QUESTION 1

12. On October 1, 2016, Roosevelt Inc. issued, at 101 plus accrued interest, 800 of its 10 percent, $1,000 bonds The bonds are dated July 1, 2016, and mature on July 1,2023. Interest is payable semiannually on January 1 and July 1. At the time of issuance. Roosevelt would receive cash of a. $820,000. b. $828,000 c. $800,000. d. $808,000. 13. A company owns a piece of land that originally cost $10,000 and has a fair market value of $8,000. It is exchanged along with $5,000 cash for another piece of land having a fair value of $13,000. The exchange had commercial substance. The proper journal entry to record this transaction is a. Land (new) Retained Earnings 13,000 2, 000 Land told) Cash 10,000 5, 000 15,000 Land (old). Cash 10,000 5, 000 Land fold) Cash 10,000 5,000 3, 000 Gain on Exchange d. Land (new) . 13, 000 Land Cash 10,000 5, 000 When the interest payment dates of a bond are May 1 and November 1, and the bond is issued on June 1, the amount of interest expense at December 31 of the year of issuance would be for a. eight months. b. six months. c. two months. d. seven months. Which of the following depreciation me 14. most closely approximates the method used to deplete the cost 15. natural resources? aUnits-of-production method Straight-line method Sum-of-the-years'-digits method c. d. Double-declining-balance method 16. Grant, Inc. had outstanding 10 percent, $1,000,000 face value, convertible bonds maturing on December 31 2020. Interest is paid December 31 and June 30. After amortization through June 30, 2017, the unamortized balance in the bond premium account was $30,000. On that date, bonds with a face amount of $500,000 were converted into 20,000 shares of $20 par common stock. Recording the conversion by using the carrying value of the bonds, Grant should credit Additional Paid-In Capital for a. $100,000. b. $115,000. c, $0. d. $85,000.

QUESTION 2

On June 1, 2005, Jefferson Controls, Inc. issued $12,000,000 of 12 percent bonds to yield 10 percent. Interest is payable semiannually on May 31 and November 30. The bonds mature in 15 years. Jefferson Controls, Inc. is a calendar- year corporation.

a. Determine the issue price of bonds. Show computations in an orderly form (6 points).

b. Journalize the issue of the bonds on June 1, 2005

c. Prepare amortization table through the third interest periods using the effective- interest method (3 points).

d. Prepare the journal entries to record the payment of interest on May 31, 2006 (3 points).

QUESTION 3

On June 1, 2014, Minute Controls, Inc. issued $12,000,000 of 10 percent bonds to yield 12 percent. Interest is payable semiannually on May 31 and November 30. The bonds mature in 15 years. Minute Controls, Inc. is a calendar-year corporation.

a.) Determine the issue price of the bonds. Show computations.

b.) Prepare amortization table through the first two interest periods using the effective-interest method.

c.) Prepare the journal entries to record bond-related transactions as of the following dates:

1.) June 1, 2014

2.) November 30, 2014

3.) December 31, 2014

4.) May 31, 2015