Question

1. Bonds Payable

On July 1, 2019, ABC Corp. issued $1,000,000 of 11% bonds dated July 1, 2019 for $1,062,771. The bonds were sold to yield 10% and pay interest semiannually on July 1 and January 1. ABC Corp. uses the straight-line method of amortization. The company's fiscal year ends on February 28. The bonds have a life of 10 years, in other words they mature in 10 years. Please add this to the problem and show all completed work in excel.

Required:

1. Prepare the journal entry on July 1, 2019 to issue the bonds.

2. Prepare the entry to record the entries for the first two interest payments.

3. Prepare the journal entry to record the payment of the face amount to the creditors.

Round all amounts to the nearest dollar. Omit explanations for all journal entries.

2. Statement of Cash Flows

ABC Company has the following comparative balance sheet data available:

	12/31/2015	12/31/2014
Cash	$30,000	$80,000
Accounts Receivable, net	160,000	100,000
Inventory	100,000	70,000
Prepaid Rent	20,000	10,000
Total Current Assets	$310,000	$260,000
Equipment	$400,000	$200,000
Accumulated Depreciation	(60,000)	(50,000)
Total Assets	$650,000	$410,000
Accounts Payable	$50,000	$40,000
Salaries Payable	40,000	40,000
Bonds Payable	0	50,000
Common Stock, $10 par	300,000	100,000
Additional Paid-in Capital	50,000	0
Retained Earnings	210,000	180,000
Total Liabilities & Stockholders' Equity	$650,000	$410,000

Additional information:

1. The company reports net income of $100,000 and Depreciation Expense of $20,000 for the year ending December 31, 2015.

2. Dividends declared and paid in 2015, $70,000.

3. Equipment with a cost of $20,000, with Accumulated Depreciation of $10,000 was sold for $3,000.

4. New equipment was purchased for cash.

Using the indirect method, prepare the statement of cash flows for the year ending December 31, 2015.

Answer 1

The answer has been presented in the supporting sheet. All the parts has been solved with detailed explanation and format. For detailed answer refer to the supporting sheet.

Answer - Part 1) Credit Debit 1062771 62771 1000000 Date Account Title July, 1,2019. Cash Premium on Bond Payable ( 1062771-1000000) Bond Payable (To record bond issued at premium) b) 1 Date Account Title 2 January 1, 2020 Interest expense Premium on bond payable (62771/(10*2)) Bond Payable Debit Credit 51861 3139 55000 6 Febraury 28,20 Interest expense Premium on bond payable (3139*2/6) Interest Payable 17287 1046 90 18333 July 1,2020 Interest expense Premium on bond payable (3139*4/6) Interest Payable Cash 34574 2093 18333 N m 55000 6 c) 7 Date 3 July 1,2029 Debit Credit Account Title Bond Payable Cash 1000000 1000000

N W 100000 1 Part 2) ABC Company Statement of Cash Flow For the year ended 12/31/2015 5 Cash Flow From Operating Activities 6 Net Income Adjustments to reconcile the net income to net cashflow from operating 7 activities 3 Depreciation expense 9 Loss on sale of equipment (20000-10000)-3000) 10 Increase in account receivable (160000-10000) 11 Increase in inventory (10000-70000) 12 Increase in prepaid rent (20000-0000) 13 Increase in account payable (50000-40000) 20000 7000 -60000 -30000 -10000 10000 -63000 37000 15 Net cash inflow from operating activities 16 Cash flow from investing activities 17 Cash proceeds from sale of equipment 18 Cash Paid for purchase of equipment (400000-200000+20000) 19 Net cash outflow from investing activities 3000 -220000 -217000

A -70000 -50000 250000 o Cash Flow From Financing activities 1 Cash dividend paid 2 Cash paid for bond payable (50000-0) 3 Cash proceeds from issue of common stock (300000+50000-100000) 4 Net cash inflow from financing activities 5 Net cash outflow from all activities 6 Beginning cash balance 7 Ending cash balance 130000 -50000 80000 30000 9 For any help please comment in the comment box o Thank You