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1) In a single-step income statement, all data are classified under two categories: (1)
Revenues, or (2) Expenses. If the income statement is recast in a multiple-step format,
what additional information or intermediate components of income would be
presented?
2) On January 1, 2014, Moon Enterprises sold 8%, 20-year bonds with a face amount of
$1,000,000 for $950,000. Interest is payable semiannually on July 1 and January 1 .
Instructions
Calculate the carrying value of the bond at December 31, 2014 and 2015 .
3) New Slang Pest Control has the following balances in selected accounts on
December 31, 2014 .
Accounts Receivable$ 0
Accumulated Depreciation Equipment0
Equipment6,650
Interest Payable0
Notes Payable20,000
Prepaid Insurance2,220
Salaries and Wages Payable0
Supplies2,940
Unearned Service Revenue30,000
All of the accounts have normal balances. The information below has been gathered at
December 31, 2014 .
1>Depreciation on the equipment for 2014 is $1,300.
2>New Slang Pest Control borrowed $20,000 by signing a 10%, one-year note on July
1, 2014 .
3>New Slang Pest Control paid $2,220 for 12 months of insurance coverage on October
1, 2014 .
4>New Slang Pest Control pays its employees total salaries of $11,000 every Monday
for the preceding 5-day week (Monday-Friday). On Monday, December 27, 2014,
employees were paid for the week ending December 24, 2014 . All employees worked
the five days ending December 31, 2014 .
5>New Slang Pest Control performed disinfecting services for a client in December
2014 . The client will be billed $3,200.
6>On December 1, 2014, New Slang Pest Control collected $30,000 for disinfecting
processes to be performed from December 1, 2014, through May 31, 2014 .
7>A count of supplies on December 31, 2014, indicates that supplies of $850 are on
hand.
Instructions
Prepare in journal form with explanations, the adjusting entries for the seven items
listed for New Slang Pest Control.
4) Orley Company had the following transactions.
1>Issued 5,000 shares of common stock with a stated value of $10 for $130,000.
2>Issued 2,000 shares of $100 par preferred stock at $108 for cash.
Instructions
Prepare the journal entries to record the above stock transactions.
5) The market price of a bond is obtained by discounting to its present value the
_______________ paid at maturity, and all _____________ payments to be made over
the term of the bond.
