1. On March 1, 2013, Navy Corporation used excess cash to purchase U.S. Treasury bonds for $103,000 plus accrued interest. The bonds were purchased at face value. The appropriate interest rate is 6%. Interest on these bonds is payable on January 1 and July 1 of each year. Navy’s investment is accounted for as held to maturity. The fair value of the Treasury bonds is $104,000 at year-end.

Required:

Prepare the appropriate journal entries to record the transactions for the year, including any year-end adjustments. Show calculations, rounded to the nearest dollar.

 

 

 

 

 

 

 

 

2. Jackson Company engaged in the following investment transactions during the current year.

 

 

   

Required:

Prepare the appropriate journal entries to record the transactions for the year including year-end adjustments. Show calculations.

 

 

 

 

 

 

 

 

 

 

3. The following selected transactions relate to liabilities of Chicago Glass Corporation for 2013. Chicago’s fiscal year ends on December 31.

 

1. On January 15, Chicago received $7,000 from Henry Construction toward the purchase of $66,000 of plate glass to be delivered on February 6.

2. On February 3, Chicago received $6,700 of refundable deposits relating to containers used to transport glass components.

3. On February 6, Chicago delivered the plate glass to Henry Construction and received the balance of the purchase price.

4. First quarter credit sales totaled $700,000. The state sales tax rate is 4% and the local sales tax rate is 2%.

 

Required:

Prepare journal entries for the above transactions.

 

 

 

 

 

 

 

4. The following selected transactions relate to contingencies of Bowe-Whitney Inc. Bowe-Whitney’s fiscal year ends on December 31, 2013, and financial statements are published in March 2014.

 

1. Bowe-Whitney is involved in a lawsuit resulting from a dispute with a customer over a 2013 transaction. At December 31, attorneys advised that it was probable that Bowe-Whitney would lose $3 million in an unfavorable outcome. On February 12, 2014, judgment was rendered against Bowe-Whitney in the amount of $14 million plus interest, a total of $15.2 million. Bowe-Whitney does not plan to appeal the judgment.

2. Since August of 2013, Bowe-Whitney has been involved in labor disputes at two of its facilities. Negotiations between the company and the unions have not produced a settlement and, since January 2013, strikes have been ongoing at these facilities. It is virtually certain that material costs will be incurred but the amount of resultant costs cannot be adequately predicted.

3. Bowe-Whitney is the defendant in a lawsuit filed in January 2014 in which Access Company seeks $10 million as an adjustment to the purchase price related to the sale of Bowe-Whitney’s hardwood division in 2013. The lawsuit alleges that Bowe-Whitney misrepresented the division’s assets and liabilities. Legal counsel advises that it is reasonably possible that Bowe-Whitney could lose $5 million, but that it’s extremely unlikely it could lose the $10 million asked for.

4. At March 1, 2014, the EPA is in the process of investigating the possibility of environmental violations at one of Bowe-Whitney’s sites, but has not proposed a penalty assessment. Management feels an assessment is reasonably possible, and if an assessment is made, a settlement of up to $33 million is probable.

 

Required:

Prepare journal entries that should be recorded as a result of each of the above contingencies.

 

 

 

 

 

 

 

 

 

 

5. Determine the price of a $200,000 bond issue under each of the following independent assumptions:

 

 

    

 

 

 

Click here to request for this assignment help

Place New Order
It's Free, Fast & Safe

"Looking for a Similar Assignment? Order now and Get a Discount!