1. Issued 200,000 shares of $1 par value common stock for $10 per share.
2. Issued a $1,000,000 face value zero-coupon bond with a five-year maturity for $747,260 that is convertible into 100,000 shares of stock.
3. Leasedequipmentfor5 years. The lease required five payments of $120,100 paid on January 1 of each yearwith the first payment due on 1/1/13. XYZ guarantees a residual of $85,300.The implicit rate is equal to the incremental borrowing rate of 6%. The equipment has a useful life of 6 years.
4. Provided employees a defined benefit pension plan. The under the plan, each employee will receive annual retirement benefits equal to[2% x Number of years of service x Final salary (expected to total $800,000)]. We expect each employee to work for 20 years until retirement and to receive retirement benefits for 15 years. The actuary uses an annual 5% discount rate. To fund the plan, we contributed$4,000 into the fund.
5. Paid $400,000 to purchase furniture and fixtures that have a useful life of 10 years and for financial reporting are depreciated on a straight-line basis to 10% of their purchase cost.
6. Purchased a portfolio of securities for $200,000. Expect to hold the securities for investment indefinitely.
7. Purchased a municipal bond for $83,560. The bond has a coupon rate of 5% (payable December 31 of each year), face value of $80,000, and a five-year maturity. The interest is not taxable and XYZ intends to hold the bond until maturity.