Jamona Corp. Scenario — Due Mon, Day 7

With the following information for Jamona Corp. please complete the following sections: 

1. Investments
2. Inventory
3. Property, Plant & Equipment
4. Equipment Leases

All the information you need to compete this assignment is included.

You must utilize the attached excel worksheet to complete.

• Do not significantly alter the formatting of the spreadsheet
• Do not delete tabs or columns
• Do not change column headers or descriptions
• Do not alter column width, formatting, shading or colors
• I have provided enough lines for entries (If you need to add rows then something is incorrect)
• Use the tab called “Work” for calculations (optional – not graded)

Submit the worksheet as your completed assignment.

SECTION 1 – INVESTMENTS

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: 

Deliverables:

1(a) Complete the Bond Amortization and Unrealized Gain (Loss) Schedules. Beginning balance of amortization schedule is purchase price of bond.

1(b) Prepare the Bond Investment entries for 2006.

SECTION 2 – INVENTORY

Jamona Corp utilizes a Periodic Inventory System. and the following information is available from Jamona’s inventory records: 

A physical inventory on March 31, 2007, shows 1,600 units on hand.

Deliverables:

2(a) Complete the LIFO inventory schedule.

2(b) Complete the entries to close out beginning inventory and purchases, record ending inventory and cost of goods sold for the end of the period; using the LIFO cost method.

I do not need to see the purchase entries.

SECTION 3 – PROPERTY, PLANT & EQUIPMENT

On July 6, Jamona Corp. acquired the plant assets of Berry Company, which had discontinued operations. The appraised value of the property is:

Jamona Corp. gave 12,500 shares of its $100 per value common stock in exchange. The stock had a market value of $168 per share on the date of the purchase of the property.

On December 20, the company paid cash for machinery, $260,000, subject to a 2% cash discount, and freight on machinery of $10,500.

Deliverables:

3(a) Calculate the amount of the assets recorded for the initial purchase of the plant assets from Berry Company.

3(b) Prepare the fixed asset entries for 2007.

SECTION 4 – EQUIPMENT LEASES

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.

Deliverables:

4(a) Complete the schedules for Lease Amortization and Depreciation of equipment asset.

4(b) Prepare the 2007 entries related to the lease.