Question - RECORD THE FOLLOWING TRANSACTION ON THE TRANSACTION DATE AND ON DEC. 31ST 2009. Also prepare the Cash Flow statement, Income statement and statement of changes in Balance Sheet for the company as of Dec 31st 2009.
1. Borrowed $40,000 from a bank on June 30th. The 5-year loan carried a 10% interest rate.
2. Invested $50,000 in a certificate of deposit on March 1st. The certificate carried an interest rate of 12%.
3. Purchased goods costing $50,000 on account.
4. Sold goods costing $40,000 for $56,000 on account.
5. Received $90,000 in advance on July1st for services to be provided over the next 15 months.
6. Paid $24,000 in advance on March 31st for renting the factory building for the next 2 years.
7. Sold goods worth $27,000 for cash. The cost of those goods to us was $18,000. We also collected accounts receivables worth $60,000.
8. The company declared a stock dividend of 200 shares. The market value of the shares on the date of declaration was $12 and the face value was $10.
9. The company issued an 11% bond on April 1st. The face value of the bond was $100,000 and it was issued at 98%. The market rate of interest was 12%. Record the interest expense and interest paid and the value of the bond on Dec 31st. Also record the amortization of discount or premium.
10. The company purchased a machine worth $40,000 on January 1st. The machine had a useful life of 5 years and zero salvage value. The company also paid $5,000 worth of freight and insurance expenses to acquire the machine. On September 30th due to certain technological issues the company decided to sell the machine for $30,000.