Reference no: EM13903974
1.On January 1, 2012, Sunrise Corporation issued $4,000,000, 9%, 5-year bonds dated January 1, 2012, at 94. The bonds pay semiannual interest on January 1 and July 1. The company uses the straight-line method of amortization and has a calendar year end.
Required:
Prepare all the journal entries that Sunrise Corporation would make related to this bond issue through January 1, 2013. Be sure to indicate the date on which the entries would be made.
2.Santos Company had the following transactions pertaining to short-term investments in equity securities.
Jan. 1 Purchased 1,500 shares of Quinn Company stock for $9,250 cash plus brokerage fees of $300.
June 1 Received cash dividends of $.30 per share on Quinn Company stock.
Sept. 15 Sold 400 shares of Quinn Company stock for $2,500 less brokerage fees of $100.
Dec. 1 Received cash dividends of $.75 per share on Quinn Company stock.
Required:
(a) Journalize the transactions.
(b) Indicate the income statement effects of the transactions.
3. Nichol Corporation's comparative balance sheets are presented below.
NICHOL CORPORATION
Comparative Balance Sheets
December 31
2012 2011
Cash $ 12,200 $ 17,700
Accounts receivable 25,200 22,300
Investments 25,000 16,000
Equipment 60,000 70,000
Accumulated depreciation (14,000) (10,000)
Total $108,400 $116,000
Accounts payable mce_markernbsp; 14,600 $11,100
Bonds payable 10,000 30,000
Common stock 50,000 45,000
Retained earnings 33,800 29,900
Total $108,400 $116,000
Additional information:
1. Net income was $17,300. Dividends declared and paid were $13,400.
2. Equipment which cost $10,000 and had accumulated depreciation of $2,200 was sold for $3,800.
3. All other changes in noncurrent account balances had a direct effect on cash flows, except the change in accumulated depreciation.
Required:
(a) Prepare a statement of cash flows for 2012 using the indirect method.
(b) Compute free cash flow.