The following information is used to answer:

Bonds: $1,000,000 Par Value

Semiannual Interest Payments,

Three-Year Life

Annual Contract Rate: 6%

Annual Market Rate: 8%

What is the price of the bond?

A. 963,544.12

B. 952,877.65

C. 947,578.63

D. 925,587.96

What is the amount of the bond discount?

A. 52,421.37

B. 50,865.35

C. 47,822.45

D. 45,647.24

Softbyte Inc.

Balance Sheet

December 31, 2017

Assets

Cash $500,000

Accounts Receivable 700,000

Inventory 300,000

Property, Plant & Equipment 900,000

Accumulated Depreciation (100,000) 800,000

Total Assets $2,300,000

Liabilities & Equity

Accounts Payable $300,000

Notes Payable 1,000,000

Common Stock 500,000

Retained Earnings 500,000

Total Liabilities & Equity $2,300,000

Instructions:

Open the balances in the ledger accounts.

Post the journal entries to the general ledger.

Prepare an income statement, statement of retained earnings, balance sheet, and statement of cash flows-indirect method.

Journal Entries for January 2013

Transaction 1: Services Provided for Cash

Description: Receives $155,000 cash from customers for programming services it has provided.

Journal Entry: Dr. Cr.

Cash 155,000

Sales 155,000

Transaction 2: Receipt of Cash on Account

Description: Receives $28,000 in cash from customers who had been billed for services.

Journal Entry: Dr. Cr.

Cash 28,000

Accounts Receivable 28,000

Transaction 3: Cost Flow Assumption: LIFO

Description: Recorded $45,000 in cost of goods sold under the LIFO cost flow assumption.

Journal Entry: Dr. Cr.

Cost of Goods Sold 45,000

Inventory 45,000

Transaction 4: Recording Depreciation Expense

Description: Recorded depreciation expense under the straight-line method.

Journal Entry: Dr. Cr.

Depreciation Expense 9,000

Accumulated Depreciation 9,000

Transaction 5: Sale of Plant Asset

Description: Sale of plant asset for cash. The cash received was equal to the book value.

Journal Entry: Dr. Cr.

Cash 3,000

Accumulated Depreciation 16,000

Equipment 19,000

Transaction 6: Gain on Sale of Plant Asset

Description: Sale of plant asset for cash. The cash received was $2,000 more than the book value resulting in a gain.

Journal Entry: Dr. Cr.

Cash 5,000

Accumulated Depreciation 16,000

Gain 2,000

Equipment 19,000

Transaction 7: Loss on Sale of Plant Asset

Description: Sale of plant asset for cash. The cash received was $500 less than the book value resulting in a loss.

Journal Entry: Dr. Cr.

Cash 2,500

Loss 500

Accumulated Depreciation 13,000

Equipment 16,000

Transaction 8: Note Given to Borrow from Bank

Description: Borrowed $2,000 cash with a 60-day, 12%, $2,000 note.

Journal Entry: Dr. Cr.

Cash 2,000

Notes Payable 2,000

Transaction 9: Payment of Note

Description: Paid the principal and interest on the note in Transaction 8.

Journal Entry: Dr. Cr.

Notes Payable 2,000

Interest Expense 40

Cash 2,040

Transaction 10: Bond Issue

Description: Issued a $100,000 Par Value Bond at a Discount

Journal Entry: Dr. Cr.

Cash 96,454

Bonds Payable 96,454

Transaction 11: Effective Interest Amortization

Description: Recorded bond interest expense under the effective interest method.

Journal Entry: Dr. Cr.

Bond Interest Expense 4,823

Bonds Payable 823

Cash 4,000

Transaction 12: Issuing Par Value Stock at a Premium

Description: Issued common stock and received cash of $50,000 in excess of par value.

Journal Entry: Dr. Cr.

Cash 350,000

Common Stock , $10 Par Value 300,000

Paid-in Capital in Excess of Par Value, Common Stock 50,000

Transaction 13: Dividend

Description: The corporation pays a dividend of $3,800 in cash to the stockholders of Softbyte.

Journal Entry: Dr. Cr.

Dividends 3,800

Cash 3,800