Please be sure to show all work and give clear understanding of each question when asked to explain. Some questions are comprehensive questions.
Q1 On January 1, 2014, Hmart Company purchased 5% bonds, having a maturity value of $500,000, for $428,938. The bonds provide the bondholders with a 7% yield. They are dated January 1, 2014, and mature January 1, 2024, with interest receivable June 30 and December 31 of each year. H-mart Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified in the held-to-maturity category. (a) Prepare the journal entry at the date of the bond purchase. (b) Prepare the first 3 years of a bond amortization schedule. (Hint: start with a complete amartization schedule/table) (c) Prepare the journal entries to record the interest received and the amortization for 2014. Q2 At December 31, 2014, the available-for-sale equity portfolio for XYZ Corp. is as follows. Security CostFair Value Stock-A$33,600$31,000 Stock-B175,000174,000 Stock-C 59,40068,500 Total $268,000$273,500 December 31, 2013, securities fair value adjustment balance—Dr. 5,400 On January 20, 2015, XYZ sold stock-A for $31,100. The sale proceeds are net of brokerage fees. (a) Prepare the adjusting entry at December 31, 2014, to report the portfolio at fair value. (b) Prepare the journal entry for the 2015 sale of Stock-A. Q3 (conceptual) 1. What approach does “Revenue from Contracts with Customers” adopt? 2. What are the five steps for revenue recognition? 3. According to the revenue recognition standard, when should revenues be recognized? 4. when identifying a contract, which criteria must companies follow? 5. when there is a variable consideration in determining the transaction price, how should a company estimate the amount of revenue recognized? 6. How should a company allocate transaction price to separate performance obligations? 7. What are some indicators that a company has satisfied its performance obligation? 8. what is a repurchase agreement? 9. What is a bill-and-hold arrangement? 10. When a consignee sells consigned merchandise on behalf of the consignor, who should recognize cost of goods sold? Q1 Q2 Q3 (Conceptual) Skim through Chapter 20 and answer the following questions 1. What is a pension plan? 2. What is a defined contribution plan? 3. What is a defined benefit plan? 4. Define a "projected benefit obligation" or PBO 5. How is the overfunded or underfunded status of a pension plan measured? 6. What are the components of pension expense? 7. What is service cost? 8. What is “interest on the liability”? How is the interest rate determined? 9. What is the equation for computing actual return? 10. Briefly explain the Corridor Approach for amortizing gain/loss.