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ACC 545 Week 3 Individual Assignment Jamona Corp. Scenario



ACC 545 Week 3 Individual Assignment Jamona Corp. Scenario Individual Assignment: Jamona Corp. Scenario Jamona Corp. Scenario Reviewthe following information: On January 1, 2006, Jamona Corp. purchased 12% bonds, having a maturity value of $300,000, for $322,744.44. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2006, and mature January 1, 2011, with interest receivable December 31 of each year. The company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified as available-for-sale. The fair value of the bonds at December 31 of each year is as follows: 2006 – $320,500 2007 – $309,000 2008 – $308,000 2009 – $310,000 2010 – $300,000 The following information is available from Jamona’s inventory records Units Unit Cost January 1, 2007 (beginning inventory) 600 $ 8.00 Purchases: January 5, 2007 1,200 9.00 January 25, 2007 1,300 10.00 February 16, 2007 800 11.00 March 26, 2007 600 12.00 A physical inventory on March 31, 2007, shows 1,600 units on hand. Select any one of the inventory methods (LIFO, FIFO, Average Cost, or others). On July 6, Jamona Corp. acquired the plant assets of Berry Company, which had discontinued operations. The appraised value of the property is: Land $ 400,000 Building 1,200,000 Machinery and equipment 800,000 Total $2,400,000 Jamona Corp. gave 12,500 shares of its $100 par value common stock in exchange. The stock had a market value of $168 per share on the date of the purchase of the property. Jamona Corp. expended the following amounts in cash between July 6 and December 15, the date when it first occupied the building. Repairs to building $105,000 Construction of bases for machinery to be installed later 135,000 Driveways and parking lots 122,000 Remodeling of office space in building 161,000 Special assessment by city on land 18,000 On December 20, the company paid cash for machinery, $260,000, subject to a 2% cash discount, and freight on machinery of $10,500. On January 1, 2007, Jamona Corp. signed a 5-year, noncancelable lease for a machine. The terms of the lease called for Jamona to make annual payments of $8,668 at the beginning of each year, starting January 1, 2007. The machine has an estimated useful life of 6 years and a $5,000 unguaranteed residual value. The machine reverts to the lessor at the end of the lease term. Jamona uses the straight-line method of depreciation for all of its plant assets. Jamona’s incremental borrowing rate is 10%, and the lessor’s implicit rate is unknown. Prepare journal entries that relate to the balance sheet items above with appropriate backup lead schedules for investments, inventory, fixed assets, and capital leases. Prepare appropriate note disclosures. Please submit as ONE file attachment


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