ACCT 220 Homework 2
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There are 3 problems this week. Click the tabs at the bottom of the spreadsheet to view each problem.
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For each of the bonds listed below, record the three requested journal entries.
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Dates and descriptions are not required.
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The Dorchester Company invested $100,000 in 5-year bonds. The bonds were purchased at par and bear interest at a rate of 8% per annum, payable semiannually.
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(a)
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Prepare the journal entry to record the initial investment.
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(b)
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Prepare the journal entry that Dorchester would record on each interest date.
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(c)
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Prepare the journal entry that Dorchester would record at maturity of the bonds.
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The Dorchester Company invested $100,000 of face amount of 5-year bonds. The bonds were purchased at 103 and bear interest at a stated rate of 8% per annum, payable semiannually.
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(a)
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Prepare the journal entry to record the initial investment.
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(b)
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Prepare the journal entry that Dorchester would record on each interest date.
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(c)
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Prepare the journal entry that Dorchester would record at maturity of the bonds.
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The Dorchester Company invested $100,000 of face amount of 4-year bonds. The bonds were purchased at 98 and bear interest at a stated rate of 8% per annum, payable semiannually.
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(a)
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Prepare the journal entry to record the initial investment.
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(b)
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Prepare the journal entry that Dorchester would record on each interest date.
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(c)
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Prepare the journal entry that Dorchester would record at maturity of the bonds.
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For each of the items below, indicate whether the lease is an operating lease or a capital lease.
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Reminder: The lessor is the party who owns the item; the lessee is the party using the item.
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Item 1
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The lessee reports the leased asset on its balance sheet.
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Item 2
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Payments are reported fully as rent expense.
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Item 3
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Ownership of the property passes to the lessee by the end of the lease term.
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Item 4
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The lease term is at least 75% of the remaining life of the property.
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Item 5
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Interest expense is measured and reported by the lessee.
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Item 6
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Depreciation of the leased asset is not reported by the lessee.
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Item 7
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At the inception of the lease, the lessee records both an asset and a liability.
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Item 8
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The lessee reports a liability for the present value of all future payments anticipated under the lease agreement.
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Item 9
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The lessor continues to report the tangible asset covered by the lease on its balance sheet.
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Listed below are nine fixed-asset transactions. Record the journal entries. Dates and descriptions are not required. The only account titles you will need are listed:
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Account titles:
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Cash
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Land
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Land Improvements
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Building
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Equipment
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Expense (Determine what expense account titles.)
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Item 1
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Paid $2,500 for insurance coverage on equipment.
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Item 2
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Paid $7,500 for trees and shrubs.
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Item 3
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Paid $500 attorney’s fees for document preparation related to land purchase.
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Item 4
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Paid $150,000 for land and building. The land was separately valued at $40,000, and the building at $120,000. Hint: The cash is only $150,000, and the entry must balance.
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Item 5
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Paid $1,000 freight costs on purchase of new furniture.
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Item 6
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Paid $300 for staplers, trash cans, and desktop mats.
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Item 7
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Ordered new $50,000 truck, to be delivered and paid for in the future.
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Item 8
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Paid $10,000 of interest costs on loan on active building construction project.
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Item 9
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Paid $25,000 to expand parking lot paving.
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