1. Bencorp issues a $90,000, 6-month, noninterest-bearing note that the bank discounted at a 10% discount rate....

Question:

1. Bencorp issues a $90,000, 6-month, noninterest-bearing note that the bank discounted at a 10% discount rate. Prepare the journal entry to record the issuance of the note.

2. On March 1, Navy Corporation used excess cash to purchase U.S. Treasury bonds for $103,000 plus accrued interest. The bonds were purchased at face value. The appropriate interest rate is 6%. Interest on these bonds is payable on January 1 and July 1 of each year. Navy's investment is accounted for as held to maturity. The fair value of the Treasury bonds is $104,000 at year-end.

Required:

Prepare the appropriate journal entries to record the transactions for the year, including any year-end adjustments. Show calculations, rounded to the nearest dollar.

3. On March 17, Union Corporation purchased 5,000 shares of AZQ common stock as a long-term investment at $40 per share. At the end of year one the market value of the AZQ stock is $42. At the end of year two it is $43.

Required:

(1.) What is the appropriate reporting category for this stock? Why?

(2.) Prepare the adjusting entry at the end of year one?

(3.) Prepare the adjusting entry at the end of year two?

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...