During the month of March, Olinger Company’s employees earned wages of $78,200. Withholdings related to these wages were $5,982 for Social Security (FICA), $9,164 for federal income tax, $3,788 for state income tax, and $489 for union dues. The company incurred no cost related to these earnings for federal unemployment tax but incurred $855 for state unemployment tax. Prepare the necessary March 31 journal entry to record salaries and wages expense and salaries and wages payable. Assume that wages earned during March will be paid during April. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Mar. 31 2. On August 1, 2014, Ortega Corporation issued $784,800, 8%, 10-year bonds at face value. Interest is payable annually on August 1. Ortega’s year-end is December 31. Prepare journal entries to record the issuance of the bonds. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Aug. 1 Show List of Accounts Debit Credit Prepare journal entries to record the accrual of interest on December 31, 2014. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Dec. 31 3. Romine Company issued $584,800 of 7%, 15-year bonds on January 1, 2014, at face value. Interest is payable annually on January 1. Don't show me this message again for the assignment Prepare the journal entries to record the issuance of the bonds. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Jan. 1, 2014 Show List of Accounts Link to Text Prepare the journal entries to record the accrual of interest on December 31, 2014. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Dec. 31, 2014 4. Cole Corporation issued $377,000, 7%, 21-year bonds on January 1, 2014, for $306,936. This price resulted in an effective-interest rate of 9% on the bonds. Interest is payable annually on January 1. Cole uses the effective-interest method to amortize bond premium or discount. Don't show me this message again for the assignment Prepare the schedule using effective-interest method to amortize bond premium or discount of Cole Corporation. (Round answers to 0 decimal places, e.g. 125.) Interest Periods Interest to Be Paid Interest Expense to Be Recorded $ Issue date Bond Carrying Value Discount Unamortized Amortization Discount $ $ $ $ 1 2 Show List of Accounts Link to Text Prepare the journal entries to record the issuance of the bonds. (Round answers to 0 decimal places, e.g. 125. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Jan. 1, 2014 Show List of Accounts Link to Text Prepare the journal entries to record the accrual of interest and the discount amortization on December 31, 2014. (Round answers to 0 decimal places, e.g. 125. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Dec. 31, 2014 Account Titles and Explanation Debit Credit Don't show me this message again for the assignment Show List of Accounts Link to Text Link to Text Prepare the journal entries to record the payment of interest on January 1, 2015. (Round answers to 0 decimal places, e.g. 125. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Jan. 1, 2015 5. Nance Co. receives $368,800 when it issues a $368,800, 6%, mortgage note payable to finance the construction of a building at December 31, 2014. The terms provide for semiannual installment payments of $18,816 on June 30 and December 31. Don't show me this message again for the assignment Prepare the schedule using effective-interest method to amortize bond premium or discount of Nance Co. (Round answers to 0 decimal places, e.g. 125.) Semiannual Interest Period Issue date Cash Payment $ Interest Expense $ Reduction of Principal $ 6/30/15 12/31/15 Don't show me this message again for the assignment Show List of Accounts Link to Text Principal Balance $ Prepare the journal entries to record the mortgage loan. (Round answers to 0 decimal places, e.g. 125. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Dec. 31, 2014 6. The financial statements of Tootsie Roll are presented below. TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF Earnings, Comprehensive Earnings and Retained Earnings (in thousands except per share data) For the year ended December 31, 2011 2010 2009 Net product sales $528,369 $517,149 $495,592 Rental and royalty revenue 4,136 4,299 3,739 Total revenue 532,505 521,448 499,331 Product cost of goods sold 365,225 349,334 319,775 Rental and royalty cost 1,038 1,088 852 Total costs 366,263 350,422 320,627 Product gross margin 163,144 167,815 175,817 Rental and royalty gross margin 3,098 3,211 2,887 Total gross margin 166,242 171,026 178,704 Selling, marketing and administrative expenses 108,276 106,316 103,755 Impairment charges — — 14,000 Earnings from operations 57,966 64,710 60,949 Other income (expense), net 2,946 8,358 2,100 Earnings before income taxes 60,912 73,068 63,049 Provision for income taxes 16,974 20,005 9,892 Net earnings $43,938 $53,063 $53,157 Net earnings Other comprehensive earnings (loss) Comprehensive earnings Retained earnings at beginning of year. Net earnings Cash dividends Stock dividends Retained earnings at end of year Earnings per share $43,938 (8,740) $35,198 $135,866 43,938 (18,360) (47,175) $114,269 $0.76 $53,063 1,183 $54,246 $53,157 2,845 $56,002 $147,687 53,063 (18,078) (46,806) $135,866 $144,949 53,157 (17,790) (32,629) $147,687 $0.90 Average Common and Class B Common shares 57,892 58,685 outstanding (The accompanying notes are an integral part of these statements.) $0.89 59,425 CONSOLIDATED STATEMENTS OF Financial Position TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES (in thousands except per share data) Assets December 31, 2011 2010 CURRENT ASSETS: Cash and cash equivalents $78,612 $115,976 Investments 10,895 7,996 Accounts receivable trade, less allowances of $1,731 and $1,531 41,895 37,394 Other receivables 3,391 9,961 Inventories: Finished goods and work-in-process 42,676 35,416 Raw materials and supplies 29,084 21,236 Prepaid expenses 5,070 6,499 Deferred income taxes 578 689 Total current assets 212,201 235,167 PROPERTY, PLANT AND EQUIPMENT, at cost: Land 21,939 21,696 Buildings 107,567 102,934 Machinery and equipment 322,993 307,178 Construction in progress 2,598 9,243 455,097 440,974 Less—Accumulated depreciation 242,935 225,482 Net property, plant and equipment 212,162 215,492 OTHER ASSETS: Goodwill 73,237 73,237 Trademarks 175,024 175,024 Investments 96,161 64,461 Split dollar officer life insurance 74,209 74,441 Prepaid expenses 3,212 6,680 Equity method investment 3,935 4,254 Deferred income taxes 7,715 9,203 Total other assets 433,493 407,300 Total assets $857,856 $857,959 Liabilities and Shareholders’ Equity December 31, 2011 2010 CURRENT LIABILITIES: Accounts payable $10,683 $9,791 Dividends payable 4,603 4,529 Accrued liabilities 43,069 44,185 Total current liabilities 58,355 58,505 NONCURRENT LIABILITES: Deferred income taxes 43,521 47,865 Postretirement health care and life insurance benefits 26,108 20,689 Industrial development bonds 7,500 7,500 Liability for uncertain tax positions 8,345 9,835 Deferred compensation and other liabilities 48,092 46,157 Total noncurrent liabilities 133,566 132,046 SHAREHOLDERS’ EQUITY: Common stock, $.69-4/9 par value—120,000 shares authorized— 25,333 25,040 36,479 and 36,057 respectively, issued Class B common stock, $.69-4/9 par value—40,000 shares 14,601 14,212 authorized—21,025 and 20,466 respectively, issued Capital in excess of par value 533,677 505,495 Retained earnings, per accompanying statement 114,269 135,866 Accumulated other comprehensive loss Treasury stock (at cost)—71 shares and 69 shares, respectively Total shareholders’ equity Total liabilities and shareholders’ equity (19,953) (1,992) 665,935 $857,856 (11,213) (1,992) 667,408 $857,959 TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF Cash Flows (in thousands) For the year ended December 31, 2011 2010 2009 CASH FLOWS FROM OPERATING ACTIVITIES: Net earnings $43,938 $53,063 $53,157 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation 19,229 18,279 17,862 Impairment charges — — 14,000 Impairment of equity method investment — — 4,400 Loss from equity method investment 194 342 233 Amortization of marketable security premiums 1,267 522 320 Changes in operating assets and liabilities: Accounts receivable (5,448) 717 (5,899) Other receivables 3,963 (2,373) (2,088) Inventories (15,631) (1,447) 455 Prepaid expenses and other assets 5,106 4,936 5,203 Accounts payable and accrued liabilities 84 2,180 (2,755) Income taxes payable and deferred (5,772) 2,322 (12,543) Postretirement health care and life insurance benefits 2,022 1,429 1,384 Deferred compensation and other liabilities 2,146 2,525 2,960 Others (708) 310 305 Net cash provided by operating activities 50,390 82,805 76,994 CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (16,351) (12,813) (20,831) Net purchase of trading securities (3,234) (2,902) (1,713) Purchase of available for sale securities (39,252) (9,301) (11,331) Sale and maturity of available for sale securities 7,680 8,208 17,511 Net cash used in investing activities (51,157) (16,808) (16,364) CASH FLOWS FROM FINANCING ACTIVITIES: Shares repurchased and retired (18,190) (22,881) (20,723) Dividends paid in cash (18,407) (18,130) (17,825) Net cash used in financing activities (36,597) (41,011) (38,548) Increase (decrease) in cash and cash equivalents (37,364) 24,986 22,082 Cash and cash equivalents at beginning of year 115,976 90,990 68,908 Cash and cash equivalents at end of year $78,612 $115,976 $90,990 Supplemental cash flow information Income taxes paid $16,906 $20,586 $22,364 Interest paid $38 $49 $182 Stock dividend issued $47,053 $46,683 $32,538 (The accompanying notes are an integral part of these statements.) Answer the following questions. Don't show me this message again for the assignment What were Tootsie Roll’s total current liabilities at December 31, 2011? (Enter amount in thousands.) Current liabilities as at December 31, 2011 $ What was the increase/decrease in Tootsie Roll’s total current liabilities from the prior year? (Enter amount in thousands.) Change in current liabilities $ Don't show me this message again for the assignment How much were the accounts payable at December 31, 2011? (Enter amount in thousands.) Accounts payable $ Don't show me this message again for the assignment 7. The financial statements of The Hershey Company and Tootsie Roll are presented below. THE HERSHEY COMPANY CONSOLIDATED STATEMENTS OF INCOME For the years ended December 31, 2011 2010 2009 In thousands of dollars except per share amounts Net Sales $6,080,788 $5,671,009 $5,298,668 Costs and Expenses: Cost of sales 3,548,896 3,255,801 3,245,531 Selling, marketing and administrative 1,477,750 1,426,477 1,208,672 Business realignment and impairment (credits) (886) 83,433 82,875 charges, net Total costs and expenses 5,025,760 4,765,711 4,537,078 Income before Interest and Income Taxes 1,055,028 905,298 761,590 Interest expense, net 92,183 96,434 90,459 Income before Income Taxes 962,845 808,864 671,131 Provision for income taxes 333,883 299,065 235,137 Net Income $628,962 $509,799 $435,994 Net Income Per Share—Basic—Class B Common $2.58 $2.08 $1.77 Stock Net Income Per Share—Diluted—Class B Common $2.56 $2.07 $1.77 Stock Net Income Per Share—Basic—Common Stock $2.85 $2.29 $1.97 Net Income Per Share—Diluted—Common Stock $2.74 $2.21 $1.90 Cash Dividends Paid Per Share: Common Stock $1.3800 $1.2800 $1.1900 Class B Common Stock 1.2500 1.1600 1.0712 The notes to consolidated financial statements are an integral part of these statements and are included in the Hershey's 2011 Annual Report, available at www.thehersheycompany.com. THE HERSHEY COMPANY CONSOLIDATED BALANCE SHEETS December 31, In thousands of dollars ASSETS Current Assets: Cash and cash equivalents Accounts receivable—trade Inventories Deferred income taxes Prepaid expenses and other Total current assets Property, Plant and Equipment, Net Goodwill Other Intangibles Deferred Income Taxes Other Assets Total assets LIABILITIES AND STOCKHOLDERS’ EQUITY Current Liabilities: Accounts payable Accrued liabilities Accrued income taxes Short-term debt Current portion of long-term debt Total current liabilities Long-term Debt Other Long-term Liabilities Total liabilities Commitments and Contingencies Stockholders’ Equity: The Hershey Company Stockholders’ Equity Preferred Stock, shares issued: none in 2011 and 2010 Common Stock, shares issued: 299,269,702 in 2011 and 299,195,325 in 2010 Class B Common Stock, shares issued: 60,632,042 in 2011 and 60,706,419 in 2010 Additional paid-in capital Retained earnings Treasury—Common Stock shares, at cost: 134,695,826 in 2011 and 132,871,512 in 2010 Accumulated other comprehensive loss The Hershey Company stockholders’ equity Noncontrolling interests in subsidiaries Total stockholders’ equity Total liabilities and stockholders’equity 2011 2010 $693,686 399,499 648,953 136,861 167,559 2,046,558 1,559,717 516,745 111,913 38,544 138,722 $4,412,199 $884,642 390,061 533,622 55,760 141,132 2,005,217 1,437,702 524,134 123,080 21,387 161,212 $4,272,732 $420,017 612,186 1,899 42,080 97,593 1,173,775 1,748,500 617,276 3,539,551 — $410,655 593,308 9,402 24,088 261,392 1,298,845 1,541,825 494,461 3,335,131 — — — 299,269 299,195 60,632 60,706 490,817 4,699,597 434,865 4,374,718 (4,258,962) (4,052,101) (442,331) 849,022 23,626 872,648 $4,412,199 (215,067) 902,316 35,285 937,601 $4,272,732 THE HERSHEY COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS For the years ended December 31, 2011 2010 In thousands of dollars Cash Flows Provided from (Used by) Operating Activities 2009 Net income Adjustments to reconcile net income to net cash provided from operations: Depreciation and amortization Stock-based compensation expense, net of tax of $15,127, $17,413 and $19,223, respectively Excess tax benefits from stock-based compensation Deferred income taxes Gain on sale of trademark licensing rights, net of tax of $5,962 Business realignment and impairment charges, net of tax of $18,333, $20,635 and $38,308, respectively Contributions to pension plans Changes in assets and liabilities, net of effects from business acquisitions and divestitures: Accounts receivable—trade Inventories Accounts payable Other assets and liabilities Net Cash Provided from Operating Activities Cash Flows Provided from (Used by) Investing Activities Capital additions Capitalized software additions Proceeds from sales of property, plant and equipment Proceeds from sales of trademark licensing rights Business acquisitions Net Cash (Used by) Investing Activities Cash Flows Provided from (Used by) Financing Activities Net change in short-term borrowings Long-term borrowings Repayment of long-term debt Proceeds from lease financing agreement Cash dividends paid Exercise of stock options Excess tax benefits from stock-based compensation Contributions from noncontrolling interests in subsidiaries Repurchase of Common Stock Net Cash (Used by) Financing Activities (Decrease) Increase in Cash and Cash Equivalents Cash and Cash Equivalents as of January 1 Cash and Cash Equivalents as of December 31 Interest Paid Income Taxes Paid $628,962 $509,799 $435,994 215,763 197,116 182,411 28,341 32,055 34,927 (13,997) 33,611 (1,385) (18,654) (4,455) (40,578) (11,072) — — 30,838 77,935 60,823 (8,861) (6,073) (9,438) (115,331) 7,860 (205,809) 580,867 20,329 (13,910) 90,434 13,777 901,423 (323,961) (23,606) 312 20,000 (5,750) (333,005) (179,538) (21,949) 2,201 — — (199,286) (126,324) (19,146) 10,364 — (15,220) (150,326) 10,834 1,156 249,126 348,208 (256,189) (71,548) 47,601 — (304,083) (283,434) 184,411 92,033 13,997 1,385 — 10,199 (384,515) (169,099) (438,818) (71,100) (190,956) 631,037 884,642 253,605 $693,686 $884,642 $97,892 $97,932 292,315 350,948 (458,047) — (8,252) — (263,403) 28,318 4,455 7,322 (9,314) (698,921) 216,502 37,103 $253,605 $91,623 252,230 (54,457) 46,584 74,000 37,228 293,272 1,065,749 TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF Earnings, Comprehensive Earnings and Retained Earnings (in thousands except per share data) For the year ended December 31, 2011 2010 2009 Net product sales $528,369 $517,149 $495,592 Rental and royalty revenue 4,136 4,299 3,739 Total revenue 532,505 521,448 499,331 Product cost of goods sold 365,225 349,334 319,775 Rental and royalty cost 1,038 1,088 852 Total costs Product gross margin Rental and royalty gross margin Total gross margin Selling, marketing and administrative expenses Impairment charges Earnings from operations Other income (expense), net Earnings before income taxes Provision for income taxes Net earnings 366,263 163,144 3,098 166,242 108,276 — 57,966 2,946 60,912 16,974 $43,938 350,422 167,815 3,211 171,026 106,316 — 64,710 8,358 73,068 20,005 $53,063 320,627 175,817 2,887 178,704 103,755 14,000 60,949 2,100 63,049 9,892 $53,157 Net earnings Other comprehensive earnings (loss) Comprehensive earnings $43,938 (8,740) $35,198 $53,063 1,183 $54,246 $53,157 2,845 $56,002 $147,687 53,063 (18,078) (46,806) $135,866 $144,949 53,157 (17,790) (32,629) $147,687 Retained earnings at beginning of year. Net earnings Cash dividends Stock dividends Retained earnings at end of year Earnings per share $135,866 43,938 (18,360) (47,175) $114,269 $0.76 $0.90 Average Common and Class B Common shares 57,892 58,685 outstanding (The accompanying notes are an integral part of these statements.) $0.89 59,425 CONSOLIDATED STATEMENTS OF Financial Position TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES (in thousands except per share data) Assets December 31, 2011 2010 CURRENT ASSETS: Cash and cash equivalents $78,612 $115,976 Investments 10,895 7,996 Accounts receivable trade, less allowances of $1,731 and $1,531 41,895 37,394 Other receivables 3,391 9,961 Inventories: Finished goods and work-in-process 42,676 35,416 Raw materials and supplies 29,084 21,236 Prepaid expenses 5,070 6,499 Deferred income taxes 578 689 Total current assets 212,201 235,167 PROPERTY, PLANT AND EQUIPMENT, at cost: Land 21,939 21,696 Buildings 107,567 102,934 Machinery and equipment 322,993 307,178 Construction in progress 2,598 9,243 455,097 440,974 Less—Accumulated depreciation 242,935 225,482 Net property, plant and equipment 212,162 215,492 OTHER ASSETS: Goodwill 73,237 73,237 Trademarks 175,024 175,024 Investments Split dollar officer life insurance Prepaid expenses Equity method investment Deferred income taxes Total other assets Total assets Liabilities and Shareholders’ Equity CURRENT LIABILITIES: Accounts payable Dividends payable Accrued liabilities Total current liabilities NONCURRENT LIABILITES: Deferred income taxes Postretirement health care and life insurance benefits Industrial development bonds Liability for uncertain tax positions Deferred compensation and other liabilities Total noncurrent liabilities SHAREHOLDERS’ EQUITY: Common stock, $.69-4/9 par value—120,000 shares authorized— 36,479 and 36,057 respectively, issued Class B common stock, $.69-4/9 par value—40,000 shares authorized—21,025 and 20,466 respectively, issued Capital in excess of par value Retained earnings, per accompanying statement Accumulated other comprehensive loss Treasury stock (at cost)—71 shares and 69 shares, respectively Total shareholders’ equity Total liabilities and shareholders’ equity 96,161 64,461 74,209 74,441 3,212 6,680 3,935 4,254 7,715 9,203 433,493 407,300 $857,856 $857,959 December 31, 2011 2010 $10,683 4,603 43,069 58,355 $9,791 4,529 44,185 58,505 43,521 26,108 7,500 8,345 48,092 133,566 47,865 20,689 7,500 9,835 46,157 132,046 25,333 25,040 14,601 14,212 533,677 114,269 (19,953) (1,992) 665,935 $857,856 505,495 135,866 (11,213) (1,992) 667,408 $857,959 TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF Cash Flows (in thousands) For the year ended December 31, 2011 2010 2009 CASH FLOWS FROM OPERATING ACTIVITIES: Net earnings $43,938 $53,063 $53,157 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation 19,229 18,279 17,862 Impairment charges — — 14,000 Impairment of equity method investment — — 4,400 Loss from equity method investment 194 342 233 Amortization of marketable security premiums 1,267 522 320 Changes in operating assets and liabilities: Accounts receivable (5,448) 717 (5,899) Other receivables 3,963 (2,373) (2,088) Inventories (15,631) (1,447) 455 Prepaid expenses and other assets 5,106 4,936 5,203 Accounts payable and accrued liabilities 84 2,180 (2,755) Income taxes payable and deferred (5,772) 2,322 (12,543) Postretirement health care and life insurance benefits 2,022 1,429 1,384 Deferred compensation and other liabilities Others Net cash provided by operating activities CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures Net purchase of trading securities Purchase of available for sale securities Sale and maturity of available for sale securities Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES: Shares repurchased and retired Dividends paid in cash Net cash used in financing activities Increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year Supplemental cash flow information Income taxes paid Interest paid Stock dividend issued (The accompanying notes are an integral part 2,146 (708) 50,390 2,525 310 82,805 2,960 305 76,994 (16,351) (3,234) (39,252) 7,680 (51,157) (12,813) (2,902) (9,301) 8,208 (16,808) (20,831) (1,713) (11,331) 17,511 (16,364) (18,190) (18,407) (36,597) (37,364) 115,976 $78,612 (22,881) (18,130) (41,011) 24,986 90,990 $115,976 (20,723) (17,825) (38,548) 22,082 68,908 $90,990 $16,906 $20,586 $38 $49 $47,053 $46,683 of these statements.) $22,364 $182 $32,538 NOTE 6—OTHER INCOME (EXPENSE), NET: Other income (expense), net is comprised of the following: Interest and dividend income Gains (losses) on trading securities relating to deferred compensation plans Interest expense Impairment of equity method investment. Equity method investment loss Foreign exchange gains (losses) Capital gains (losses) Miscellaneous, net 2011 2010 2009 $1,087 $879 $1,439 29 (121) _ (194) 2,098 (277) 274 3,364 4,524 (142) (243) _ (4,400) (342) (233) 4,090 951 (28) (38) 537 100 $2,946 $8,358 $2,100 As of December 31, 2009, management determined that the carrying value of an equity method investment was impaired as a result of accumulated losses from operations and review of future expectations. The Company recorded a pre-tax impairment charge of $4,400 resulting in an adjusted carrying value of $4,961 as of December 31, 2009. The fair value was primarily assessed using the present value of estimated future cash flows. Don't show me this message again for the assignment Based on the information contained in these financial statements, compute the current ratio for 2011 for each company. (Round answers to 2 decimal places, e.g. 15.25.) Hershey Current ratio Tootsie Roll :1 :1 Don't show me this message again for the assignment Based on the information contained in these financial statements, compute the following 2011 ratios for each company. (Round answers to 1 decimal places, e.g. 15.2% or 15.2 times.) (1) Debt to assets. Times interest earned. (Hershey’s total interest expense for 2011 was $94,780,000. See (2) Tootsie Roll’s Note 6 for its interest expense.) Hershey Tootsie Roll Debt to assets % % Times interest earned times times 8. In recent years, Farr Company has purchased three machines. Because of frequent employee turnover in the accounting department, a different accountant was in charge of selecting the depreciation method for each machine, and various methods have been used. Information concerning the machines is summarized in the table below. Machine 1 2 3 Acquired Jan. 1, 2012 July 1, 2013 Nov. 1, 2013 Cost $130,000 92,000 75,220 Salvage Value $31,900 11,300 6,220 Useful Life (in years) 9 5 7 Depreciation Method Straight-line Declining-balance Units-of-activity For the declining-balance method, Farr Company uses the double-declining rate. For the units-ofactivity method, total machine hours are expected to be 30,000. Actual hours of use in the first 3 years were: 2013, 880; 2014, 3,960; and 2015, 5,620. Don't show me this message again for the assignment Compute the amount of accumulated depreciation on each machine at December 31, 2015. MACHINE 1 Accumulated Depreciation at December 31 $ Don't show me this message again for the assignment Link to Text Link to Text MACHINE 2 $ MACHINE 3 $ If machine 2 was purchased on April 1 instead of July 1, what would be the depreciation expense for this machine in 2013? In 2014? 2013 Depreciation Expense $ 2014 $ Don't show me this message again for the assignment 9. Wempe Co. sold $3,402,000, 7%, 10-year bonds on January 1, 2014. The bonds were dated January 1, 2014, and pay interest on January 1. The company uses straight-line amortization on bond premiums and discounts. Financial statements are prepared annually. Don't show me this message again for the assignment Prepare the journal entries to record the issuance of the bonds assuming they sold at: (1) 103 and (2) 97. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) No. Date Account Titles and Explanation 1. 1/1/14 2. 1/1/14 Debit Credit 10. Grace Herron has just approached a venture capitalist for financing for her new business venture, the development of a local ski hill. On July 1, 2013, Grace was loaned $233,000 at an annual interest rate of 7%. The loan is repayable over 5 years in annual installments of $56,827, principal and interest, due each June 30. The first payment is due June 30, 2014. Grace uses the effective-interest method for amortizing debt. Her ski hill company’s year-end will be June 30. Don't show me this message again for the assignment Prepare an amortization schedule for the 5 years, 2013–2018. (Round answers to 0 decimal places, e.g. 125.) Period Cash Payment Interest Expense Principal Reduction Balance July 1, 2013 $ $ $ $ June 30, 2014 June 30, 2015 June 30, 2016 June 30, 2017 June 30, 2018 * * Amount may be off due to rounding. 11. Ratzlaff Company issues €2 million, 10-year, 8% bonds at 97, with interest payable on July 1 and January 1. Don't show me this message again for the assignment Prepare the journal entry to record the sale of these bonds on January 1, 2014. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Jan. 1 Don't show me this message again for the assignment Show List of Accounts Link to Text Assuming instead that the above bonds sold for 104, prepare the journal entry to record the sale of these bonds on January 1, 2014. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Jan. 1 Don't show me this message again for the assignment
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