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the following information:
1. On January 1, 2006, Jamona
Corp. purchased 12% bonds, having a maturity value of $300,000, for
$322,744.44. The bonds provide the bondholders with a 10% yield. They are dated
January 1, 2006, and mature January 1, 2011, with interest receivable December
31 of each year. The company uses the effective-interest method to allocate
unamortized discount or premium. The bonds are classified as
available-for-sale. The fair value of the bonds at December 31 of each year is
as follows:
- 2006 –
$320,500
- 2007 –
$309,000
- 2008 –
$308,000
- 2009 –
$310,000
- 2010 –
$300,000
1. The following information is
available from Jamona’s inventory records
Units
Unit Cost
January 1, 2007 (beginning
inventory) 600
$ 8.00
Purchases:
January 5,
2007
1,200
9.00
January 25,
2007
1,300
10.00
February 16, 2007
800
11.00
March 26,
2007
600
12.00
A physical inventory on March 31, 2007, shows 1,600 units
on hand. Select any one of the inventory methods (LIFO, FIFO, Average Cost, or
others).
1. On July 6, Jamona Corp.
acquired the plant assets of Berry Company, which had discontinued operations.
The appraised value of the property is:
Land
$ 400,000
Building
1,200,000
Machinery and equipment
800,000
Total
$2,400,000
Jamona Corp. gave 12,500 shares of its $100 par value
common stock in exchange. The stock had a market value of $168 per share on the
date of the purchase of the property.
Jamona Corp. expended the following amounts in cash
between July 6 and December 15, the date when it first occupied the building.
Repairs to
building
$105,000
Construction of bases for machinery to be installed later
135,000
Driveways and parking lots
122,000
Remodeling of office space in
building
161,000
Special assessment by city on land
18,000
On December 20, the company paid cash for machinery,
$260,000, subject to a 2% cash discount, and freight on machinery of $10,500.
1. On January 1, 2007, Jamona
Corp. signed a five-year non-cancelable lease for a machine. The terms of the
lease called for Jamona to make annual payments of $8,668 at the beginning of
each year, starting January 1, 2007. The machine has an estimated useful life
of six years and a $5,000 un-guaranteed residual value. The machine reverts to
the lessor at the end of the lease term. Jamona uses the straight-line method
of depreciation for all of its plant assets. Jamona’s incremental borrowing
rate is 10%, and the lessor’s implicit rate is unknown.
- Prepare journal entries with appropriate
supporting detailed schedules for the balance sheet items: investments,
inventory, fixed assets, and capital leases.
- Prepare appropriate note disclosures.
