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xYZ Corp Income Statement For the year ended December 31, 2010 $ 5,000,000 Sales Cost of goods sold Gross profit Operating expenses 1,600,000 Selling expenses 400,000 500,000 Administrative expenses Operating income Interest expense Income tax expense Net Income 900,000 700,000 12,000 $ 648,000 ADDITIONAL INFORMATION Accounts receivable decreased $400,000 during the year. 2. 1. Prepaid expenses decreased $160,000 during the year 3. Accounts payable to suppliers of merchandise decreased $150,000 during the year. 4. Inventory increased $350,000 during the year 5. Accrued expenses payable decreased $150,000 during the year 6. Administrative expenses include depreciation expense of $90,000 Required : Prepare the Operating Activities section of Statement of Cash Flows using the Direct method PROBLEM v On January 2, 2007, Yen Corporation issued $4,000,000 of its 6% , 10-year bonds. The bonds pay interest annually on J Note : Present value factors are provided below. Required: anuary 1 . The current yield rate on such bonds is 8%. 1 Prepare the journal entry to record the issuance of the bond. 2 Calculate the gain or loss if the entire bond issue is retired at 102 at the end of the third year. Bond issue cost is $150,000 0.46319 Present value of 1 at 8% for 10 periods Present value of an ordinary annuity at 8% for 10 periods Present value of 1 at 6% for 10 periods Present value of an ordinary annuity at 6% for 10 periods Present value of an ordinary annuity at 8% for 20 periods 6.71008 0.55839 7.36009 9.81815

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