Perfect systems borrow $94,000 cash on May 15, 2011, by signing
a 60-day, 12% notes.
1. On what date this note mature
2. Suppose the face value of note equals $94,000, the
principal of the loan. Prepare the journal entries to record (a)
issuance of the note and (b) payment of the note at maturity.
10-1
Note round amounts to the nearest whole dollar; assume no
reversing entries are used
On January 1, 2011, Kidman Enterprise issues a bond that have
a $1,700,000 Par value, mature in 20 years and pay 9% interest
semiannually on June 30 and December 31. The bonds are sold at par.
1. How much interests will Kidman pay (in cash) to the
bondholders every six months?
2. Prepare journal entries to record (a) the issuance of
bonds on January 1, 2011; (b) The first interest payment on June
30, 2011; and (c) the second interest payment on December 31,
2011.
3. Prepare the journal entry for issuance assuming the bonds
are issued at (a) 98 and (b) 102.
10-16
Ramirez Company is considering a project that will require a
$500,000 loan. It presently has total liabilities of $200,000 and
total asset of $620,000
1. Compute Ramirez’s (a) present debt-to-equity ratio and (b)
the debt-to-equity ratio assuming it borrows $500,000 to fund the
project.
2. Evaluate and discuss the level of risk involved if Ramirez
borrows the funds to pursue the project.
11-2
Aloha Corporation issues 6,000 shares of its common stock for
$144,000 cash on February 20. Prepare journal entries to record
this event under each of the following separate situations.
1. The stock has neither par nor stated value.
2. The stock has $20 par value
3. The stock has $8 stated value
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