Instructions for the Microsoft Excel Templates by Rex A Schildhouse

Be advised, the template workbooks and worksheets are not protected. Overtyping any data may remove it.
Extensive detail and information is contained within the help function of Microsoft Excel and in the provided text. You should enter your name, date, instructor's name, and course into the cells at the top of the page. This information will be printed on the top of each page if the template requires more than one page. Each template is set to print with File Name, Page # of # Page(s), the print date, and the print time to assist in assembly of multiple pages. If more than one page is required by the template, manual page breaks have been set to provide consistent presentation. All of the cells have been correctly formatted for presentation and should not require any adjustment. For example, if the text requires one, two, or three significant digits in a presentation, the template has been set for that presentation in the appropriate cells. In general, the yellow highlighted cells are the cells which work and effort should be presented. These entries may include date(s), account title(s), values, memorandum appropriate to the entry, or text answers to questions. And information or data which may be required by the solution will be entered in cells with borders to help identify them. Where a yellow highlighted cell shows "Date" enter the appropriate date for that step of the challenge. This may be any date format that Microsoft Excel accepts. Some of these formats include "1/1/12", "01/01/12", and "01/01/2012." All of these will return January 01, 2012, in the format set in the template. Where a yellow highlighted cell shows "Acct Nbr" enter the appropriate account number, provided in the template and in the text for that step of the challenge. This is entry may be a "Look to" formula to another cell where that information has been provided or previously entered. Where a yellow highlighted cell shows "Account Title" enter the appropriate account title for that step of the challenge. This is a text entry and most of those cells are set for the proper indentation for that step. Frequently the chart of accounts appropriate to the challenge is provided and you can use the "look to" formula to reference the appropriate account title without typing it. Check with your instructor to see if abbreviated account titles are acceptable. For example "A/R" for Accounts Receivable, "A/P" for Accounts Payable. If your instructor is using a comparison process between workbooks for grading, these abbreviates may not be acceptable. Where a yellow highlighted cell shows titles such as "Values," "Amounts," or "Quantities" enter the appropriate numerical value for that step of the challenge. The cell is formatted for proper presentation of the entered information. If a dollar sign is appropriate, it should not be entered, Microsoft Excel will place it there through formatting. Commas and significant digits (decimals) are also set through formatting for common presentation. Since the formatting of the templates is not protected by any password, you may change any of the formatting found in the templates to meet your desires. Where a yellow highlighted cell shows titles such as "Formula" you may enter the appropriate formula or enter a numerical value appropriate for that step of the challenge. Most of the values necessary for the appropriate formula are located on the template in cells with borders or in other yellow highlighted cells. The formula may be a simple "Look to" formula, an equal sign and a cell reference, "=E27" or more complex as "=E27*5," or something similar to the time-value-of-money formula. These are addressed in the tutorial text provided for Microsoft Excel.

Where a yellow highlighted cell shows titles such as "Formula" you may enter the appropriate formula or enter a numerical value appropriate for that step of the challenge. Most of the values necessary for the appropriate formula are located on the template in cells with borders or in other yellow highlighted cells. The formula may be a simple "Look to" formula, an equal sign and a cell reference, "=E27" or more complex as "=E27*5," or something similar to the time-value-of-money formula. These are addressed in the tutorial text provided for Microsoft Excel. Where a yellow highlighted cell shows "Text" enter the appropriate text for that step of the challenge. This may be a memorandum entry for a journal entry or a lengthy text answer discussing the results of an analysis of a company's financials. These titles can simply be typed over. Where a yellow highlighted cell shows titles such as "Journal Number" or "Journ #" you should enter the appropriate number provided in the template and in the text for that step of the challenge. In general this will appear in instances such as "Record the following events in General Journal number six." The print area is defined to fit onto 8 1/2" 11" sheets in portrait or landscape mode as required. Margins are generally set to no less than 1/2" so most printers can print them without a problem. If you printer cannot accept margins less than 1" you may have to reformat the margins through Page Setup. The display may have "Freeze Pane" invoked so column titles remain visible during data entry. This can be removed by utilizing the View menu and selecting "Unfreeze Panes" under "Freeze Panes." When negative values are required, enter them by starting with a minus sign, "-". Negative values may be shown as ($400) or -$400. Negative values in formulas can be created by putting a minus sign in front of the cell reference - "=E10*-E11" will return a negative value if both cells E10 and E11 contain positive values. Microsoft Office and Microsoft Excel are products of, and copyrighted by, Microsoft Corporation, One Microsoft Way, Redmond, Washington 98052-6399

Solution Name: Date: Instructor: Course: Intermediate Accounting, 14th Edition by Kieso, Weygandt, and Warfield Primer on Using Excel in Accounting by Rex A Schildhouse
E17-2 (Entries for Held-to-Maturity Securities) On January 1, 2012, Jennings Company purchased at par 10% bonds having a maturity value of $300,000 . They are dated January 1, 2012, and mature January 1, 2017, with interest receivable December 31 of each year. The bonds are classified in the held-to-maturity category. Instructions: (a) Prepare the journal entry at the date of the bond purchase. Jan 1, 12 Debt Investments (Held-to-Maturity) Cash 300,000 300,000

(b) Prepare the journal entry to record the interest received for 2012. Dec 31, 12 Cash Interest Revenue ($300,000 10.00%) 30,000 30,000

(c) Prepare the journal entry to record the interest received for 2013. Dec 31, 13 Cash Interest Revenue ($300,000 10.00%) 30,000 30,000

153010938.xlsx.ms_office, Exercise 17-2 Solution, Page 3 of 26, 6/20/2013, 6:59 AM

Name: Date: Instructor: Course: Intermediate Accounting, 14th Edition by Kieso, Weygandt, and Warfield Primer on Using Excel in Accounting by Rex A Schildhouse
E17-2 (Entries for Held-to-Maturity Securities) On January 1, 2012, Jennings Company purchased at par 10% bonds having a maturity value of $300,000 . They are dated January 1, 2012, and mature January 1, 2017, with interest receivable December 31 of each year. The bonds are classified in the held-to-maturity category. Instructions: (a) Prepare the journal entry at the date of the bond purchase. Jan 1, 12 Account Title Account Title Amount Amount

(b) Prepare the journal entry to record the interest received for 2012. Dec 31, 12 Account title Account title Amount Amount

(c) Prepare the journal entry to record the interest received for 2013. Dec 31, 13 Account Title Account Title Amount Amount

153010938.xlsx.ms_office, Exercise 17-2, Page 4 of 26, 6/20/2013, 6:59 AM

Solution Name: Date: Instructor: Course: th Intermediate Accounting, 14 Edition by Kieso, Weygandt, and Warfield Primer on Using Excel in Accounting by Rex A Schildhouse
E17-5 (Effective-Interest versus Straight-Line Bond Amortization) On January 1, 2012, Morgan . Company acquires $300,000 of Nicklaus, Inc., 9% bonds at a price of $278,384 . The interest is payable each December 31, and the bonds mature December 31, 2014. The investment will provide Morgan Company a 12% yield. The bonds are classified as held-to-maturity. Note: Due to significant digits and rounding, there may be slight differences in values. Instructions: (a) Prepare a 3-year schedule of interest revenue and bond discount amortization, applying the straight-line method. Schedule of Interest Revenue and Bond Discount Amortization Straight-line Method 9% Bond Purchased to Yield 12% Bond Carrying Cash Interest Discount Amount Received Revenue Amortization of Bonds Date Jan 1, 12 278,384.00 Dec 31, 12 27,000.00 34,205.33 7,205.33 285,589.33 Dec 31, 13 27,000.00 34,205.33 7,205.33 292,794.67 Dec 31, 14 27,000.00 34,205.33 7,205.33 300,000.00 (b) Prepare a 3-year schedule of interest revenue and bond discount amortization, applying the effective-interest method. Schedule of Interest Revenue and Bond Discount Amortization Effective Interest Method 9% Bond Purchased to Yield 12% Bond Carrying Cash Interest Discount Amount Received Revenue Amortization of Bonds Date Jan 1, 12 278,384.00 Dec 31, 12 27,000.00 33,406.08 6,406.08 284,790.08 Dec 31, 13 27,000.00 34,174.81 7,174.81 291,964.89 Dec 31, 14 27,000.00 35,035.79 8,035.79 300,000.68 (c) Prepare the journal entry for the interest receipt of December 31, 2013, and the discount amortization under the straight-line method. Dec 31, 13 Cash Held-to-Maturity Securities Interest Revenue 27,000.00 7,205.33 34,205.33

(d) Prepare the journal entry for the interest receipt of December 31, 2013, and the discount amortization under the effective-interest method. Dec 31, 13 Cash Held-to-Maturity Securities Interest Revenue 27,000.00 7,174.81 34,174.81

153010938.xlsx.ms_office, Exercise 17-5 Solution, Page 5 of 26, 6/20/2013, 6:59 AM

Name: Date: Instructor: Course: th Intermediate Accounting, 14 Edition by Kieso, Weygandt, and Warfield Primer on Using Excel in Accounting by Rex A Schildhouse
E17-5 (Effective-Interest versus Straight-Line Bond Amortization) On January 1, 2012, Morgan . Company acquires $300,000 of Nicklaus, Inc., 9% bonds at a price of $278,384 . The interest is payable each December 31, and the bonds mature December 31, 2014. The investment will provide Morgan Company a 12% yield. The bonds are classified as held-to-maturity. Note: Due to significant digits and rounding, there may be slight differences in values. Instructions: (a) Prepare a 3-year schedule of interest revenue and bond discount amortization, applying the straight-line method. Schedule of Interest Revenue and Bond Discount Amortization Straight-line Method 9% Bond Purchased to Yield 12% Bond Carrying Cash Interest Discount Amount Received Revenue Amortization of Bonds Date Jan 1, 12 Amount Dec 31, 12 Formula Formula Formula Formula Dec 31, 13 Formula Formula Formula Formula Dec 31, 14 Formula Formula Formula Formula (b) Prepare a 3-year schedule of interest revenue and bond discount amortization, applying the effective-interest method. Schedule of Interest Revenue and Bond Discount Amortization Effective Interest Method 9% Bond Purchased to Yield 12% Bond Carrying Cash Interest Discount Amount Received Revenue Amortization of Bonds Date Jan 1, 12 Amount Dec 31, 12 Formula Formula Formula Formula Dec 31, 13 Formula Formula Formula Formula Dec 31, 14 Formula Formula Formula Formula (c) Prepare the journal entry for the interest receipt of December 31, 2013, and the discount amortization under the straight-line method. Dec 31, 13 Account Title Account Title Account Title Amount Amount Amount

(d) Prepare the journal entry for the interest receipt of December 31, 2013, and the discount amortization under the effective-interest method. Dec 31, 13 Account Title Account Title Account Title Amount Amount Amount

153010938.xlsx.ms_office, Exercise 17-5, Page 6 of 26, 6/20/2013, 6:59 AM

Solution Name: Date: Instructor: Course: th Intermediate Accounting, 14 Edition by Kieso, Weygandt, and Warfield Primer on Using Excel in Accounting by Rex A Schildhouse
E17-23 (Fair Value Hedge) On January 2, 2012, MacCloud Co. issued a 4 fixed interest, interest payable -year, $100,000 note at 6.00% semiannually. MacCloud now wants to change the note to a variable-rate note. As a result, on January 2, 2012, MacCloud Co. enters into an interest rate swap where it agrees to fixed and pay LIBOR of for the first 6 months on receive 6.00% 5.70% At each 6-month period, the variable rate will be reset. The variable rate is reset to $100,000 on June 30, 2012. 6.70% Instructions: (a) Compute the net interest expense to be reported for this note and related swap transaction as of June 30, 2012. (b) Compute the net interest expense to be reported for this note and related swap transaction as of December 31, 2012. (a) 06/30/12 (b) 12/31/12 $100,000 $100,000 3.00% 3.00% 3,000 3,000 3,000 3,000 0 0 2,850 0 $2,850

Fixed-rate debt Fixed rate (6.00% 2) Semiannual debt payment Swap fixed receipt Net income effect Swap variable rate 5.70% 1/2 $100,000 6.70% 1/2 $100,000 Net interest expense

3,350 $3,350

Note to instructor: An interest rate swap in which a company changes its interest payments from fixed to variable is a fair value hedge because the changes in fair value of both the derivative and the hedged liability offset one another.

153010938.xlsx.ms_office, Exercise 17-23 Solution, Page 7 of 26, 6/20/2013, 6:59 AM

Name: Date: Instructor: Course: th Intermediate Accounting, 14 Edition by Kieso, Weygandt, and Warfield Primer on Using Excel in Accounting by Rex A Schildhouse
E17-23 (Fair Value Hedge) On January 2, 2012, MacCloud Co. issued a 4 fixed interest, interest payable -year, $100,000 note at 6.00% semiannually. MacCloud now wants to change the note to a variable-rate note. As a result, on January 2, 2012, MacCloud Co. enters into an interest rate swap where it agrees to fixed and pay LIBOR of for the first 6 months on receive 6.00% 5.70% At each 6-month period, the variable rate will be reset. The variable rate is reset to $100,000 on June 30, 2012. 6.70% Instructions: (a) Compute the net interest expense to be reported for this note and related swap transaction as of June 30, 2012. (b) Compute the net interest expense to be reported for this note and related swap transaction as of December 31, 2012. (a) 06/30/12 (b) 12/31/12 Amount Amount Percentage Percentage Formula Formula Amount Amount Formula Formula Formula Formula Formula

Text title Text title Text title Text title Text title Text title Text title Text title Text title

Formula Formula

153010938.xlsx.ms_office, Exercise 17-23, Page 8 of 26, 6/20/2013, 6:59 AM

Solution Name: Date: Instructor: Course: Intermediate Accounting, 14th Edition by Kieso, Weygandt, and Warfield Primer on Using Excel in Accounting by Rex A Schildhouse
4 -year, 7.50% E17-25 (Fair Value Hedge) Sarazan Company issues a fixed-rate interest only, non-prepayable $1,000,000 note payable on December 31, 2012. It decides to change the interest rate from a fixed rate to variable rate and enters into a swap agreement with M&S Corp. The swap agreement specifies that Sarazan will receive a fixed rate at and pay variable with settlement dates that match the interest payments on the debt. 7.50% Assume that interest rates have declined during 2013 and that Sarazan received $13,000 as an adjustment to interest expense for the settlement at December 31, 2013. The loss related to the . debt (due to interest rate changes) was . The value of the swap contract increased $48,000 $48,000 Instructions: (a) Prepare the journal entry to record the payment of interest expense on December 31, 2013. Interest Expense Cash ($1,000,000 7.50%) 75,000 75,000

(b) Prepare the journal entry to record the receipt of the swap settlement on December 31, 2013. Cash Interest Expense 13,000 13,000

(c) Prepare the journal entry to record the change in the fair value of the swap contract on December 31, 2013. Swap Contract Unrealized Holding Gain or LossIncome 48,000 48,000

(d) Prepare the journal entry to record the change in the fair value of the debt on December 31, 2013. Unrealized Holding Gain or LossIncome Note Payable 48,000 48,000

153010938.xlsx.ms_office, Exercise 17-25 Solution, Page 9 of 26, 6/20/2013, 6:59 AM

Name: Date: Instructor: Course: Intermediate Accounting, 14th Edition by Kieso, Weygandt, and Warfield Primer on Using Excel in Accounting by Rex A Schildhouse
4 -year, 7.50% E17-25 (Fair Value Hedge) Sarazan Company issues a fixed-rate interest only, non-prepayable $1,000,000 note payable on December 31, 2012. It decides to change the interest rate from a fixed rate to variable rate and enters into a swap agreement with M&S Corp. The swap agreement specifies that Sarazan will receive a fixed rate at and pay variable with settlement dates that match the interest payments on the debt. 7.50% Assume that interest rates have declined during 2013 and that Sarazan received $13,000 as an adjustment to interest expense for the settlement at December 31, 2013. The loss related to the . debt (due to interest rate changes) was . The value of the swap contract increased $48,000 $48,000 Instructions: (a) Prepare the journal entry to record the payment of interest expense on December 31, 2013. Account title Account title Amount Amount

(b) Prepare the journal entry to record the receipt of the swap settlement on December 31, 2013. Account title Account title Amount Amount

(c) Prepare the journal entry to record the change in the fair value of the swap contract on December 31, 2013. Account title Account title Amount Amount

(d) Prepare the journal entry to record the change in the fair value of the debt on December 31, 2013. Account title Account title Amount Amount

153010938.xlsx.ms_office, Exercise 17-25, Page 10 of 26, 6/20/2013, 6:59 AM

Name: Date: Instructor: Course: Intermediate Accounting, 14th Edition by Kieso, Weygandt, and Warfield Primer on Using Excel in Accounting by Rex A Schildhouse
P17-5 (Equity Securities Entries and Disclosures) Parnevik Company has the following securities in its investment portfolio on December 31, 2012 (all securities were purchased in 2012): 3,000 shares of Anderson Co. common stock which cost $58,500 10,000 shares of Munter Ltd. common stock which cost $580,000 6,000 shares of King Company preferred stock which cost $255,000 The Securities Fair Value Adjustment account shows a credit of $10,100 at the end of 2012. In 2013, Parnevik completed the following securities transactions. 1. On January 15, sold 3,000 shares of Andersons common stock at $22 per share less fees of $2,150 2. On April 17, purchased 1,000 shares of Castles common stock at $33.50 per share plus fees of $1,980 On December 31, 2013, the market values per share of these securities were: Munter Ltd. $61.00 King Co. $40.00 Castle Co. $29.00 In addition, the accounting supervisor of Parnevik told you that, even though all these securities have readily determinable fair values, Parnevik will not actively trade these securities because the top management intends to hold them for more than one year. Instructions: (a) Prepare the entry for the security sale on January 15, 2013. Gross selling price of 3,000 shares at $22.00 Less: Commissions, taxes, and fees Net proceeds from sale Cost of 3,000 shares Gain on sale of stock Jan 15, 13 Cash Equity Investments (Available-for-Sale) Gain on Sale of Stock 63,850 58,500 5,350 $66,000 (2,150) 63,850 (58,500) $5,350

(b) Prepare the journal entry to record the security purchase on April 17, 2013. Total purchase price is: Number of shares Cost per share Cost for shares Plus fees paid Total cost of shares Apr 17, 13 Equity Investments (Available-for-Sale) Cash 35,480 35,480

1,000 $33.50 33,500.00 1,980 $35,480

153010938.xlsx.ms_office, Problem 17-5 Solution, Page 11 of 26, 6/20/2013, 6:59 AM

Name: Date: Instructor: Course: (c) Compute the unrealized gains orthlosses and prepare the adjusting for Parnevik on Intermediate Accounting , 14 Edition by Kieso, Weygandt, andentry Warfield
December 31, 2013. Available-for-Sale PortfolioDecember 31, 2013 Unrealized Fair Gain Value (Loss) Securities Cost Munter Ltd. $580,000 $610,000 $30,000 King Co. 255,000 240,000 (15,000) Castle Co. 35,480 29,000 (6,480) Total of portfolio $870,480 $879,000 8,520 Previous securities fair value adjustment balanceCr. (10,100) Securities fair value adjustmentDr. $18,620 Dec 31, 13 Fair Value Adjustment (Available-for-Sale) Unrealized Holding Gain or LossEquity 18,620 18,620

(d) How should the unrealized gains or losses be reported on Parneviks balance sheet? The unrealized holding gains or losses should be reported on the balance sheet under the title accumulated other comprehensive income as a separate component of stockholders equity.

153010938.xlsx.ms_office, Problem 17-5 Solution, Page 12 of 26, 6/20/2013, 6:59 AM

Name: Date: Instructor: Course: Intermediate Accounting, 14th Edition by Kieso, Weygandt, and Warfield Primer on Using Excel in Accounting by Rex A Schildhouse
P17-5 (Equity Securities Entries and Disclosures) Parnevik Company has the following securities in its investment portfolio on December 31, 2012 (all securities were purchased in 2012): 3,000 shares of Anderson Co. common stock which cost $58,500 10,000 shares of Munter Ltd. common stock which cost $580,000 6,000 shares of King Company preferred stock which cost $255,000 The Securities Fair Value Adjustment account shows a credit of $10,100 at the end of 2012. In 2013, Parnevik completed the following securities transactions. 1. On January 15, sold 3,000 shares of Andersons common stock at $22 per share less fees of $2,150 2. On April 17, purchased 1,000 shares of Castles common stock at $33.50 per share plus fees of $1,980 On December 31, 2013, the market values per share of these securities were: Munter Ltd. $61.00 King Co. $40.00 Castle Co. $29.00 In addition, the accounting supervisor of Parnevik told you that, even though all these securities have readily determinable fair values, Parnevik will not actively trade these securities because the top management intends to hold them for more than one year. Instructions: (a) Prepare the entry for the security sale on January 15, 2013. Text Title Text Title Text Title Text Title Text Title Jan 15, 13 Account Title Account Title Account Title Amount Amount Amount Amount Amount Formula Amount Formula

(b) Prepare the journal entry to record the security purchase on April 17, 2013. Total purchase price is: Text title Text title Text title Text title Text title Apr 17, 13 Account Title Account Title Amount Amount

Quantity Amount Formula Amount Formula

153010938.xlsx.ms_office, Problem 17-5, Page 13 of 26, 6/20/2013, 6:59 AM

Name: Date: Instructor: Course: (c) Compute the unrealized gains orthlosses and prepare the adjusting for Parnevik on Intermediate Accounting , 14 Edition by Kieso, Weygandt, andentry Warfield
December 31, 2013. Available-for-Sale PortfolioDecember 31, 2013 Unrealized Fair Gain Value (Loss) Securities Cost Munter Ltd. Amount Amount Formula King Co. Amount Amount Formula Castle Co. Amount Amount Formula Total of portfolio Formula Formula Formula Previous securities fair value adjustment balanceCr. Amount Securities fair value adjustmentDr. Formula Dec 31, 13 Account Title Account Title Amount Amount

(d) How should the unrealized gains or losses be reported on Parneviks balance sheet? Enter text answer as appropriate.

153010938.xlsx.ms_office, Problem 17-5, Page 14 of 26, 6/20/2013, 6:59 AM

Name: Date: Instructor: Course: Intermediate Accounting, 14th Edition by Kieso, Weygandt, and Warfield Primer on Using Excel in Accounting by Rex A Schildhouse
P17-11 (Equity InvestmentsAvailable-for-Sale) Castleman Holdings, Inc. had the following availablefor-sale investment portfolio at January 1, 2012. 1,000 shares of Evers Company at $15.00 per share $15,000 900 shares of Rogers Company at $20.00 per share $18,000 500 shares of Chance Company at $9.00 per share $4,500 Available-for-sale securities at cost: $37,500 Securities fair value adjustment-Available-for-sale - Credit balance ($7,500) Available-for-sale securities at fair value: $30,000 During 2012, the following transactions took place: 1. On March 1, Rogers Company paid a $2.00 per share dividend. 2. On April 30, Castleman Holdings, Inc. sold 300 shares of Chance Company for $11.00 per share 3. On May 15, Castleman Holding, Inc. purchased 100 more shares of Evers Co. stock at $16.00 per share 4. At December 31, 2012, the stocks had the following price per share values: Evers Company $17.00 Rogers Company $19.00 Chance Company $8.00 During 2013, the following transactions took place: 5. On February 1, Castleman Holding, Inc. sold the remaining Chance shares for $8.00 per share. 6. On March 1, Rogers Company paid a $2.00 per share dividend. 7. On December 21, Evers Company declared a cash dividend of $3.00 per share to be paid in the next month. 8. At December 31, 2013, the stocks had the following price per share values: Evers Company $19.00 Rogers Company $21.00 Instructions: (a) Prepare journal entries for each of the above transactions. 1 Mar 1, 12 Cash Dividend Revenue ($2.00 900 shares) Cash Gain on Sale of Inv [($11-$9)300 sh] Equity Investments (Available-for-Sale) 1,800 1,800 3,300 600 2,700 1,600 1,600

Apr 30, 12

May 15, 12 Equity Investments (Available-for-Sale) Cash ($16.00 100 shares) Dec 31, 12 Fair Value Adjustment (Available-for-Sale) Unrealized Holding Gain or Loss-Equity

8,500 8,500

153010938.xlsx.ms_office, Problem 17-11 Solution, Page 15 of 26, 6/20/2013, 6:59 AM

Name: Date: Instructor: Course: Security Cost Intermediate Accounting , 14th Edition by Kieso, Weygandt, and Warfield Fair
Value Evers Company ($15,000 + $1,600) 16,600 [(1,000 sh + 100 sh) $17.00 per sh] Rogers Company ($18,000) 18,000 (900 sh $19.00 per sh] Chance Company ($4,500 - $2,700) 1,800 [(500 sh - 300 sh) $8.00 per sh] Total of Portfolio 36,400 Previous securities fair value adjustment bal.Cr. Securities fair value adjustmentDr. 5 Feb 1, 13 Cash ($8.00 200 shares) Loss on Sale of Inv [($8-$9)200 sh] Equity Investments (Available-for-Sale) Cash ($2.00 900 shares) Dividend Revenue 18,700 17,100 1,600 37,400

Unrealized Gain (Loss) 2,100 (900) (200) 1,000 (7,500) 8,500

1,600 200 1,800 1,800 1,800 3,300 3,300

Mar 1, 13

Dec 21, 13 Dividends Receivable ($3.00 1,100 sh) Dividend Revenue Dec 31, 13 Fair Value Adjustment (Available-for-Sale) Unrealized Holding Gain or Loss-Equity Security Cost

4,200 4,200 Fair Value 20,900 18,900 39,800 Unrealized Gain (Loss) 4,300 900 5,200 1,000 4,200

Evers Company ($15,000 + $1,600) 16,600 [(1,000 sh + 100 sh) $19.00 per sh] Rogers Company ($18,000) 18,000 (900 sh $21.00 per sh] Total of Portfolio 34,600 Previous securities fair value adjustment bal.Cr. Securities fair value adjustmentDr.

(b) Prepare a partial balance sheet showing the Investments account at December 31, 2012, and 2013. Partial Balance Sheet as of: Current Assets - Dividends Receivable Investments: Available-for-sale securities, at fair value Stockholders' equity: Accumulated other comprehensive gain December 31, 2012 $0 $37,400 $1,000 December 31, 2013 $3,300 $39,800 $5,200

153010938.xlsx.ms_office, Problem 17-11 Solution, Page 16 of 26, 6/20/2013, 6:59 AM

Name: Date: Instructor: Course: Intermediate Accounting, 14th Edition by Kieso, Weygandt, and Warfield Primer on Using Excel in Accounting by Rex A Schildhouse
P17-11 (Equity InvestmentsAvailable-for-Sale) Castleman Holdings, Inc. had the following availablefor-sale investment portfolio at January 1, 2012. 1,000 shares of Evers Company at $15.00 per share $15,000 900 shares of Rogers Company at $20.00 per share $18,000 500 shares of Chance Company at $9.00 per share $4,500 Available-for-sale securities at cost: $37,500 Securities fair value adjustment-Available-for-sale - Credit balance ($7,500) Available-for-sale securities at fair value: $30,000 During 2012, the following transactions took place: 1. On March 1, Rogers Company paid a $2.00 per share dividend. 2. On April 30, Castleman Holdings, Inc. sold 300 shares of Chance Company for $11.00 per share 3. On May 15, Castleman Holding, Inc. purchased 100 more shares of Evers Co. stock at $16.00 per share 4. At December 31, 2012, the stocks had the following price per share values: Evers Company $17.00 Rogers Company $19.00 Chance Company $8.00 During 2013, the following transactions took place: 5. On February 1, Castleman Holding, Inc. sold the remaining Chance shares for $8 per share. 6. On March 1, Rogers Company paid a $2 per share dividend. 7. On December 21, Evers Company declared a cash dividend of $3 per share to be paid in the next month. 8. At December 31, 2013, the stocks had the following price per share values: Evers Company $19 Rogers Company $21.00 Instructions: (a) Prepare journal entries for each of the above transactions. 1 Mar 1, 12 Account Title Dividend Revenue Account Title Account Title Account Title Amount Amount Amount Amount Amount Amount Amount

Apr 30, 12

May 15, 12 Account Title Account Title Dec 31, 12 Account Title

Amount Account Title Amount

153010938.xlsx.ms_office, Problem 17-11, Page 17 of 26, 6/20/2013, 6:59 AM

Name: Date: Instructor: Course: Security Cost Intermediate Accounting , 14th Edition by Kieso, Weygandt, and Warfield Fair
Value Evers Company Formula Calculation as desired Rogers Company Formula Calculation as desired Chance Company Formula Calculation as desired Total of Portfolio Formula Previous securities fair value adjustment bal.Cr. Securities fair value adjustmentDr. 5 Feb 1, 13 Account Title Account Title Account Title Account Title Account Title Formula Formula Formula Formula

Unrealized Gain (Loss) Formula Formula Formula Formula Amount Formula

Amount Amount Amount Amount Amount Amount Amount

Mar 1, 13

Dec 21, 13 Account Title Account Title Dec 31, 13 Account Title

Amount Account Title Security Cost Fair Value Formula Formula Formula Amount Unrealized Gain (Loss) Formula Formula Formula Amount Formula

Evers Company Formula Calculation as desired Rogers Company Formula Calculation as desired Total of Portfolio Formula Previous securities fair value adjustment bal.Cr. Securities fair value adjustmentDr.

(b) Prepare a partial balance sheet showing the Investments account at December 31, 2012, and 2013. Partial Balance Sheet as of: Current Assets - Dividends Receivable Investments: Available-for-sale securities, at fair value Stockholders' equity: Accumulated other comprehensive gain December 31, 2012 Amount Amount Amount December 31, 2013 Amount Amount Amount

153010938.xlsx.ms_office, Problem 17-11, Page 18 of 26, 6/20/2013, 6:59 AM

Solution Name: Date: Instructor: Course: Intermediate Accounting, 14th Edition by Kieso, Weygandt, and Warfield Primer on Using Excel in Accounting by Rex A Schildhouse
P 17-13 (Derivative Financial Instrument) The treasurer of Miller Co. has read on the Internet that the stock price of Wade Inc. is about to take off. In order to profit from this potential development, Miller Co. purchased a call option on Wade common shares on July 7, 2012, for $240.00 The call option is for 200 shares (notional value), and the strike price is $70.00 . (The market price of a share of Wade stock on that date is $70.00 ) The option expires on January 31, 2013. The following data are available with respect to the call option Date Market Price of Wade Shares Time Value of Call Option September 30, 2012 $77.00 per share $180.00 December 31, 2012 $75.00 per share $65.00 January 4, 2013 $76.00 per share $30.00

(a) Prepare the journal entry for Miller Co. for July 7, 2012Investment in call option on Wade shares. Jul 7, 12 Call Option Cash 240 240

(b) Prepare the journal entry for Miller Co. for September 30, 2012Miller prepares financial statements. Sep 30, 12 Call Option [($77.00 - $70.00) 200 shares] Unrealized Holding Gain or Loss - Income Unrealized Holding Gain or Loss - Income Call Option ($240.00 - $180.00) 1,400 1,400 60 60

Sep 30, 12

(c) Prepare the journal entry for Miller Co. for December 31, 2012Miller prepares financial statements. Dec 31, 12 Unrealized Holding Gain or Loss - Income Call Option [($77.00 - $75.00) 200 shares] Unrealized Holding Gain or Loss - Income Call Option ($180.00 - $65.00) 400 400 115 115

Dec 31, 12

153010938.xlsx.ms_office, Problem 17-13 Solution, Page 19 of 26, 6/20/2013, 6:59 AM

Solution Name: Date: Instructor: Course: (d) Prepare the journal entry for ,Miller Co. forby January 2013Miller the call option on the Wade Intermediate Accounting 14th Edition Kieso,4, Weygandt, andsettles Warfield
shares. Jan 4, 13 Call Option [($76.00 - $75.00) 200 shares] Unrealized Holding Gain or Loss - Income Unrealized Holding Gain or Loss - Income Call Option ($65.00 - $30.00) Cash ($6.00 200 shares) Loss on Settlement of Call Option Call Option Call Option 240 1,400 200 200 200 35 35 1,200 30 1,230

Jan 4, 13

Jan 4, 13

60 400 115 35

1,230

153010938.xlsx.ms_office, Problem 17-13 Solution, Page 20 of 26, 6/20/2013, 6:59 AM

Name: Date: Instructor: Course: Intermediate Accounting, 14th Edition by Kieso, Weygandt, and Warfield Primer on Using Excel in Accounting by Rex A Schildhouse
P 17-13 (Derivative Financial Instrument) The treasurer of Miller Co. has read on the Internet that the stock price of Wade Inc. is about to take off. In order to profit from this potential development, Miller Co. purchased a call option on Wade common shares on July 7, 2012, for $240.00 The call option is for 200 shares (notional value), and the strike price is $70.00 . (The market price of a share of Wade stock on that date is $70.00 ) The option expires on January 31, 2013. The following data are available with respect to the call option Date Market Price of Wade Shares Time Value of Call Option September 30, 2012 $77.00 per share $180.00 December 31, 2012 $75.00 per share $65.00 January 4, 2013 $76.00 per share $30.00 Instructions: (a) Prepare the journal entry for Miller Co. for July 7, 2012Investment in call option on Wade shares. Jul 7, 12 Account title Account title Amount Amount

(b) Prepare the journal entry for Miller Co. for September 30, 2012Miller prepares financial statements. Sep 30, 12 Account title Account title Account title Account title Amount Amount Amount Amount

Sep 30, 12

(c) Prepare the journal entry for Miller Co. for December 31, 2012Miller prepares financial statements. Dec 31, 12 Account title Account title Account title Account title Amount Amount Amount Amount

Dec 31, 12

153010938.xlsx.ms_office, Problem 17-13, Page 21 of 26, 6/20/2013, 6:59 AM

Name: Date: Instructor: Course: (d) Prepare the journal entry for ,Miller Co. forby January 2013Miller the call option on the Wade Intermediate Accounting 14th Edition Kieso,4, Weygandt, andsettles Warfield
shares. Jan 4, 13 Account title Account title Account title Account title Account title Account title Account title Call Option Amount Amount Amount Amount Amount Amount Amount

Jan 4, 13

Jan 4, 13

Formula

153010938.xlsx.ms_office, Problem 17-13, Page 22 of 26, 6/20/2013, 6:59 AM

Name: Date: Instructor: Course: Intermediate Accounting, 14th Edition by Kieso, Weygandt, and Warfield Primer on Using Excel in Accounting by Rex A Schildhouse
P 17-16 (Fair Value Hedge Interest Rate Swap) On December 31, 2012, Mercantile Corp. had a 8.00% fixed-rate note outstanding, payable in 2 years. It decides to enter into a $10,000,000 2-year swap with Chicago First Bank to convert the fixed-rate debt to variable-rate debt. The terms of 8.00% the swap indicate that Mercantile will receive interest at a fixed rate of and will pay a variable rate equal to the 6-month LIBOR rate, based on the amount. The $10,000,000 LIBOR rate on December 31, 2012, is 7.00% . The LIBOR rate will be reset every 6 months and will be used to determine the variable rate to be paid for the following 6-month period. Mercantile Corp. designates the swap as a fair value hedge. Assume that the hedging relationship meets all the conditions necessary for hedge accounting. The 6-month LIBOR rate and the swap and debt fair values are as follows. Date 6-Month LIBOR Rate Swap Fair Value Debt Fair Value December 31, 2012 7.00% $10,000,000 June 30, 2013 7.50% ($200,000) $9,800,000 December 31, 2013 5.00% $60,000 $10,060,000 Instructions: (a)(1) Present the journal entries to record the entry, if any, swap on December 31, 2012. No entry necessary at the date of the swap because the fair value of the swap at inception is zero.

(a)(2) Present the journal entries to record the semiannual debt interest payment on June 30, 2013. Jun 30, 13 Interest Expense Cash [$10,000,000 8.00% (1/2)] 400,000 400,000

(a)(3) Present the journal entries to record the settlement of the semiannual swap amount receivables 8.00% 7.00% at less amount payable at LIBOR, Jun 30, 13 Cash Interest Expense 50,000 50,000

Swap receivable [$10,000,000 8.00% (1/2)] Payable at LIBOR [$10,000,000 7.00% (1/2)] Cash settlement

Interest Received (Paid) $400,000 $350,000 $50,000

(a)(4) Present the journal entries to record the change in the fair value of the debt on June 30, 2013. Jun 30, 13 Notes Payable Unrealized Holding Gain or Loss - Income 200,000 200,000

(a)(5) Present the journal entries to record the change in the fair value of the swap at June 30, 2013. Jun 30, 11 Unrealized Holding Gain or Loss - Income Swap Contract 200,000 200,000

(b) Indicate the amount(s) reported on the balance sheet and income statement related to the debt and swap on December 31, 2012. Balance Sheet Liabilities Notes Payable Income Statement

$10,000,000 No effect

153010938.xlsx.ms_office, Problem 17-16 Solution, Page 23 of 26, 6/20/2013, 6:59 AM

Name: Date: Instructor: Course: Intermediate Accounting, 14th Edition by Kieso, Weygandt, and Warfield
(c) Indicate the amount(s) reported on the balance sheet and income statement related to the debt and swap on June 30, 2013. Balance Sheet Liabilities Notes Payable Swap Contract Income Statement Interest Expense ($400,000 - $50,000) Unrealized Holding Gain-Notes Payable Unrealized Holding Loss-Swap Total

$9,800,000 $200,000 $350,000 $200,000 ($200,000) $0

(d) Indicate the amount(s) reported on the balance sheet and income statement related to the debt and swap on December 31, 2013. Balance Sheet Assets Swap Contract Liabilities Notes Payable Income Statement Interest Expense First six months Second six months Unrealized Holding Gain-Swap Unrealized Holding Loss-Notes Payable Total Swap Receivable [8.00% $10,000,000 (1/2)] Payable at LIBOR (7.50% $10,000,000 (1/2)] Cash settlement Interest expense unadjusted June 30December 31, 2013 Cash settlement

$60,000 $10,060,000

$350,000 See (c), above. $375,000 See below. $60,000 ($60,000) $0 $400,000 375,000 $25,000

$400,000 (25,000) $375,000

153010938.xlsx.ms_office, Problem 17-16 Solution, Page 24 of 26, 6/20/2013, 6:59 AM

Name: Date: Instructor: Course: Intermediate Accounting, 14th Edition by Kieso, Weygandt, and Warfield Primer on Using Excel in Accounting by Rex A Schildhouse
P 17-16 (Fair Value Hedge Interest Rate Swap) On December 31, 2012, Mercantile Corp. had a 8.00% fixed-rate note outstanding, payable in 2 years. It decides to enter into a $10,000,000 2-year swap with Chicago First Bank to convert the fixed-rate debt to variable-rate debt. The terms of 8.00% the swap indicate that Mercantile will receive interest at a fixed rate of and will pay a variable rate equal to the 6-month LIBOR rate, based on the amount. The $10,000,000 LIBOR rate on December 31, 2012, is 7.00% . The LIBOR rate will be reset every 6 months and will be used to determine the variable rate to be paid for the following 6-month period. Mercantile Corp. designates the swap as a fair value hedge. Assume that the hedging relationship meets all the conditions necessary for hedge accounting. The 6-month LIBOR rate and the swap and debt fair values are as follows. Date 6-Month LIBOR Rate Swap Fair Value Debt Fair Value December 31, 2012 7.00% $10,000,000 June 30, 2013 7.50% ($200,000) $9,800,000 December 31, 2013 5.00% $60,000 $10,060,000 Instructions: (a)(1) Present the journal entries to record the entry, if any, swap on December 31, 2012. Enter text answer as appropriate.

(a)(2) Present the journal entries to record the semiannual debt interest payment on June 30, 2013. Jun 30, 13 Account title Account title Amount Amount

(a)(3) Present the journal entries to record the settlement of the semiannual swap amount receivables 8.00% 7.00% at less amount payable at LIBOR, Jun 30, 13 Account title Account title Amount Amount

Text title Text title Text title

Interest Received (Paid) Amount Amount Amount

(a)(4) Present the journal entries to record the change in the fair value of the debt on June 30, 2013. Jun 30, 13 Account title Account title Amount Amount

(a)(5) Present the journal entries to record the change in the fair value of the swap at June 30, 2013. Jun 30, 11 Account title Account title Amount Amount

(b) Indicate the amount(s) reported on the balance sheet and income statement related to the debt and swap on December 31, 2012. Balance Sheet Liabilities Account title Income Statement

Amount Amount

153010938.xlsx.ms_office, Problem 17-16, Page 25 of 26, 6/20/2013, 6:59 AM

Name: Date: Instructor: Course: Intermediate Accounting, 14th Edition by Kieso, Weygandt, and Warfield
(c) Indicate the amount(s) reported on the balance sheet and income statement related to the debt and swap on June 30, 2013. Balance Sheet Liabilities Account title Account title Income Statement Account title Account title Account title Total (d) Indicate the amount(s) reported on the balance sheet and income statement related to the debt and swap on December 31, 2013. Balance Sheet Assets Account title Liabilities Account title Income Statement Account title First six months Second six months Account title Account title Total Text title Text title Cash settlement Interest expense unadjusted Text title Text title

Amount Amount Amount Amount Amount Formula

Amount Amount

Amount See (c), above. Amount See below. Amount Amount Formula Amount Amount Formula

Amount Amount Formula

153010938.xlsx.ms_office, Problem 17-16, Page 26 of 26, 6/20/2013, 6:59 AM