Question

Foley Mountain Company Trial Balance 11/30/17 I cr Dr 112,000 127,000 1,000 50,000 65,000 62,000 75,000 0 32,000 106,000 12,000 22,000 45,000 0 Cash Accounts Receivable Allowance for Doubtful Accounts Short Term Note Receivable Supplies Inventory Equipment Building Accumulated Depreciation Copyright Accounts Payable Dividends Payable Interest Payable Unearned Revenue ST Note Payable LT Mortgage Payable Bonds Payable Premium on Bonds Payable Common Stock - $1.75 par Paid In Capital In Excess of Par-CS Preferred Stock - $5 par Paid In Capital In Excess of Par-PS Treasury Stock Retained Earnings Dividends Sales Revenue Sales Returns & Allowances Sales Discounts Cost of Goods Sold Bad Debts Expense Depreciation Expense Wages Expense Rent Expense Insurance Expense Supplies Expense Interest Revenue Interest Expense Gain on Sale of Equipment Income Tax Expense Total 125,000 16,840 175,000 86,000 1,000 50,000 0 3,500 2,000 480,160 10,000 3,000 46,000 30,000 26,000 160,000 98,000 25,000 16,000 1,000 6,500 15,000 46,000 1,065,500 1,065,500

Answer 1

Foley Mountain Company Journal entries Date Account 1-Dec Building LT Mortgage payable Credit Debit $ 300,000 $ 300,000 $ 6,000 25-Dec Cash Common Stock - $1.75 par Paid in Capital in Excess of Par-CS =1,000*1.75 $ $ 1,750 4,250 $ 303,000 29-Dec Dividends Dividends Payable =((17,5000/1.75)+1,000)*3 $ 303,000 Op shares= $175,000/$1.75 = 100,000 shares 31-Dec LT Mortgage payable Interest expense Cash $ $ 1,800 2,000 =300,000*8%*1/12 $ 3,800 $ 600 =45,000*8%*2/12 31-Dec Interest expense Interest Payable $ 600 31-Dec Interest expense Premium on Bonds Payable Interest Payable 11,347.20 1,152.80 =(125,000+16,840)*8% balancing figure =125,000*10% $ 12,500 $ 12,000 =22,000-10,000 31-Dec Unearned Revenue Sales Revenue $ 12,000 $ 550 =50 shares *$11 31-Dec Treasury Stock Cash $ 550

Credit Foley Mountain Company T Accounts Date Debit Date Credit Date Debit Date Cash Building Op bal $ 112,000 31-Dec $ 3,800 Op bal $ 25-Dec $ 6,000 31-Dec $ 550 1-Dec $ 300,000 Date Debit Date Credit LT Mortgage payable Op bal $ - 31-Dec $ 1,800 1-Dec $300,000 Date Debit Date Credit Unearned Revenue 31-Dec $ 12,000 Op bal $ 22,000 Bal. Bal. $ 298,200 $ 113,650 Common Stock - $1.75 par Op bal $ 175,000 25-Dec $ 1,750 $ 300,000 Bal. Paid in Capital in Excess of Par-CS Dividends Op bal $ 86,000 Op bal $ 2,000 25-Dec $ 4,250 29-Dec $ 303,000 Bal. $ 10,000 Interest Payable Op bal $ - 31-Dec $ 600 31-Dec $ 12,500 $ 90,250 Bal. Bal. $ 13,100 $ 176,750 Premium on Bonds Payable 31-Dec 1,152.80 Op bal $ 16,840 Bal. Treasury Stock - 550 $ 305,000 Dividends Payable Op bal $ - 29-Dec $ 303,000 Op bal $ 31-Dec $ Bal. $ 303,000 Bal. 15,687.20 Bal. $ 550 Sales Revenue Interest expense Op bal $ 480,160 Op bal $ 6,500 31-Dec $ 12,000 31-Dec $ 2,000 31-Dec $ 600 31-Dec 11,347.20 Bal. $ 492,160 Bal. 20,447.20

Foley Mountain Company Accounts Cash Accounts Receivable Allowance for doubtful account Short term Note receivable Supplies Inventory Equipment Building Accumulated Depreciation Copyright Accounts Payable Dividends Payable Interest Payable Unearned Revenue ST Note Payable LT Mortgage Payable Bonds Payable Premium on Bonds Payable Common Stock-$1.75 par Paid in Capital in Excess of Par-CS Preferred Stock-$5 par Paid in Capital in Excess of Par-PS Treasury Stock Retained earnings Dividends Sales Revenue Sales returns & allowances Sales discounts Cost of sales Bad Debt expense Depreciation expense Wages expense Rent expense Insurance expense Supplies expense Interest Revenue Interest expense Gain on sale of equipment Income tax expense Totals Trial Balance Debit Credit 113,650.00 127,000.00 1,000.00 50,000.00 65,000.00 62,000.00 75,000.00 300,000.00 32,000.00 106,000.00 12,000.00 303,000.00 13,100.00 10,000.00 45,000.00 298,200.00 125,000.00 15,687.20 176,750.00 90,250.00 1,000.00 50,000.00 550.00 3,500.00 305,000.00 492,160.00 10,000.00 3,000.00 46,000.00 30,000.00 26,000.00 160,000.00 98,000.00 25,000.00 16,000.00 1,000.00 20,447.20 15,000.00 46,000.00 1,684,647.20 1,684,647.20

#1 LT Mortagage Payable balance after Jan 31, 2018 payment 296,388.00 Calculation Interest expense Principal Payment Ending Principal balance Monthly Payment 1-Dec-17 31-Dec-17 31-Jan-18 3,800 3,800 Interest expense Principal Payment Ending Principal balance 300,000 2,000 1,800 298,200 1,988 1,812 296,388 Monthly Payment less Interest expense =300,000*8%*1/12 =3,800-2,000 =298, 200*8%*1/12 =3,800-1,812 =300,000-1,800 =298,200-1,812 #2 Expected receipts from sale (issuance) of bonds $ 2,154,434.70 Present Value (PV) PV of Interest PV of Maturity amount Total Present Value Amount Calculation $ 926,608.19 =(2,000,000*12%*6/12)*(1-(1/(1+5%)^10))/5% $ 1,227,826.51 =2,000,000/(1+5%)^10 $ 2,154,434.70 Interest rate - annual Interest rate semi annual (r) 10% 5% -10%/2 Number of years Number of periods (n) 10 -5 years*2 PV of Interest PV of Maturity amount =Interest*(1-(1/(1+r)^n)/ =Maturity amount /(1+r)^n