2, 2015, for $600,000. > 20% ownership interest in Charlie Co., represented by 20,000 shares of outstanding common stock purchased on January 2, 2015, for $300,000. > On January 2, 2015, the carrying values of the acquired shares of both investments equaled their purchase price. > Beta reported earnings of $400,000 for the year ended December 31, 2015, and declared and paid dividends of $100,000 on 12/15/2015. > Charlie reported earnings of $350,000 for the year ended December 31, 2015, and declared and paid dividends of $60,000 on 12/15/2015. > On December 31, 2015, Beta's and Charlie's common stock were trading over-the-counter at $18 and $20 per share, respectively. > The investment in Charlie is accounted for using the equity method.> The investment in Beta is accounted for as available-for-sale securities. You recalculated the amounts reported in Alpha's December 31, 2015 financial statements, and determined that they were correct. Stressing that the information available in the financial statements was limited, you advised Warren that, assuming Alpha properly applied generally accepted accounting principles, Alpha may have appropriately used two different methods to account for its investments in Beta and Charlie, even though the investments represent equal ownership interests. Prepare the general journal entries for the following: 1. Alpha's investment in Charlie Co. on January 2, 2015. 2. Dividends received from Charlie in 2015. 3. Required for Charlie's reported income for the year ending on December 31, 2015. 4. Alpha's investment in Beta Co. on January 2, 2015. 5. Dividends received from Beta in 2015. 6. Required for Beta's reported income for the year ending on December 31, 2015Step by Step Solution
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