3.6 Satka Fishing Expeditions ,Inc., recorded the following transactions in July…………………..Indicate the effects that each of these transactions will have upon the following six total amounts in the company’s financial statements for the month of July. Organize your answer in tabular form, using the column headings shown, and use the code letters I for increase, D for decrease, and NE for no effect.3.7 A number of transactions of Claypool Construction are described below in terms of accountsdebited and credited.a. Indicate the effects of each transactions upon the elements of the income statement and the balance sheet. Use the code letters I for increase, D for decrease, and NE for no effect. Organize your answer in tabular form, using the column headings shown,b. Write a one-sentence description of each transaction.3.8 Shown below are selected transactions of the architectural firm of Baxter, Claxter, and Stone,Inc.a. Prepare journal entries to record the transactions in the firm’s accounting records.b. Identify any of the above transactions that will not result in a change in the company’s net income.3.10 Trafflet Enterprises incorporated on May 3,2009. The company engaged in the followingtransactions during its first month of operations:a. Prepare journal entries, including explanations, for the above transactions.b. Post each entry to the appropriate ledger accountsc. Prepare a trial balance dated May 31, 2009. Assume accounts with zero balances are not included in the trial balance.3.11 The McMillan Corporation incorporated on September 2, 2009. The company engaged inthe following transactions during its first month of operations:a. Prepare journal entries, including explanations, for the above transactions.b. Post each entry to the appropriate ledger accountsc. Prepare a trial balance dated May 30, 2009. Assume accounts with zero balances are notincluded in the trial balance.Exercise 5.2Tutors for Rent, Inc., performs adjusting entries every month, but closes its accounts only at year-end. The company’s year-end adjusted trial balance dated December 31, 2009, was:TUTORS FOR RNET,INC.Adjusted Trial BalanceDecember 31, 2009 Cash....................................................................................... $91,100 Accounts receivable.....................................................................4,500 Supplies (300)Equipment………………………………………………………………………12,000 Accumulated depreciation: equipment…………………………………………$5,000 Accounts payable………………………………………………………………1,500 Income taxes payable………………………………………………………….. 3,500 Capital stock……………………………………………………………………25,000 Retained earnings………………………………………………………………45,000 Dividends………………………………………………………………………2,000Tutoring revenue earned………………………………………………………96,000 Salary expense…………………………………………………………………52,000Supply expense…………………………………………………………………1,200Advertising expense (300)Depreciation expense: equipment………………………………………………1,000 Income taxes expense………………………………………………………….. 11,600$176,000 $176,000 a. Prepare an income statement and statement of retained earnings for the year ended December31, 2009. Also prepare the company’s balance sheet dated December 31, 2009.b. Dose the company appear to be liquid? Defend your answer.c. Has the company been profitable in the past? Explain.Exercise 5.3Wilderness Guide Services, Inc., performs adjusting entries every month, but closes its accounts only at year-end. The company’s year-end adjusted trial balance dated December 31, 2009, follows:Wilderness Guide Services, Inc.Adjusted Trial BalanceDecember 31, 2009 Cash…………………………………………………………………………… $12,200Accounts receivable……………………………………………………………31,000Camping supplies………………………………………………………………7,900 Unexpired insurance policies………………………………………………….. 2,400 Equipment………………………………………………………………………70,000 Accumulated depreciation: equipment…………………………………………$60,000 Notes payable(due 4/1/10)…………………………………………………….. 18,000 Accounts payable………………………………………………………………9,500 Capital stock……………………………………………………………………25,000 Retained earnings………………………………………………………………15,000 Dividends………………………………………………………………………1,000Guide revenue earned…………………………………………………………102,000 Salary expense…………………………………………………………………87,500 Camping Supply expense………………………………………………………1,200 Insurance expense……………………………………………………………9,600 Depreciation expense: equipment………………………………………………5,000 Interest expense…………………………………………………………………1,700$229,500 $229,500 a. Prepare an income statement and statement of retained earnings for the year ended December31, 2009. Also prepare the company’s balance sheet dated December 31, 2009.(Hint: Unprofitable companies have no income taxes expense.)b. Dose the company appear to be liquid? Defend your answer.c. Has the company been profitable in the past? Explain.Exercise 5.10ORGON FOODSBalance SheetDecember 31, 2009Assets Cash.......................................................................................$6,800 Accounts receivable.....................................................................7,200 Office supplies (700)Prepaid rent……………………………………………………………………. 1,700Equipment……………………………………………………………………… $ 12,000 Accumulated depreciation: equipment……………………………………….. (4,800) $7,200 Total assets………………………………………………………….. $23,200LiabilitiesAccounts payable………………………………………………………………. $2,200 Income taxes payable……………………………………………………………1,800 Total Liabilities…………………………………………………………………. $4,000Stockholders’ EquityCapital stock……………………………………………………………………. $10,000 Retained earnings………………………………………………………………. 9,200 Total Stockholders’ Equity…………………………………………………….. $19,200 Total Liabilities and Stockholders’ Equity………………………………………$23,200Other information provided by the company is as follows:Total Revenue for the year ended December 31, 2009……………………………$25,500 Total ecpense for the year ended December 31, 2009………………………….....20,400 Total Stockholders’ Equity, January 1, 2009………………………………………14,800Compute and discuss briefly the significance of the following measures as they relate to Oregon Foods:a. Net income percentage in 2009.b. Return on equity in 2009.c. Working capital on December 31, 2009.d. Current ratio on December 31, 2009.10.2 Listed below are eight events or transactions of GemStar Corporation.Indicate the effects that each of these transactions on the following financial statements categories. Organize your answer in tabular form, using the column headings. Use the following code letters to indicate the effects of each transaction on the accounting element listed in the column heading: I for increase, D for decrease, and NE for no effect.10.9 Swanson Corporation issued $8 million of 20-year, 8 percent bonds on April 1, 2009, at102. Interest is due on March 31 and September 30 of each year, and all of the bonds in the issue mature on March 31, 2029. Swanson’s fiscal year ends on December 31. Prepare the following journal entries:Ex. 10.9a. 2009Apr. 1 Cash …………………………………………….8,160,000 Premium on Bonds Payable ………………… 160,000Bond Payable …………………………………8,000,000 To record issuance of bonds at 102.b. 2009Sept. 30 Bon d Interest Expense ……………316,000Pre mium on Bonds Payable ……… 4,000Cash …………………………320,000 To pay interest and amortize bond premium.Semiannual interest payment:$8,000,000 x 8% x 1/2 ……… $320,000Less premium amortized:[$160,000 / 20 yrs.] x 1/2 …… (4,000)Interest expense $316,000c. 2029Mar. 31 Bond Interest Payable ……………160,000Bon d Interest Expense ……………158,000Prem ium on Bonds Payable ………2,000Cash …………………………………320,000 To record final interest payment and amortizebond premium:(1) Interest expense for 3 months in 2029 = $316,000 x 3/6 = $158,000(2) Premium amortized in 2029 = $4,000 x 3/6 = $2,000(3) Interest payable from 12/31/28 = $320,000 x 3/6 = $160,000Mar. 31 Bonds Payable ……………………… 8,000,000Cash ……………………………………8,000,000 To retire bonds at maturity.d. (1) Amortization of a bond premium decreases annual interest expense and, consequently, increases annual net income.(2) Amortization of a bond premium is a noncash component of the annual interest expense computation. Thus, it has no effect upon annual net cash flow from operating activities. (Receipt of cash upon issuance of bonds and payment of cash to retire bonds at maturity are both classified as financing activities.)10.10 Mellilo Corporation issued $5 million of 20-year, 9.5 percent bonds on July 1,2009, at 98.Interest is due on June 30 and December 31 of each year, and all of the bonds in the issue mature on June 30,2009. Mellilo’s fiscal year ends on December 31. Prepare the following journal entries:Ex. 10.10a. 2009July 1 Cash ………………………4,900,000Discount on Bonds Payable … 100,000Bonds Payabl e ………………………5,000,000 To record issuance of bonds at 98.b. 2009Dec. 31 Bond Interest Expense ………………240,000Discount on Bonds Payable ……………… 2,500Cash ……………………………………237,500 To pay interest and amortize bond discount:Semiannual interest payment:$5,000,000 x 9 1/2% x 1/2 …….. $237,500Add discount amortized:[$100,000 ? 20 yrs.] x 1/2 …… 2,500Interest expense $240,000c. 2029June 30 Bond Interest Expense ……………… 240,000D iscount on Bonds Payable ……………2,500Cash ………………………………………… 237,500 To make final interest payment and amortize bond discount(same calculation as in part b. above).June 30 Bond Payable …………………………5,000,000Cash ………………………………………… 5,000,000 To retire bonds at maturity.d. (1) Amortization of bond discount increases annual interest expense and, consequently, reduces annual net income.(2) Amortization of bond discount is a noncash component of annual interest expense and has no effect upon annual net cash flow from operating activities. (Receipt of cash upon issuance of bonds and payment of cash to retire bonds at maturity are both classified as financing activities.)。