Rodgers Corporation produces and sells football equipment. On July 1, 2014, Rodgers Corporation issued

Rodgers Corporation produces and sells football equipment. On July 1, 2014, Rodgers Corporation issued $65,000,000 of 10-year, 12% bonds at a market (effective) interest rate of 10%, receiving cash of $73,100,469. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year.


Instructions
1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, 2014.

2. Journalize the entries to record the following:

a. The first semiannual interest payment on December 31, 2014, and the amortization of the bond premium, using the straight-line method. (Round to the nearest dollar.)

b. The interest payment on June 30, 2015, and the amortization of the bond premium, using the straight-line method. (Round to the nearest dollar.)

3. Determine the total interest expense for 2014.

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?

5. (Appendix 1) Compute the price of $73,100,469 received for the bonds by using the present value tables in Appendix A at the end of the text. (Round to the nearest dollar.)


Answer:


1. Cash 73,100,469
Premium on Bonds Payable 8,100,469
Bonds Payable 65,000,000
2. a. Interest Expense 3,494,977
Premium on Bonds Payable* 405,023
Cash 3,900,000
*$8,100,469 ÷ 20 semiannual periods
b.
 Interest Expense 3,494,977
Premium on Bonds Payable* 405,023
Cash 3,900,000

*$8,100,469 ÷ 20 semiannual periods
3. $3,494,977
4. Yes. Investors will be willing to pay more than the face amount of the bonds when the interest
payments they will receive from the bonds exceed the amount of interest that they could
receive from investing in other bonds.
5. Present value of $1 for 20 semiannual
periods at 5% semiannual rate………………………………… 0.37689
Face amount of bonds……………………………………………
Present value of annuity of $1
× $65,000,000 $24,497,850
for 20 semiannual periods at 5% semiannual rate………… 12.46221
Semiannual interest payment…………………………………… × $ 3,900,000 48,602,619
Proceeds of bond issue…………………………………………… $73,100,469

Rodman Corporation’s fiscal year ends on November 30. The following accounts are found in its job order cost accounting

Rodman Corporation’s fiscal year ends on November 30. The following accounts are found in its job order cost accounting system for the first month of the new fiscal year.

Other data:

1. On December 1, two jobs were in process: Job No. 154 and Job No. 155. These jobs had combined direct materials costs of $9,860 and direct labor costs of $16,800. Overhead was applied at a rate that was 75% of direct labor cost.
2. During December, Job Nos. 156, 157, and 158 were started. On December 31, Job No. 158 was unfinished. This job had charges for direct materials $4,300 and direct labor $5,100, plus manufacturing overhead. All jobs, except for Job No. 158, were completed in December.
3. On December 1, Job No. 153 was in the finished goods warehouse. It had a total cost of $5,600. On December 31, Job No. 157 was the only job finished that was not sold. It had a cost of $4,300.
4. Manufacturing overhead was $760 overapplied in December.

List the letters (a) through (m) and indicate the amount pertaining to each letter.

Raw Materials Inventory
Dec. 1 Beginning balance (a) ??
31 Purchases 19,980
Dec. 31 Requisitions 18,500
Dec. 31 Ending balance 8,220

Work in Process Inventory
Dec. 1 Beginning balance (b) ??
31 Direct materials (c) ??
31 Direct labor 9,400
31 Overhead (d) ??
Dec. 31 Jobs completed (f)??
Dec. 31 Ending balance (e)??

Finished Goods Inventory
Dec. 1 Beginning balance (g)??
31 Completed jobs (h) ??
Dec. 31 Cost of goods sold (i)??
Dec. 31 Ending balance (j)??

Factory Labor
Dec. 31 Factory wages 12,210
Dec. 31 Wages assigned (k)??

Manufacturing Overhead
Dec. 31 Indirect materials 2,100
31 Indirect labor (l) ???
31 Other overhead 1,380
Dec. 31 Overhead applied (m) ??

Dec. 1 Beginning balance (a) ??
(A) Beginning balance = Ending balance + Requisitions -Purchases
Beginning balance = 8,220+18,500-19,980
Beginning balance = 6740

Work in Process Inventory
(b) Dec. 1 Beginning balance ??
Beginning balance = 9,860+16,800+ 16,800 x 75% = 39260

(c) Direct materials ??
Direct materials = Requisitions – Indirect material
Direct materials = 18,500-2,100=16400

(d) Overhead ??
Overhead = 9,400 x 0.75 = 7050

(E) Ending balance ??
Ending balance = 4,300 + 5,100 +5,100 x 0.75 = 13225

(f)Jobs completed ??
Jobs completed = Beginning balance (b) + Direct materials (c) + Direct labor Overhead (d) – Ending balance (e)

Jobs completed = 39260+ 16400+9,400+7050-13225=58885

Overhead applied = 7050 -760-2,100-1,380=2810

Manufacturing overhead was $760 overapplied in December.

Factory Labor
Dec. 31 Factory wages 12,210
Dec. 31 Wages assigned (k)??

The Wages assigned equal to Factory wages.
So, Wages assigned (k) = 12,210

Wayman Corporation reports the following amounts in its December 31, 2015, income statement.

Sales revenue $ 397,000 Income tax expense $ 51,000
Interest expense 21,000 Cost of goods sold 131,000
Salaries expense 41,000 Advertising expense 31,000
Utilities expense 51,000

Required:
Prepare a multiple-step income statement.

Sales revenue 397,000
Cost of goods sold 131,000
Gross profit 266,000
Salaries expense 41,000
Utilities expense 51,000
Advertising expense 31,000
Total operating expenses 123,000
Operating income 143,000
Interest expense 21,000
Income before income taxes 122,000
Income tax expense 51,000
Net income 71,000