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On January 1, 2006, Jamona Corp. purchased

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On January 1, 2006, Jamona Corp. purchased

1. 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 aredated January 1, 2006, and mature January 1, 2011, with interest receivable December 31 ofeach year. The company uses the effective-interest method to allocate unamortized discountor premium. The bonds are classified as available-for-sale. The fair value of the bonds atDecember 31 of each year is as follows:2006 – $320,5002007 – $309,0002008 – $308,0002009 – $310,0002010 – $300,000Prepare the amortization table on the investment in bond. Prepare the entries on theinvestment in bond on 1/1/06, the interest revenue and the amortization of the premiumon 12/31/07, and the adjustment of the investment position to fair value on 12/31/07.2. On January 1, 2007, Jamona Corp. signed a 5-year, noncancelable lease for a machine. Theterms of the lease called for Jamona to make annual payments of $8,668 at the beginning ofeach year, starting January 1, 2007. The machine has an estimated useful life of 6 years anda $5,000 unguaranteed residual value. The machine reverts to the lessor at the end of thelease term. Jamona uses the straight-line method of depreciation for all of its plant assets.Jamona’s incremental borrowing rate is 10%, and the lessor’s implicit rate is unknown.Determine how this lease would qualify as a capital lease.Prepare the amortization table for the lease and the entries for signing the lease on1/1/07, the lease payment on 1/1/07, the interest recognition and lease payment for12/31/07, and the depreciation entry for 12/31/07.Prepare appropriate note disclosure.3.Your company is in financial trouble and is in the process of reorganization. Your manager wants to knowhow you will report on restructuring the debt. Use the following information to help with this assignment.ASSETSCURRENT ASSETSCash and cash equivalentsTrade accounts receivable, net of allowancesOther receivables$ 108,3402,866,26062,150Operating supplies, at lower of averagecost or market58,630Prepaid expenses446,050Total Current Assets3,541,430PROPERTY, PLANT AND EQUIPMENT (at cost)Land1,950,000Buildings and improvements2,327,410Equipment5,015,660Other equipment and leasehold improvements1,645,580total10,938,650Accumulated depreciation and amortization(7,644,430)Net Property, Plant, and Equipment3,294,220OTHER ASSETSDeposits and other assetsTOTAL ASSETSLIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)1,000,080$ 7,835,730To satisfy various benefit issues that have arisen as a result of the restructuring, new post employmentbenefits have been created. The company currently has a defined benefits plan and is considering switchingto a defined contribution plan to save costs. Compute the costs associated with keeping the current planversus the costs of a defined contribution plan where the employer pays 3% of payroll. Should the companyswitch to a defined contribution plan? (To make decision on this, you need to calculate the INDIFFERENCEPOINT of payroll amount at which the pension cost would be the same between the current defined benefit planand the proposed defined contribution plan.If you use Excel for completing this assignment, please use a separate TAB for each of the 4 problemsand submit only a SINGLE FILE for all 4 problems. If you Word, please organize your answerssequentially for the requirements of the 4 problems.


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