Reference no: EM13506677

Question 1

On January 1, 2012, PVP Co. issued 6 % bonds with a face value of $5,000,000 when the market interest rate was 10 %. The bonds are due in 10 years, and interest is payable semiannually every June 30 and December 31. Using the appropriate factors below, calculate the selling price of the bond (round your final answer).

 

Present value of an ordinary annuity of $1	At 3% 10 periods=8.5302 At 5% 20 periods=12.4622	At 6% 10 periods=7.3601 At 10% 10 periods=6.1446
Present value of  $1	At 3% 10 periods=0.7441 At 5% 20 periods=0.3769	At 6% 10 periods=0.5584 At 10% 10 periods=0.3855

Use the answer sheet provided.

Question 2

The trial balance before adjustment for the A&E Corporation shows the following balances:

 

	Debit	Credit
Accounts Receivable	$300,000
Allowance for Doubtful Accounts		$1,000
Sales		$700,000
Sales Returns and Allowances	$10,000

Using the data above, show computations and prepare the journal entries required to record each of the following:
a. The company wants to maintain the Allowance for Doubtful Accounts at 6% of gross accounts receivable. Show computation and prepare your journal entry using the answer sheet provided.
b. The company wishes to increase the allowance by 3% of net sales. Show computation and prepare your journal entry using the answer sheet provided.