Answered step by step
Verified Expert Solution
Question
1 Approved Answer
STOCKHOLDERS' EQUITY Common Stock (150,000 shares authorized, par value $1, 130,000 shares issued and outstanding) 130,000 Paid-in Capital in Excess of Par - Common Stock
STOCKHOLDERS' EQUITY Common Stock (150,000 shares authorized, par value $1, 130,000 shares issued and outstanding) 130,000 Paid-in Capital in Excess of Par - Common Stock 954,000 Retained Earnings 35,455 Total Stockholders' Equity 1,119,455 Total Liabilities and Stockholders' Equity 1,266,995 General Products, Inc., provided the following financial and business-related data for 2019 below. Item ! 1 a 2 3 4 Trademarks were previously acquired for $200,000 on January 1, 2018. Estimated useful life at the time of acquisition was 20 years. In 2019, there was litigation challenging these trademarks brought by a competitor, and Generationens successfully defended these trademarks at a legal cost of $45,000. The new (updated) useful life of the trademarks was estimated to be 25 years from the date of acquisition. All sales were on credit and totaled $940,560. COGS totaled $780,650. Included in the total sales of $940,560 were the sales of 6,000 soap powder boxes. As a premium offer to increase soap powder sales, Generates includes one special coupon with every soap powder box. Customers can redeemfour coupons to obtain one free premium item-a kitchen utensil. Based on past experience, 60% of the coupons are expected to be redeemed by customers. During 2019,3,400 coupons were actually redeemed. Also in 2019. Generations purel an additional 1,000 premiums (kitchen utensil items) @ $1.10 each on credit to add to its Inventory of Premiums. Five-year 6% bonds were issued on January 1, 2018, sold to yield 8% interest. Interest is paid semiannually on January 1 and June 30 for these bonds. Maturity value of the bond issue is $100,000 and the issue was sold at a discount of $8,111 for an initial carrying value of $91,889. The bond indenture indicated that Garrafas may later call and redeem these bonds @ 101 any time after June 30, 2019. These bonds were subsequently called and redeemed on September 1, 2013, following the sale of a new 5% bond issue taking advantage of lower interest rates (see Item 5 below). The effective-interest method is applied to amortize the discount. To take advantage of lower interest rates and to finance the call and redemption of the previously issued 6% bonds @ 101, on September 1, 2019. Generales issued new 5% bonds with face value of $100,000 to yield 6%. The maturity period of these new 5% bonds is 10 years and interest is paid semiannually on January 1and June 30. The new 5% bonds were issued at a discount of $7,438 for an initial carrying value of $$92,562 on July 1, 2019. The effective-interest method is applied to amortize the discount. 5 STOCKHOLDERS' EQUITY Common Stock (150,000 shares authorized, par value $1, 130,000 shares issued and outstanding) 130,000 Paid-in Capital in Excess of Par - Common Stock 954,000 Retained Earnings 35,455 Total Stockholders' Equity 1,119,455 Total Liabilities and Stockholders' Equity 1,266,995 General Products, Inc., provided the following financial and business-related data for 2019 below. Item ! 1 a 2 3 4 Trademarks were previously acquired for $200,000 on January 1, 2018. Estimated useful life at the time of acquisition was 20 years. In 2019, there was litigation challenging these trademarks brought by a competitor, and Generationens successfully defended these trademarks at a legal cost of $45,000. The new (updated) useful life of the trademarks was estimated to be 25 years from the date of acquisition. All sales were on credit and totaled $940,560. COGS totaled $780,650. Included in the total sales of $940,560 were the sales of 6,000 soap powder boxes. As a premium offer to increase soap powder sales, Generates includes one special coupon with every soap powder box. Customers can redeemfour coupons to obtain one free premium item-a kitchen utensil. Based on past experience, 60% of the coupons are expected to be redeemed by customers. During 2019,3,400 coupons were actually redeemed. Also in 2019. Generations purel an additional 1,000 premiums (kitchen utensil items) @ $1.10 each on credit to add to its Inventory of Premiums. Five-year 6% bonds were issued on January 1, 2018, sold to yield 8% interest. Interest is paid semiannually on January 1 and June 30 for these bonds. Maturity value of the bond issue is $100,000 and the issue was sold at a discount of $8,111 for an initial carrying value of $91,889. The bond indenture indicated that Garrafas may later call and redeem these bonds @ 101 any time after June 30, 2019. These bonds were subsequently called and redeemed on September 1, 2013, following the sale of a new 5% bond issue taking advantage of lower interest rates (see Item 5 below). The effective-interest method is applied to amortize the discount. To take advantage of lower interest rates and to finance the call and redemption of the previously issued 6% bonds @ 101, on September 1, 2019. Generales issued new 5% bonds with face value of $100,000 to yield 6%. The maturity period of these new 5% bonds is 10 years and interest is paid semiannually on January 1and June 30. The new 5% bonds were issued at a discount of $7,438 for an initial carrying value of $$92,562 on July 1, 2019. The effective-interest method is applied to amortize the discount. 5
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started