Use the Following Data for Questions 10 Through 17

question 10

Essay

Use the following data for questions 10 through 17. Each question is independent of the other questions.
Sawyer Corporation has a machine (Machine A) that it acquired on 1/1/14 for $540,000. On 12/31/14 such machines have a selling price and fair value of $621,000. When used in production, such machines have an estimated useful life of 10 years with no salvage value. Use the straight-line method.
Brown Corporation has a machine (Machine B) that it acquired on 1/1/14 for $729,000. On 12/31/14 such machines have a selling price and fair value of $540,000. When used in production, such machines have an estimated useful life of 10 years with no salvage value. Use the straight-line method.
On 12/31/14 Brown gave Machine B plus $81,000 cash to Sawyer in return for
Machine A.
-Long-Term Debt."1. On March 31, 2011, Hanson Corporation sold $9,000,000 of its 8%, 10-year bonds for $8,653,500 including accrued interest. The bonds were dated January 1, 2011. Interest is paid semiannually on January 1 and July 1. On April 1, 2015, Hanson purchased 1/2 of the bonds on the open market at 99 plus accrued interest and canceled them. Hanson uses the straight-line method for amortization of bond premiums and discounts.(a) What was the amount of the gain or loss on retirement of the bonds?(b) Prepare the journal entry needed at April 1, 2015 to record retirement of the bonds. Assume that interest and premium or discount amortization have been recorded through January 1, 2015. Record interest and amortization on only the bonds retired.(c) Prepare the journal entry needed at July 1, 2015 to record interest and premium or discount amortization.""2. On January 1 of the current year, Feller Corporation issued $5,000,000 of 10% debenture bonds on a basis to yield 9%, receiving $5,224,300. Interest is payable annually on December 31 and the bonds mature in 6 years. The effective-interest method is used.(a) What is the interest expense for the first year?(b) What is the interest expense for the second year?""3. On October 1, 2014, Noller Company issued $6,000,000 par value, 10%, 10-year bonds dated July 1, 2014, with interest payable semiannually on January 1 and July 1. The bonds are issued at $6,813,000 (to yield 8%) plus accrued interest. The effective interest method is used.(a) Prepare the journal entry at the date the bonds are issued.(b) Prepare the adjusting entry at December 31, 2014, the end of the fiscal year.(c) Prepare the entry for the interest payment on January 1, 2015."

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Definitions:

Quintile

A statistical value dividing a data set into five equal parts, each representing 20% of the population being studied.

Medicaid

A joint federal and state program that helps with medical costs for some people with limited income and resources.

Disabled Persons

Individuals who have a physical, mental, intellectual, or sensory impairment which, in interaction with various barriers, may hinder their full and effective participation in society on an equal basis with others.

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