Saint leo mba560 test 4

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Description

Problem 1. Villarente Company issued 5-year $200,000
face value bonds at 95 on January 1, 2012. The stated interest rate on these
bonds is 9%, and the effective interest rate is 10.33%. Use the effective
interest rate method to complete the amortization schedule below.

Cash
Payment

Interest Expense

Discount Amortization

Carrying
Value

January 1, 2012

December 31, 2012

December 31, 2013

December 31, 2014

December 31, 2015

December 31, 2016

Totals

Problem
2.
Allen Corporation was
organized on July 15, 2012. It was authorized to issue 150,000 shares of $25
par value common stock and 50,000 shares of 6% cumulative preferred stock. The
preferred stock had a stated value of $50 per share. The following stock
transactions relate to Allen Corporation.

·
Issued
55,000 shares of common stock for $33 per share.

·
Issued
2,750 shares of the class A preferred stock for $62 per share.

·
Issued
27,500 shares of common stock for $35 per share.

Required:

1) Indicate the effect of each of these transactions on Allen’s financial
statements. Include dollar amounts in the model, below. After recording the
three transactions, calculate column totals.
2) After these transactions have been recorded, what is the total amount of
stockholders’ equity?
3) After these transactions have been recorded, how many shares of common stock
are outstanding?

Assets

=

Equity

Cash Flow

Cash

Common Stock

+

Paid-in Capital in Excess of Par Value

+

Preferred Stock

+

Paid-in Capital in Excess of Stated Value

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