On November 1, 2016, a $216,000, 9-month, noninterest-bearing note is issued at a
10% discount rate.
Required: Prepare the appropriate journal entry to record the issuance of the note.
1> Determine the effective interest rate.
2> Prepare the appropriate journal entry on December 31, 2016, to record interest on
the note for the 2016 financial statements.
3> Prepare the appropriate journal entry(s) on July 31, 2017, to record interest and the
payment of the note.
Shown below is activity for one of the products of Denver Office Equipment: January 1
balance, 500 units @ $55 $27,500
Purchases:
January 10: 500 units @ $60
January 20: 1,000 units @ $63
Sales:
January 12: 800 units
January 28: 750 units Required: Compute the January 31 ending inventory and cost of
goods sold for January, assuming Denver uses FIFO.
How are outstanding stock options and awards taken into account in computing diluted
EPS for V Co.?
In its 2016 Annual Report to shareholders, V Co. had the following disclosure note
about its EPS:
NOTE 9 – EARNINGS PER SHARE:
The following represents the reconciliation from basic earnings per share to diluted
earnings per share. Options to purchase 8.3 million and 9.7 million shares of common
stock were outstanding at May 31, 2016 and May 31, 2015, respectively, but were not
included in the computation of diluted earnings per share because the options’ exercise
prices were greater than the average market price of the common shares and, therefore,
the effect would be antidilutive. No such antidilutive options were outstanding at May
31, 2014.
Year ended May 31,
2016 2015 2014
Guido Properties owes First State Bank $60 million under a 7% note with two years
remaining to maturity. Due to financial difficulties of Guido, the previous year’s interest
($4.2 million) was not received. The bank agrees to settle the note receivable and
accrued interest receivable in exchange for land having a fair value of $44 million.
Required: Compute the loss on troubled debt restructuring that the bank would record.
Listed below are five terms followed by a list of phrases that describe or characterize
each of the terms. Match each phrase with the correct term.