This exercise reviews general ledger accounts and postings to them from special journals. A list of abbreviations and a list of postings to general ledger accounts (in random order) follow: Abbreviations S = Two-Column Sales Journal CR = Multiple-Column Cash Receipts Journal P = Single-Column Purchases Journal CP = Multiple-Column Cash Payments Journal GJ = Two-Column General Journal Instructions For each of the postings to […]

Show by means of journal entries how will you record the following issues: Also show how they will appear in their respective balance sheets: A Ltd. issued 10,000, 10% debentures of Rs.100 each at a discount of 5% redeemable at the end of 5 years at par B Ltd. issued 10,000, 11% debentures of Rs.100 each at par redeemable at the end of 5 years […]

X Ltd. issued Rs.24,00,000 debentures during 2009 on the following terms and conditions: A sinking fund to be created by yearly appropriations of profit and similar amount to be invested outside. The company will have the right to purchase for cancellation of debentures from the market if available below par value. The debentures are to be redeemed on 31 December 2010 at a premium of […]

Using a financial calculator, solve for the unknowns in each of the following situations. (a)On June 1, 2014, Holly Golightly purchases lakefront property from her neighbor, George Peppard, and agrees to pay the purchase price in seven payments of $16,000 each, the first payment to be payable June 1, 2015. (Assume that interest compounded at an annual rate of 7.35% is implicit in the payments.) […]

The following balances appeared in the books of Cheerful Ltd. as on 1 April 2010: 12% Debentures 10,00,000 (Face Value 100) Debentures Redemption Fund 6,25,000 Debentures Redemption Fund 6,25,000 Investments (In 8% Government Bonds of the Face Value of Rs.7,50,000) Interest on the debentures was payable on 30 September and 31 March and interest on government bonds was receivable on the same dates. On 31 […]

Using a financial calculator, provide a solution to each of the following situations. (a)Lynn Anglin owes a debt of $35,000 from the purchase of her new sport utility vehicle. The debt bears annual interest of 9.1% compounded monthly. Lynn wishes to pay the debt and interest in equal monthly payments over 8 years, beginning one month hence. What equal monthly payments will pay off the […]

X Ltd. has 12% Rs.2,00,000 debentures outstanding in its books on 1 January 2010. It also had Rs.1,20,000 balance in sinking fund A/c represented by 8% investments (Face value Rs.1,50,000). On 30 December 2010, it sold investments of face value of Rs.20,000 @ Rs.90 and purchased own debentures of the face value of Rs.20,000 out of proceeds for immediate cancellation. The interest dates for both […]

This exercise enables you to practice identifying investing and financing activities. Instructions Place the appropriate code in the blanks to identify each of the following transactions as giving rise to an: Code II inflow of cash due to an investing activity, or IO outflow of cash due to an investing activity, or FI inflow of cash due to a financing activity, or FO outflow of […]

Parker Ltd. issued 15% 20,000 debentures of Rs.100 each on 1 January 2006 redeemable at a premium of 10% after 5 years. A sinking fund is created for the purpose of redemption of debentures and the money is invested in 5% government securities at par. The investments are to be made in multiples of Rs.100 only. Rs.1 invested p.a. at 5% over 5 years amounts […]

Last year (2013), Simmons Company installed new factory equipment. The owner of the company, Gene Simmons, recently returned from an industry equipment exhibition where he watched computerized equipment demonstrated. He was impressed with the equipment”s speed and cost efficiency. Upon returning from the exhibition, he asked his purchasing agent to collect price and operating cost data on the new equipment. In addition, he asked the […]