Question: Balzac issued $5,000,000 of 115 bonds on July 1, 2009, at 96 which yielded proceeds
Bonds payable – Balzac issued $5,000,000 of 115 bonds on July 1, 2009, at 96 which yielded proceeds of $4,800,000. The bonds will mature on July 1, 2019. Interest is paid semiannually on July 1 and January 1. Balzac uses the straight line method to amortize the bond discount.
Notes payable. Balzac has signed several long term notes with financial institutions and insurance companies. The maturities of these notes are given below. The total unpaid interest for all of these notes amount to $210,000 on March 31, 2015.
Due date Amount Due
April 1, 2015 $ 200,000
July 1, 2015 300,000
October 1, 2015 150, 000
January 1, 2015 150,000
March 31, 2017 600,000
April 1, 2017 – march 31 2018 500,000
April 1, 2018 – march 31, 2019 700,000
April 1, 2019 – march 31, 2020 400,000
April 1, 2020 – march 31, 2021 500,000
$3,500,000
Estimate warranties – Balzac has a one-year product warranty on some selected items in its products line. The estimated warranty liability on sales made during the 2013-2014 fiscal year and still outstanding as of march 31, 2014 amounted to $84,000. The warranty costs on sales made from April 1, 2014 through March 31, 2015 are estimated at $210,000. The actual warranty costs incurred during the current 2014-15 fiscal year are as follows:
Warranty claims honored on 2013-14 sales $ 84,000
Warranty claims honored on 2014-15 sales 95,000
Total warranty claims honored $179,000
Other information:
- Trade payables – accounts payable for supplies, goods and services amounted to $370,000 as of march 31, 2015.
- Payroll related items – outstanding obligations related to Balzac’s payroll as of March 31, 2015 are:
Accrued salaries and wages $ 150,000
FICA Taxes 22,000
State & federal income tax withheld- employees 25,000
Other payroll deductions 5,000
- Taxes – the following taxes incurred but not due until the next fiscal year are:
State and federal income taxes $310,000
Property taxes 125,000
Sales and use taxes 182, 00
- Miscellaneous Accruals – Other accruals not separately classified amount to $75,000 as of March 31, 2015 5 Dividends
- Dividends – On March 15. 2015, Balzac’s board of directors declared 4 cash dividend of $.40 per common share and a 10% common stock dividend. Both dividends were to be distributed on April 12, 2015, to the common stockholders of record at the close of business on March 31, 2015. Data regarding Balzac common stock are as follows:
Par value $per share
Number of shares issued and outstanding 3,000,000 shares
Market values of common stock: 21.50 per share
April 12, 2015 22.50 per share
Instructions’ Prepare the liabilities section of the balance sheet and appropriate notes to the statement for Balzac Inc as of March 31. 2015. As they should appear in its annual report to the stockholders. Write the entries which would be made over the life of the bonds and the dividend declarations. Include an analysis of the notes payable and warranty account
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