Assignment Option #1: Journal Entry: Bonds and Stocks

Bonds

Intel Inc. is the pioneer in the manufacture of microprocessors for computers. The company?s fiscal year runs from April 1 to March 31. On 4/1/2015, Intel Issued $5,000,000 of 11% Bonds due in 10 years. The interest is payable annually on April 1. The market rate of interest on that date for bonds of similar risk is 10%.

Prepare the journal entry for the issuance of the bonds and on the first interest payment date.

Use the Excel Template linked at the bottom of this page to prepare an amortization schedule for the bonds. Any written comments should be included in Excel?s comments function and formatted according toCSU-Global Guide to Writing and APA Requirements.

Stocks

Presented below is the stockholders? equity section of AMR Corporation. All amounts are in millions except for number of shares and par value.

Stockholders' Equity (Deficit)	Current Year	Prior Year
Preferred stock - 20,000,000 shares authorized; none issued	$ -0-	$ -0-
Common stock - $1 par value; 750,000,000 shares authorized; 182,350,259 shares issued	182	182
Additional paid-in capital	2,521	2,605
Treasury shares at cost: current year-21,194,312; prior year-22,768,027	(1,308)	(1,405)
Accumulated other comprehensive loss	(664)	(785)
Accumulated deficit	(1,312)	(551)
	$ (581)	$ 46

1. Explain why the common stock is classified as part of the stockholders? equity.
2. Explain why treasury stock is not classified as an asset.
3. Explain what is meant by "Accumulated other comprehensive loss."
4. Why is the accumulated deficit larger in the current year than in the prior year?
5. Compute book value per share for AMR for the current year.

Prepare the journal entries to record the following. Date Account Title Account Title Amount Amount Provide a one line explanation for the reason why the journal entry has bee Date Account Title Account Title Amount Amount Provide a one line explanation for the reason why the journal entry has bee Date 4/1/2014 4/1/2015 4/1/2016 4/1/2017 4/1/2018 4/1/2019 4/1/2020 4/1/2021 4/1/2022 4/1/2023 Cash Paid Interest expense Premium Amortization Carrying Amount of Bonds