Wishaw, Inc. produces and sells outdoor equipment. On July 1, 2014, Wishaw, Inc. issued $150,000,000 of 20-year, 12% bonds at a market (effective) interest rate of 9%, receiving cash of $191,403,720. Interest on the bonds is payable semi annually on December 31 and June 30. The fiscal year of the company is the calendar year.
Required:
For all journal entries with a compound transaction, if an amount box does not require an entry, leave it blank.
1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, 2014.
2. Journalize the entries to record the following:
a. The first semi annual interest payment on December 31, 2014, and the amortization of the bond premium, using the straight-line method. (Round to the nearest dollar.)
b. The interest payment on June 30, 2015, and the amortization of the bond premium, using the straight-line method. (Round to the nearest dollar.)
3. Determine the total interest expense for 2014. Round to the nearest dollar.
4. Compute the price of 191,403,720 received for the bonds by using Table 1 and Table 2. (Round to the nearest dollar.) Your total may vary slightly from the price given due to rounding differences.
Present value of the face amount
Present value of the semi-annual interest payments
Price received for the bonds
13) Muses Manufacturing produces plastic toys and uses process costing. There are three processing departments—Assembling, Finishing, and Packaging. On January 1, 2012, the Finishing Department had 2,000 units of partially processed product in production. During January, 32,000 units were transferred in from the Assembling Department and 29,000 units were completed and transferred out. At the end of the month, there were 5,000 units of partially processed products remaining in the Finishing Department. See additional details below.
Finishing Department, ending balance at January 31, 2012
Percentage completion for materials cost: 90%
Percentage completion for conversion cost: 75%
For the Finishing Department, what was the number of equivalent units for the month of January, with respect to direct materials?
Please show all work and explain how you got the solution.
14. What major safeguards should be built into a system of internal control for purchases of goods? Give at least three examples for a business/organization of your choice.
15. Carr Company Produces a single product. Last year, Carr Manufactured 32,210 units and sold 26,700 units. Production costs for the year were as follows:
Fixed manufacturing overhead 418,730$
Variable manufacturing overhead 251,238$
Direct labor 157,829$
Direct Materials 241,575$
Sales were $1,241,550 for the year, variable selling and administrative expenses were $138,840, and fixed selling and administrative expenses were $199,702. There was no beginning inventory. Assume that direct labor is a variable cost.
Under variable costing, the company’s net operating income for the year would be:
a) $27,550 lower than absorption costing (incorrect)
b) $27,550 higher than under absorption costing
C) $71,630 lower than under absorption costing
d) $71,630 higher than under absorption costing