St. Leo MBA 560 module 4 test

mod4_p_student

Problem 1. Villarente Company issued 5-year $200,000 face value bonds at 95 on

January 1, 2012

. The stated interest rate on these bonds is 9%, and the effective interest rate is 10.33%. Use the effective interest rate method to complete the amortization schedule below.

 

Payment

January 1, 2012    

    

    

    

    

    

    

 

Cash

Interest Expense

Discount Amortization

Carrying Value

December 31, 2012

December 31, 2013

December 31, 2014

December 31, 2015

December 31, 2016

Totals

Problem 2. Allen Corporation was organized on July 15, 2012. It was authorized to issue 150,000 shares of $25 par value common stock and 50,000 shares of 6% cumulative preferred stock. The preferred stock had a stated value of $50 per share. The following stock transactions relate to Allen Corporation.

·        

Issued 55,000 shares of common stock for $33 per share.

·         Issued 2,750 shares of the class A preferred stock for $62 per share.

·         Issued 27,500 shares of common stock for $35 per share.

Required: 1) Indicate the effect of each of these transactions on Allen’s financial statements. Include dollar amounts in the model, below. After recording the three transactions, calculate column totals. 2) After these transactions have been recorded, what is the total amount of stockholders’ equity? 3) After these transactions have been recorded, how many shares of common stock are outstanding?    

=

Cash 

+

+

+

 

          

                              

Assets

Equity

Cash Flow

Common Stock

Paid-in Capital in Excess of Par Value

Preferred Stock

Paid-in Capital in Excess of Stated Value

  


Problem 1.
 Villarente Company issued 5-year $200,000 face value bonds at 95 on

January 1, 2012

. The stated interest rate on these bonds is 9%, and the effective interest rate is 10.33%. Use the effective interest rate method to complete the amortization schedule below.

 

Cash

Payment

Interest Expense

Discount Amortization

Carrying
Value

January 1, 2012

December 31, 2012

December 31, 2013

December 31, 2014

December 31, 2015

December 31, 2016

Totals


Problem 2.
Allen Corporation was organized on July 15, 2012. It was authorized to issue 150,000 shares of $25 par value common stock and 50,000 shares of 6% cumulative preferred stock. The preferred stock had a stated value of $50 per share. The following stock transactions relate to Allen Corporation.

· Issued 55,000 shares of common stock for $33 per share.

· Issued 2,750 shares of the class A preferred stock for $62 per share.

· Issued 27,500 shares of common stock for $35 per share.

Required:
1) Indicate the effect of each of these transactions on Allen’s financial statements. Include dollar amounts in the model, below. After recording the three transactions, calculate column totals.
2) After these transactions have been recorded, what is the total amount of stockholders’ equity?
3) After these transactions have been recorded, how many shares of common stock are outstanding?
   

+

+

Assets

=

Equity

Cash Flow

Cash

Common Stock

+

Paid-in Capital in Excess of Par Value

Preferred Stock

Paid-in Capital in Excess of Stated Value

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