Problem 1 - Obtain Proctor and Gamble's 2014 (P&G) Annual Report

1. a) What was the total current portion of P&G long-term debt at June 30, 2014? 

b) What would have been the effect on working capital on June 30, 2014 if the current portion of long-term debt had not been properly reclassified?  State the direction and dollar amount.

2. How many shares of common stock are held in treasury at fiscal year-end 2014?

3. Prepare the journal entry to record the declaration and payment of cash dividends for fiscal year 2014 (assume declaration and payment occurs simultaneously).

4. Compute P&G's dividend payout ratio for fiscal year 2014.

5. a) How much cash was received from the sale (disposal) of property, plant, and equipment during fiscal year 2014?

b) Assume the cost of the PPE sold during 2014 was $950M and the accumulated depreciation on PPE sold amounted to $350M.  What is the gain or loss on the sale?

Problem 2 - Assume that TarMart purchased equipment at the beginning of fiscal year 2014 for $480,000 cash.  The equipment had an estimated useful life of 8 years and a residual value of $30,000. 

1. What would depreciation expense be for year 3 under the straight-line method?

2. What would depreciation expense be for year 3 under the double-declining balance method?

3. What is the first year in which depreciation expense under the straight-line method is higher than under the declining balance method?

4. Assume TarMart uses the straight-line depreciation method for its equipment.  Also assume that at fiscal year-end 2018, TarMart sold the equipment purchased at the beginning of fiscal year 2014 for $200,000 cash.  Prepare the journal entry to record the sale of the equipment at year-end 2018.

Problem 3 - Sayers

On December 31, 2017, Sayers Nissan issued $3 million of 10-year, 10% debentures.  The market interest rate at issuance was 12%.  Interest payments are semi-annual.

1. Compute the proceeds from the issuance and prepare the journal entry to record the issuance.

2. Prepare the journal entries to record the first two semiannual interest payments, including any bond discount or premium amortization.

3. Prepare the journal entry to record payment at the maturity date.

4. Show how the bond-related accounts would appear on the balance sheets as of December 31, 2017, and June 30, 2018.