In its 1 year of operations, Carla Vista Corporation purchased available for sale debt securities costing $69,500 as a long term investment. At December 31,2022, the fair value of the securities is$64,550. What is the financial statement presentation of the securities and related accounts. Assume the securities are noncurrent.

Bass Company owns 25% of Petit Company. For the current year, Petit reports net income of $150,000 and declares and pays a$60,000 cash dividend. Record Bass’s equity in Petit’s net income and the receipt of dividends from Petit.

Cash collected on accounts receivable would produce what effect on the balance sheet?

In its first year of operation, Sheridan Company recognizes $30,000 in service revenue,$7,200 of which was an account and still outstanding at year-end. The remaining $22,800 was received in cash from customers.

The company incurred operating expenses of$16,600. Of these expenses, $13,520 were paid in cash;$3,080 was still on account at year-end. In addition, Sheridan prepaid $2,650 for insurance coverage that would not be used until the second year of operations.

Required: Calculate the first year's net earnings under the cash basis of accounting and the first year's set earnings under the accrual basis of accounting.

For the data presented in BEE-6, show the financial statement presentation of the securities and related accounts. Assume the securities are noncurrent.

On August 1, Shaw Company buys 1,000 shares of Estrada common stock for $37,000 cash. On December 1, Shaw sells the stock investments for$40,000 in cash. Journalize the purchase and sale of the common stock.

Noler Company owns 25% of Lauer Company. For the current year, Lauer reports net income of $180,000 and declares and pays a$50,000 cash dividend. Record Noler’s equity in Lauer’s net income and the receipt of dividends from Lauer

Moby Inc. is considering two alternatives to finance its construction of a new $2 million plant.

(a) Issuance of 200,000 shares of common stock at the market price of$10 per share.

Complete the following table, and indicate which alternative is preferable.

$$\begin{array}{lcc} &\textbf{\underline{Issue Stock}}&\textbf{\underline{Issue Bond}}\\ \text{Income before interest and taxes}&\$700,000&\$700,000\\ \text{Interest expense from bonds}&\underline{\hspace{35pt}}&\underline{\hspace{35pt}}\\ \text{Income before income taxes}\\ \text{Income tax expense (30\\\%)}&\underline{\hspace{35pt}}&\underline{\hspace{35pt}}\\ \text{Net Income}&\underline{\underline{\$\hspace{35pt}}}&\underline{\underline{\$\hspace{35pt}}}\\ \text{Outstanding shares}&&500,000\\ \text{Earnings per share}&\underline{\hspace{35pt}}&\underline{\hspace{35pt}}\\ \end{array}$$

Presented below is the partial bond discount amortization schedule for Gomez Corp. Gomez uses the effective-interest method of amortization.

$$\begin{array}{cccccc} \textbf{\underline{Interest Periods}}&\textbf{\underline{Interest to Be Paid}}&\textbf{\underline{Interest Expense to Be Recorded}}&\textbf{\underline{Discount Amortization}}&\textbf{\underline{Unamortized Discount}}&\textbf{\underline{Bond Carrying Value}}\\ \text{Issue date}&&&& \$38,609&\$961,391\\ 1&\$45,000&\$48,070&\$3,070&35,539&964,461\\ 2&45,000&48,223&3,223&32,316&967,684 \end{array}$$

(a) Prepare the journal entry to record the payment of interest and the discount amortization at the end of period 1.

Swisher Company issued $2,000,000 of bonds on January 1, 2017. Instructions

(c) Prepare the journal entry to record the redemption of the bonds before maturity at 98. Assume the balance in Premium on Bonds Payable is$9,000.

Eubank Corporation issues $500,000 of bonds for$520,000. (b) Show how the bonds would be reported on the balance sheet at the date of issuance.

Dilley Corporation issues $300,000 of bonds for$315,000. Show how the bonds would be reported on the balance sheet at the date of issuance.

State whether each of the following statements is true or false. _______ 1. Mortgage bonds and sinking fund bonds are both examples of debenture bonds. _______ 2. Convertible bonds are also known as callable bonds. _______ 3. The market rate is the rate investors demand for loaning funds. _______ 4. Annual interest on bonds is equal to the face value times the stated rate.

Presented below is the partial bond discount amortization schedule for Gomez Corp. Gomez uses the effective-interest method of amortization.

$$\begin{array}{cccccc} \textbf{\underline{Interest Periods}}&\textbf{\underline{Interest to Be Paid}}&\textbf{\underline{Interest Expense to Be Recorded}}&\textbf{\underline{Discount Amortization}}&\textbf{\underline{Unamortized Discount}}&\textbf{\underline{Bond Carrying Value}}\\ \text{Issue date}&&&& \$38,609&\$961,391\\ 1&\$45,000&\$48,070&\$3,070&35,539&964,461\\ 2&45,000&48,223&3,223&32,316&967,684 \end{array}$$

(b) Explain why interest expense is greater than interest paid.