ACCT 220 ACCT220 Homework 2 Solution

ACCT 220 ACCT220 Homework 2 Solution

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ACCT 220 Homework 2

 There are 3 problems this week. Click the tabs at the bottom of the spreadsheet to view each problem.

 

 

 

 For each of the bonds listed below, record the three requested journal entries.

 

 Dates and descriptions are not required.

 

 

 

 The Dorchester Company invested $100,000 in 5-year bonds. The bonds were purchased at par and bear interest at a rate of 8% per annum, payable semiannually.

 

 

 

 (a)

 Prepare the journal entry to record the initial investment.

 (b)

 Prepare the journal entry that Dorchester would record on each interest date.

 (c)

 Prepare the journal entry that Dorchester would record at maturity of the bonds.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 The Dorchester Company invested $100,000 of face amount of 5-year bonds. The bonds were purchased at 103 and bear interest at a stated rate of 8% per annum, payable semiannually.

 

 

 

 (a)

 Prepare the journal entry to record the initial investment.

 (b)

 Prepare the journal entry that Dorchester would record on each interest date.

 (c)

 Prepare the journal entry that Dorchester would record at maturity of the bonds.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 The Dorchester Company invested $100,000 of face amount of 4-year bonds. The bonds were purchased at 98 and bear interest at a stated rate of 8% per annum, payable semiannually.

 

 

 

 (a)

 Prepare the journal entry to record the initial investment.

 (b)

 Prepare the journal entry that Dorchester would record on each interest date.

 (c)

 Prepare the journal entry that Dorchester would record at maturity of the bonds.

 

 For each of the items below, indicate whether the lease is an operating lease or a capital lease.

 

 Reminder: The lessor is the party who owns the item; the lessee is the party using the item.

 

 

 Item 1

 The lessee reports the leased asset on its balance sheet.

 

 

 

 

 Item 2

 Payments are reported fully as rent expense.

 

 

 

 

 Item 3

 Ownership of the property passes to the lessee by the end of the lease term.

 

 

 

 

 Item 4

 The lease term is at least 75% of the remaining life of the property.

 

 

 

 

 Item 5

 Interest expense is measured and reported by the lessee.

 

 

 

 

 Item 6

 Depreciation of the leased asset is not reported by the lessee.

 

 

 

 

 Item 7

 At the inception of the lease, the lessee records both an asset and a liability.

 

 

 

 

 Item 8

 The lessee reports a liability for the present value of all future payments anticipated under the lease agreement.

 

 

 

 

 Item 9

 The lessor continues to report the tangible asset covered by the lease on its balance sheet.

 

 Listed below are nine fixed-asset transactions. Record the journal entries. Dates and descriptions are not required. The only account titles you will need are listed:

 

 

 

 Account titles:

 

 Cash

 

 Land

 

 Land Improvements

 

 Building

 

 Equipment

 

 Expense (Determine what expense account titles.)

 

 

Item 1

 Paid $2,500 for insurance coverage on equipment.

Item 2

 Paid $7,500 for trees and shrubs.

Item 3

 Paid $500 attorney's fees for document preparation related to land purchase.

Item 4

 Paid $150,000 for land and building. The land was separately valued at $40,000, and the building at $120,000. Hint: The cash is only $150,000, and the entry must balance.

Item 5

 Paid $1,000 freight costs on purchase of new furniture.

Item 6

 Paid $300 for staplers, trash cans, and desktop mats.

Item 7

 Ordered new $50,000 truck, to be delivered and paid for in the future.

Item 8

 Paid $10,000 of interest costs on loan on active building construction project.

Item 9

 Paid $25,000 to expand parking lot paving.


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