A.

1
Sale 100% $ 90,000
Cost of goods sold 60% $ 54,000
Profit 40% $ 36,000
Unsold merchandise 50% $ 18,000 Unrealized profit before tax
Tax rate 40% $ 7,200
After tax $ 10,800

A.2
Sale 100% $ 112,500
Cost of goods sold 80% $ 90,000
Profit 20% $ 22,500
Unsold merchandise 60% $ 13,500 Unrealized profit before tax
Tax rate 40% $ 5,400
After tax $ 8,100

A.3
Sale 140% $ 180,000
Cost of goods sold 100% $ 128,571.43
Profit 40% $ 51,428.57
Unsold merchandise 30% $ 15,428.57 Unrealized profit before tax
Tax rate 30% $ 4,628.57
After tax $ 10,800.00

A.4
Sale 170% $ 136,000.00
Cost of goods sold 100% $ 80,000.00
Profit 70% $ 56,000.00
Unsold merchandise 80% $ 44,800.00 Unrealized profit before tax
Tax rate 40% $ 17,920.00
After tax $ 26,880.00

A.5
Purchased
Actual value
Book value of assets $
Book value of liabilities $
Acquisition differential
100% $ 4,500,000.00
4,900,000.00
(1,100,000.00) $ 3,800,000.00
$ 700,000.00 positive

A.6
Purchased 58% $ 2,800,000.00
Actual value $ 4,827,586.21
Book value of S shares $ 600,000.00
Retained earnings $ 1,200,000.00 $ 1,800,000.00
Acquisition differential $ 3,027,586.21 positive

A.7
 N I/Y PV
once a year 10 4.2
10*2 4.20/2
Twice a year 20 2.1 $ 6,194,336.75

Issue price $ 6,194,336.75

A.8
N I/Y PV
once a year 10 4.50 $ 1,920,000.00
10*2 2.2506*2
Twice a year 20 2.25 $ 1,920,000.00

Market rate 4.50%

A.9
Purchased 100% $4,900,000
Actual value
Book value of assets 4900000
Book value of liabilities -1,100,000 3,800,000
Acquisition differential $1,100,000
Fair Value difference $100,000 $1,100000-$1,000,000
Goodwill $1,000,000

A.10
N I/Y PV
once a year 10 4.4 $ 10,481,205.56
10*2 4.40/2
Twice a year 20 2.2 $ 10,481,205.56

Journal entries
Date Particulars Debit Credit
June 30 ,2014 Cash 10,481,205.56
Bonds payable 10,481,205.56

Dec 31 ,2014 Interest expense 230,586.52

Bonds payable 19,413.48
Cash 250,000.00

June30 ,2015 Interest expense 230,159.43

Bonds payable 619,840.57
Cash 250,000.00

Sep 30 ,2019 Interest expense 45,173.39

Bonds payable 4,101,845.12
Cash 4,080,000.00
Gain on bond redemption 67,018.51
 Date Cash Interest Amortization
30-Jun-14
31-Dec-14 $ 250,000.00 $ 230,586.52 $ 19,413.48
30-Jun-15 $ 250,000.00 $ 230,159.43 $ 19,840.57
31-Dec-15 $ 250,000.00 $ 229,722.93 $ 20,277.07
30-Jun-16 $ 250,000.00 $ 229,276.84 $ 20,723.16
31-Dec-16 $ 250,000.00 $ 228,820.93 $ 21,179.07
30-Jun-17 $ 250,000.00 $ 228,354.99 $ 21,645.01
31-Dec-17 $ 250,000.00 $ 227,878.80 $ 22,121.20
30-Jun-18 $ 250,000.00 $ 227,392.13 $ 22,607.87
31-Dec-18 $ 250,000.00 $ 226,894.76 $ 23,105.24
30-Jun-19 $ 250,000.00 $ 226,386.44 $ 23,613.56
30-Sep-19 $ 125,000.00 $ 112,933.47 $ 12,066.53
31-Dec-19 $ 125,000.00 $ 112,800.74 $ 12,199.26

A.11
Depreciable value ($140,000-$10,000)/10= $13,000 per year
2014 Jun- dec 7 months 13000*7/12
2015 Jun- dec 12 months 13000*12/12
2016 Jun- dec 12 months 13000*12/12
2017 Jun- dec 12 months 13000*12/12
2018 Jan- Mar 3 months 13000*3/12
Accumulated depreciation
Original value
Book Value

Sold on April 7, 2018 $ 78,000.00

Less: Book Value $ (90,166.67)
Loss before tax $ (12,166.67)
Tax 35% $ 4,258.33
Loss after tax $ (7,908.34)
ed profit before tax

ed profit before tax

ed profit before tax

ed profit before tax

 PMT FV
$ 276,000.00 $ 6,000,000.00
$276,000/2
$ 138,000.00 $ 6,000,000.00

PMT FV
$ 80,000.00 $ 2,000,000.00
$80,000/2
$ 40,000.00 $ 2,000,000.00

00-$1,000,000

PMT FV
$ 500,000.00 $ 10,000,000.00
$500,000/2
$ 250,000.00 $ 10,000,000.00
 Carrying value
$ 10,481,205.56
$ 10,461,792.08
$ 10,441,951.51
$ 10,421,674.44
$ 10,400,951.28
$ 10,379,772.21
$ 10,358,127.20
$ 10,336,005.99
$ 10,313,398.13
$ 10,290,292.88
$ 10,266,679.33 Carrying value at 40% on sep 30.
$ 10,254,612.80 $ 50,000.00 $ 45,173.39 $ 4,826.61 $ 4,101,845.12
$ 10,242,413.54

$ 7,583.33
$ 13,000.00
$ 13,000.00
$ 13,000.00
$ 3,250.00
$ 49,833.33
$ 140,000.00
$ 90,166.67