1. ON the first day of the current fiscal year, $1,000,000 of 10-year, 7% bonds, with interest payable semiannually, were sold for $1,050,000. Present entries to record the following transactions for the current fiscal year:
a. Issuance of the bonds
b. First semiannual interest payment
c. Amortization of bond premium for the year, using the straight-line method of amortization
2. Indicate the section where each of the following items would be reported on the corporation balance sheet:
CA-Current assets
I-Investments
PPE-property, plant and equipment
IA-Intangible assets
CL-current liabilities
LTL-long term liabilities
PIC-paid in capital
RE-retained earnings
a. Deferred income tax payable (due after current year)
b. Marketable securities
c. Bond sinking fund
d. Excess of issue price over par of common stock
e. Investment in Adkins Co Bonds
f. Unamortized bond discount (on bonds due in 2008)
3. Indicate the section (operating activities, investing activities, financing activities or none) in which each of the following would be reported on the statement of cash flows prepared by the indirect method:
a. Gain on sale of fixed assets
b. Operating income
c. Retirement of long term debt
d. Sale of capital stock
e. Distribution of stock dividends
f. Payment of cash dividends
g. Purchase of fixed assets
h. Sale of fixed assets
i. Receipt of interest revenue
j. Payment of interest expense
a. Issuance of the bonds
b. First semiannual interest payment
c. Amortization of bond premium for the year, using the straight-line method of amortization
2. Indicate the section where each of the following items would be reported on the corporation balance sheet:
CA-Current assets
I-Investments
PPE-property, plant and equipment
IA-Intangible assets
CL-current liabilities
LTL-long term liabilities
PIC-paid in capital
RE-retained earnings
a. Deferred income tax payable (due after current year)
b. Marketable securities
c. Bond sinking fund
d. Excess of issue price over par of common stock
e. Investment in Adkins Co Bonds
f. Unamortized bond discount (on bonds due in 2008)
3. Indicate the section (operating activities, investing activities, financing activities or none) in which each of the following would be reported on the statement of cash flows prepared by the indirect method:
a. Gain on sale of fixed assets
b. Operating income
c. Retirement of long term debt
d. Sale of capital stock
e. Distribution of stock dividends
f. Payment of cash dividends
g. Purchase of fixed assets
h. Sale of fixed assets
i. Receipt of interest revenue
j. Payment of interest expense