Question 1:

The following information is available for Barclay Corp. for the year ended December 31,
2020:
Net income $ 36,100
Proceeds from the sale of equipment which has book value of $36,000 27,500
Issuance of common stock for cash 35,000
Amortization expense 12,100
Redemption of bonds payable at book value 15,800
Borrow from a bank 16,000
Payment of cash dividends 18,000
In addition, the following information is available from the comparative balance sheet for
Barclay at the end of 2020 and 2019:
. 2020 2019
Cash $146,500 $28,700
Accounts receivable (net) 7,900 6,200
Prepaid rent 5,100 7,200
Accounts payable 8,900 12,400
Interest payable 3,200 1,700
Instructions
(a) Prepare Barclay's statement of cash flows for the year ended December 31, 2020, using
the indirect method.
(b) The owner of Barclay could not understand why the net income for the year was
approx. $36,000 but the cash at bank increased by nearly $118,000. With reference to
the cash flow statement, explain why this was happening.

Question 2:
On Nov. 1st, 2020, Kamin Corp. issued $4,600,000, 9%, 10-year bonds. The market discount
rate at that time was 8%. The bonds were dated Nov. 1st, 2020, and pay interest semi-annually
on Nov. 1st and May. 1st. Financial statements are prepared annually on Dec. 31.
Requirements
(a) Prepare the journal entry to record the issuance of the bonds on Nov. 1, 2020.
(b) Prepare the journal entry to accrued bond interest on Dec. 31, 2020.
(c) Prepare the journal entry to record the interest payment on May 1, 2021
Notes: Rounding the results to the nearest dollar.
Question 3:

The stockholders’ equity accounts of Lafold Corp. on Jan. 1, 2020 were as follows:

Preferred Stock (12%, $80 par, 6,000 shares authorized) $ 432,000

Common Stock ($22 stated value, 150,000 shares authorized) 3,014,000

Paid-in Capital in Excess of Par Value – Preferred Stock 13,500

Paid-in Capital in Excess of Par Value – Common Stock 287,700

Retained Earnings 59,000

Treasury Stock (9,700 common shares) 226,980

During 2020, Lafold had the following transactions and events pertaining to its stockholder’s
equity.

Feb. 14 Purchased 7,300 additional shares of common treasury stock at $24.5 per share.

Mar. 21 Issued 400 shares of preferred stock for $34,000

Nov. 1 Declared a 12% cash dividend on preferred stock, payable November 25

Nov. 25 Paid the dividend declared on November 1

Dec. 05 Declared a $0.55 per share cash dividend to common stockholders of record on
December 25, payable December 31, 2020

31 Determined that net income for the year was $197,000. Paid the dividend declared on
December 05.

Requirements
Journalize the transactions.

Question 1
The following information is available for Natwest Corp. for the year ended December 31,
2020:
Acquisition of land and building for cash 92,000
Proceeds from the sale of equipment which has book value of $16,200 18,100
Issuance of bonds for cash 45,000
Depreciation expense 28,600
Payment of cash dividends 35,000
Net income 86,500
In addition, the following information is available from the comparative balance sheet for
Natwest at the end of 2020 and 2019:
. 2020 2019
 Cash $92,000 $42,500
Accounts receivable (net) 7,900 10,800
Inventory 9,200 5,900
Accounts payable 14,600 12,100
Salary payable 2,900 4,800
Instructions
(a) Prepare Natwest 's statement of cash flows for the year ended December 31, 2020,
using the indirect method.
(b) The owner of Natwest could not understand why the net income for the year was
$86,500 but the cash at bank increased by only nearly $50,000. With reference to the
cash flow statement, explain why this was happening.

Question 2:

On Aug. 1st, 2020, Hakim Corp. issued $2,500,000, 9%, 8-year bonds. The market discount
rate was 8%. The bonds were dated Aug. 1st, 2020, and pay interest semi-annually on Aug. 1st
and Feb. 1st. Financial statements are prepared annually on Dec. 31.
Requirements
(a) Prepare the journal entry to record the issuance of the bonds on Aug. 1, 2020.
(b) Prepare the journal entry to accrued bond interest on Dec. 31st, 2020.
(c) Prepare the journal entry to record the interest payment on Feb. 1st, 2021.
Notes: Rounding the results to the nearest dollar.

Question 3

The stockholders’ equity accounts of Baihan Corp. on Jan. 1, 2020 were as follows:

Preferred Stock (12%, $75 par, 5,000 shares authorized) $ 322,500

Common Stock ($15 stated value, 600,000 shares authorized) 7,875,000

Paid-in Capital in Excess of Par Value – Preferred Stock 19,780

Paid-in Capital in Excess of Par Value – Common Stock 1,680,000

Retained Earnings 348,000

Treasury Stock (21,000 common shares) 369,600

Mar. 20 Issued 400 shares of preferred stock for $32,400

Apr. 15 Issued 30,000 additional shares of common stock at $19.2 per share.

Oct. 5 Declared a 12% cash dividend on preferred stock, payable November 15.

Nov. 15 Paid the dividend declared on October 5

Dec. 1 Declared a $0.19 per share cash dividend to common stockholders of record on
December 15, payable December 31, 2020

31 Determined that net income for the year was $285,000. Paid the dividend declared on
December 1.

Requirements
Journalize the transactions.