118) On May 1, 2010, Gigajoule Company paid $180,000 to purchase $200,000 of bonds that carry a 5% contract rate of interest and will mature in 5 years from the date of purchase. Interest on the bonds is paid May 1 and November 1 of each year. Gigajoule Company plans to hold the bonds until maturity and amortizes the premium or discount on bonds using the straight-line method each interest payment date. As of December 31, 2010, the bonds had a market value of $185,000.
a. Prepare all necessary journal entries for 2010 dealing with the investment in bonds.
b. Show how the bonds would be presented on the balance sheet dated December 31, 2010.
119) How does an investor account for a long-term investment in bonds?
120) Megawatt Corporation purchased inventory merchandise on June 15, 2011, from a Scottish company for 100,000 British pounds. Megawatt remitted payment to the Scottish company on July 13, 2011. The British pound was worth $1.74 on June 15, 2011, and $1.78 on July 13, 2011.
Prepare entries for Megawatt Corporation needed on June 15, 2011, and July 13, 2011.
121) Hot Corporation sold merchandise on March 5, 2011, to a Swiss company for 320,000 Swiss francs. Hot Corp. received payment from the Swiss company on April 3, 2011. The Swiss franc was worth $0.26 on March 5, 2011, and $0.32 on April 3, 2011.
Prepare the appropriate sales and cash receipts entries for Hot Corporation on March 5, 2011, and April 3, 2011.
122) JetNew Corporation sold merchandise on June 25, 2010 to a US company for 560,000 US dollars. JetNew received payment from the US company on July 5, 2010. The US was worth $1.04 on June 25, 2010, and $1.05 on July 5, 2010.
Prepare the appropriate sales and cash receipts entries for JetNew Corporation on May 25, 2010, and July 5, 2010.