Villarente Company Issued 5-Year $200,000 Face Value Bonds at 95 on January 1, 2012. the Stated Interest Rate on These Bonds Is 9%, and the Effective Interest Rate Is 10.33%. Use the Effective Interest Rate Method to
Problem 1. Villarente Company issued 5-year $200,000 face value bonds at 95 on January 1, 2012. The stated interest rate on these bonds is 9%, and the effective interest rate is 10.33%. Use the effective interest rate method to complete the amortization schedule below.
Cash
Payment Interest Expense Discount Amortization Carrying
Value
January 1, 2012
December 31, 2012 18,000 19,627 1627 191,627
December 31, 2013 18,000 19,795.07 1796.07 193,422.07
December 31, 2014 18,000 19,980.50 1980.50 195,402.57
December 31, 2015 18,000 20,185.09 2185.09 197.587.85
December 31, 2016 18,000 20,410.80 2412.35 200,000
Totals 90,000 99,998.46 10,000.01 22339237.27 Problem 2. Allen Corporation was organized on July 15, 2012. It was authorized to issue 150,000 shares of $25 par value common stock and 50,000 shares of 6% cumulative preferred stock. The preferred stock had a stated value of $50 per share. The following stock transactions relate to Allen Corporation.
• Issued 55,000 shares of common stock for $33 per share.
• Issued 2,750 shares of the class A preferred stock for $62 per share.
• Issued 27,500 shares of common stock for $35 per share.
Required:
1) Indicate the effect of each of these transactions on Allen's financial statements. Include dollar amounts in the model, below. After recording the three transactions, calculate column totals.
2) After these transactions have been recorded, what is the total amount of stockholders' equity?
3) After these transactions have been recorded, how many shares of common stock are outstanding?
Assets = Equity Cash Flow Cash Common Stock + Paid-in Capital in Excess of Par Value + Preferred Stock + Paid-in Capital in Excess of Stated Value
1 1,815,000 1,375,000 440,000 0 0 1,815,000
2 170,500 0 0 137,500 33,000 170.500
3 962,500 687,500 275,000 0 0 962,500
Total 2,948,000 2,062,500 715,000 137,500 33,000 2,948,000
Stockholder Equity
Common Stock 2,062,500
Cash
Payment Interest Expense Discount Amortization Carrying
Value
January 1, 2012
December 31, 2012 18,000 19,627 1627 191,627
December 31, 2013 18,000 19,795.07 1796.07 193,422.07
December 31, 2014 18,000 19,980.50 1980.50 195,402.57
December 31, 2015 18,000 20,185.09 2185.09 197.587.85
December 31, 2016 18,000 20,410.80 2412.35 200,000
Totals 90,000 99,998.46 10,000.01 22339237.27 Problem 2. Allen Corporation was organized on July 15, 2012. It was authorized to issue 150,000 shares of $25 par value common stock and 50,000 shares of 6% cumulative preferred stock. The preferred stock had a stated value of $50 per share. The following stock transactions relate to Allen Corporation.
• Issued 55,000 shares of common stock for $33 per share.
• Issued 2,750 shares of the class A preferred stock for $62 per share.
• Issued 27,500 shares of common stock for $35 per share.
Required:
1) Indicate the effect of each of these transactions on Allen's financial statements. Include dollar amounts in the model, below. After recording the three transactions, calculate column totals.
2) After these transactions have been recorded, what is the total amount of stockholders' equity?
3) After these transactions have been recorded, how many shares of common stock are outstanding?
Assets = Equity Cash Flow Cash Common Stock + Paid-in Capital in Excess of Par Value + Preferred Stock + Paid-in Capital in Excess of Stated Value
1 1,815,000 1,375,000 440,000 0 0 1,815,000
2 170,500 0 0 137,500 33,000 170.500
3 962,500 687,500 275,000 0 0 962,500
Total 2,948,000 2,062,500 715,000 137,500 33,000 2,948,000
Stockholder Equity
Common Stock 2,062,500