[precyferrer]

) Presented below are various account balances of K.D. Lang Inc.
a) Unamortized premium on bonds payable, of which $3,000 will be amortized during the next year.
b) Banks loans payable of a winery, due March 10, 2012. (The product requires aging for 5 years before sales.)
c) Serial bonds payable $1,000,000 of which $20,000 is due each July 31.
d) Amounts withheld from employee’s wages for income tax.
e) Notes payable due January 15, 2011.
f) Credit balances in customer’s accounts arising from returned and allowances after collection in full of account.
g) Bonds payable of $2,000,000 maturing June 30, 2010
h) Overdraft of $1,000 in a bank account. (No other balances are carried at this bank.)
I) Deposits made by customers who have ordered goods.

Indicate whether each of the items above should be classified on December 31, 2009, as a current liability, a long term liability or under some other classification. Consider each one independently from all others, that is, do not assume that all of them relate to one particular business. If the classification of some of the items is doubtful, explain why in each case


2. ) On January 2, 2003, Banno Corporation issued $1,500,000 of 10% bonds at 97 due December 31, 2012. Legal and other costs of $24,000 were incurred in connection with the issue. Interest on the bonds is payable annually each December 31. The 24,000 bond issue costs are being deferred and amortized. The discount on the bonds is also being amortized.
The bonds are callable at 101 (i.e. at 101% if face amount), and on January 2, 2008, Banno called$900,000 face amount of the bonds and retired them. For the bonds called, unamortized bond discount at retirement was #13,500, and amortized bond issue cost was $7,200.


3. Soundgarden Company sold 200 copymaking machines in 2008for $4,000a piece, together with one year warranty. Maintenance on each machine during the warranty period averages $330.
a) Prepare entries to record the sale of the machines and the related warranty costs, assuming that the accrual method is used. Actual warranty costs incurred in 2008 were $17,000.

4. ). Presented below are two independent situations.
1. On January 1, 2008, Paul Simon Company issued $200,000 of 9%, 10 year bonds at par. Interest is payable quarterly on April 1, July 1, October 1 and January 1.
2. On January 1, 2008, Graceland Company issued $100,000 of 12%, 10 year bonds dated June 1 at par. Interest payable semiannually on July 1, and January1.
Instructions:
For each of these two independent situations, prepare journal entries to record:
a) The issuance of the bond.
b) The payment of interest on July 1.
c) The accrual of interest on December 31.


5. On January 1, 2009, Unchartered Waters Corporation retired $600,000 of bonds at 99. At the time of retirement, the unamortized premium was $15,000 and unamortized bond issue costs were $5,250. Prepare the corporation’s journal entry to record the reacquisition of the bonds.

[morgaine300]

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