Prepare a revised income statement under variable costing method for the year ended December 31, 2016.

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Answer 1

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Chapter 18, Problem 30P

1.

To determine

Prepare a revised income statement under variable costing method for the year ended December 31, 2016.

2.

To determine

Identify the two merits of using variable costing method rather than absorption costing.

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Buffalo Inc. issued $4,200,000 of convertible 5-year bonds on July 1, 2025. The bonds provide for 6% interest payable semiannually on January 1 and July 1. The discount in connection with the issue was $102,000, which is being amortized monthly on a straight-line basis. The bonds are convertible after one year into 15 shares of Buffalo Inc's $1 par value common stock for each $1,000 of bonds. On October 1, 2026, $504,000 of bonds were turned in for conversion into common stock. Interest has been accrued monthly and paid as due. At the time of conversion, any accrued interest on bonds being converted is paid in cash. Prepare the journal entries to record the conversion, amortization, and interest in connection with the bonds as of the following dates.

Buffalo Inc. issued $4,200,000 of convertible 5-year bonds on July 1, 2025. The bonds provide for 6% interest payable semiannually on January 1 and July 1. The discount in connection with the issue was $102,000, which is being amortized monthly on a straight-line basis. The bonds are convertible after one year into 15 shares of Buffalo Inc's $1 par value common stock for each $1,000 of bonds. On October 1, 2026, $504,000 of bonds were turned in for conversion into common stock. Interest has been accrued monthly and paid as due. At the time of conversion, any accrued interest on bonds being converted is paid in cash. Prepare the journal entries to record the conversion, amortization, and interest in connection with the bonds as of the following dates. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.

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Answer 2

Question

Chapter 18, Problem 30P

1.

To determine

Prepare a revised income statement under variable costing method for the year ended December 31, 2016.

2.

To determine

Identify the two merits of using variable costing method rather than absorption costing.

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Answer 3

Question

Chapter 18, Problem 30P

1.

To determine

Prepare a revised income statement under variable costing method for the year ended December 31, 2016.

2.

To determine

Identify the two merits of using variable costing method rather than absorption costing.

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Answer 4

Question

Chapter 18, Problem 30P

1.

To determine

Prepare a revised income statement under variable costing method for the year ended December 31, 2016.

2.

To determine

Identify the two merits of using variable costing method rather than absorption costing.

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 5

Chapter 18, Problem 30P

1.

To determine

Prepare a revised income statement under variable costing method for the year ended December 31, 2016.

2.

To determine

Identify the two merits of using variable costing method rather than absorption costing.

Answer 6

Chapter 18, Problem 30P

1.

To determine

Prepare a revised income statement under variable costing method for the year ended December 31, 2016.

Answer 7

Chapter 18, Problem 30P

1.

To determine

Prepare a revised income statement under variable costing method for the year ended December 31, 2016.

Answer 8

2.

To determine

Identify the two merits of using variable costing method rather than absorption costing.

Answer 9

2.

To determine

Identify the two merits of using variable costing method rather than absorption costing.

Answer 10

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Answer 11

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Answer 12

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Answer 13

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Prepare a revised income statement under variable costing method for the year ended December 31, 2016.

Solution Summary: The author explains the variable costing method and how to prepare a revised income statement for the year ended December 31, 2016.

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Prepare a revised income statement under variable costing method for the year ended December 31, 2016.

Identify the two merits of using variable costing method rather than absorption costing.

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