# Acc280 Financial Accounting: E5-3 On September 1, Howe Office Supply had an inventory

Acc280 Financial Accounting

E5-3

On September 1, Howe Office Supply had an inventory of 30 pocket calculators at a cost of $18 each. The company uses a perpetual inventory system. During September, the following transactions occurred.

Sept.

6 Purchased 80 calculators at $20 each from De Vito Co. for cash.

9 Paid freight of $80 on calculators purchased from De Vito Co.

10 Returned 2 calculators to De Vito Co. for $42 credit (including freight) because they did not meet specifications.

12 Sold 26 calculators costing $21 (including freight) for $31 each to Mega Book Store, terms n/30.

14 Granted credit of $31 Mega Book Store for the return of one calculator that was not ordered.

20 Sold 30 calculators costing $21 for $31 each to Barbara's Card Shop, terms n/30.

Instructions

Journalize the September transactions.

E5-3

On September 1, Howe Office Supply had an inventory of 30 pocket calculators at a cost of $18 each. The company uses a perpetual inventory system. During September, the following transactions occurred.

Sept.

6 Purchased 80 calculators at $20 each from De Vito Co. for cash.

9 Paid freight of $80 on calculators purchased from De Vito Co.

10 Returned 2 calculators to De Vito Co. for $42 credit (including freight) because they did not meet specifications.

12 Sold 26 calculators costing $21 (including freight) for $31 each to Mega Book Store, terms n/30.

14 Granted credit of $31 Mega Book Store for the return of one calculator that was not ordered.

20 Sold 30 calculators costing $21 for $31 each to Barbara's Card Shop, terms n/30.

Instructions

Journalize the September transactions.

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Financial and Managerial Accounting

PROBLEM 13-2A Present value; bond premium; entries for bonds payable transactions

Atlantis Inc. produces and sells voltage regulators. On July 1, 2007, Atlantis Inc. issued $800,000 of 10-year, 14% bonds at an effective interest rate of 13%. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year. For compound entries, leave those boxes that do not require an entry BLANK. For a compound transaction, accounts should be listed largest to smallest.

Instructions:

1. Journalize the entry to record the amount of the cash proceeds from the sale of the bonds. Use the tables of present values in Appendix A to compute the cash proceeds, rounding to the nearest dollar.

2. Journalize the entries to record the following:

a. The first semiannual interest payment on December 31, 2007, including the amortization of the bond premium, using the straight-line method. (Round to the nearest dollar.)

b. The interest payment on June 30, 2008, and the amortization of the bond premium, using the straight-line method. (Round to the nearest dollar.)

3. Determine the total interest expense for 2007.

4. Will the bond proceeds always be greater than the face amount of the bonds when the contract rate is greater than the market rate of interest? Explain.

PROBLEM 13-2A Present value; bond premium; entries for bonds payable transactions

Atlantis Inc. produces and sells voltage regulators. On July 1, 2007, Atlantis Inc. issued $800,000 of 10-year, 14% bonds at an effective interest rate of 13%. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year. For compound entries, leave those boxes that do not require an entry BLANK. For a compound transaction, accounts should be listed largest to smallest.

Instructions:

1. Journalize the entry to record the amount of the cash proceeds from the sale of the bonds. Use the tables of present values in Appendix A to compute the cash proceeds, rounding to the nearest dollar.

2. Journalize the entries to record the following:

a. The first semiannual interest payment on December 31, 2007, including the amortization of the bond premium, using the straight-line method. (Round to the nearest dollar.)

b. The interest payment on June 30, 2008, and the amortization of the bond premium, using the straight-line method. (Round to the nearest dollar.)

3. Determine the total interest expense for 2007.

4. Will the bond proceeds always be greater than the face amount of the bonds when the contract rate is greater than the market rate of interest? Explain.

Financial and Managerial Accounting

E25-17 Variable cost concept of product pricing

Based on the data presented in Exercise 25-15, assume that Sirrus Phone Company uses the variable cost concept of applying the cost-plus approach to product pricing.

Instruction:

a. Determine the variable costs and the cost amount per unit for the production and sale of 3,500 units of mobile phones.

b. Determine the markup percentage (rounded to two decimal places) for mobile phones

c. Determine the selling price of mobile phones. Round to the nearest dollar.

E25-17 Variable cost concept of product pricing

Based on the data presented in Exercise 25-15, assume that Sirrus Phone Company uses the variable cost concept of applying the cost-plus approach to product pricing.

Instruction:

a. Determine the variable costs and the cost amount per unit for the production and sale of 3,500 units of mobile phones.

b. Determine the markup percentage (rounded to two decimal places) for mobile phones

c. Determine the selling price of mobile phones. Round to the nearest dollar.

Financial and Managerial Accounting

E25-16 Product cost concept of product pricing

Based on the data presented in Exercise 25-15, assume that Sirrus Phone Company uses the product cost concept of applying the cost-plus approach to product pricing.

Instruction:

a. Determine the total manufacturing costs and the cost amount per unit for the production and sale of 3,500 units of mobile phones.

b. Determine the markup percentage (rounded to two decimal places) for mobile phones

c. Determine the selling price of mobile phones. Round to the nearest dollar.

E25-16 Product cost concept of product pricing

Based on the data presented in Exercise 25-15, assume that Sirrus Phone Company uses the product cost concept of applying the cost-plus approach to product pricing.

Instruction:

a. Determine the total manufacturing costs and the cost amount per unit for the production and sale of 3,500 units of mobile phones.

b. Determine the markup percentage (rounded to two decimal places) for mobile phones

c. Determine the selling price of mobile phones. Round to the nearest dollar.