Entries for bond (held-to-maturity) investmentsThe following bond investment transactions were completed by Starks Company:Purchased 24, $1,000 government bonds at 100 plus accrued interest of $120 (1 month). The bonds pay 6% annual interest onJuly 1 and January 1.Received semiannual interest on bond investment.Sold 9, $1,000 bonds at 98 plus $90 accrued interest (2 months).Jan. 31July 1Aug. 30a. Journalize the entries for these transactions. Assume a 360-day year. Do not round interim calculations. Round final answers to nearest dollar. If an amount box does not require an entry, leave it blank.Jan. 31 Investments-Government BondsInterest ReceivableJuly 1CashCashInterest ReceivableInterest RevenueAug. 30 CashLoss on Sale of InvestmentsInterest RevenueInvestments-Government BondsFeedback►Check My WorkDec. 31 Interest Receivable24,000Interest Revenue120 ✓720 ✔24,1208,910 ✔1200 0000000b. Journalize the December 31 adjusting entry for semiannual interest earned on the bonds. Assume a 360-day year. Do not round interim calculations. Round final answers to nearest dollar. If an amount box does not require an entry,leave it blank.600

Lets understand the basics. Journal entry is required to make in order to record event and…

Answered: 31 Purchased 24, $1,000 government…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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On January 1, a company issues bonds dated January 1 with a par value of $350,000. The bonds mature in 5 years. The contract rate is 7%, and interest is paid semiannually on June 30 and December 31. The market rate is 8% and the bonds are sold for $335,819. The journal entry to record the first interest payment using straight-line amortization is: Multiple Choice Debit Interest Expense $10,831.90; debit Discount on Bonds Payable $1,418.10; credit Cash $12,250,00 Debit Interest Expense $13,668.10, credit Discount on Bonds Payable $1,418.10, credit Cash $12,250.00 Debit Interest Expense $12,250.00, credit Cash $12.250.00 Debit interest Expense $13,668.10; credit Premium on Bonds Payable $1,418.10; credit Cash $12,250,00 Debit interest Payable $12.250.00; credit Cash $12.250.00
On the first day of the fiscal year, a company issues a $7,300,000, 8%, 10-year bond that pays semiannual interest of $292,000 ($7,300,000 × 8% × ½), receiving cash of $5,991,433. Journalize the first interest payment and the amortization of the related bond discount. Round to the nearest dollar. If an amount box does not require an entry, leave it blank.
On September 1, Year 1, Parsons Company purchased $84, 000 of 10-year, 7% government bonds at 100 plus accrued interest. The semiannual interest payment dates are June 30 and December 31. Interest computations are done by the month. Required: a. Joumalize the entry for the bond purchase. b. Joumalize the receipt of interest on December 31 of the first year. c. Journalize the sale of the bonds on February 1 of the second year for 582, 000 plus accrued interest. If an amount box does not require an entry, leave it blank. a. Year 1 Sept. 1 b. Year 1 Dec. 31 c. Year 2 Feb. 1
On September 1, Year 1, West Company borrowed $30,000 from Valley Bank. West agreed to pay interest annually at the rate of 5% per year. The note issued by West carried an 18-month term. West Company has a calendar year-end. What is the amount of interest expense that will be reported on West's income statement for Year 1? Multiple Choice $500 $375 $-0- $150
A noninterest-bearing note is issued on February 12 of a non-leap year in the amount of $14,250. It has a term of 10 months. It is sold on September 22 with a negotiated interest rate of 2%. Determine the proceeds of the sale. Add 3 days grace period. Select one: a. $14184.71 b. $12193.87 c. none d. $13189.29 Check
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Current Attempt in Progress Presented below are data on three promissory notes. Determine the missing amounts. (Use 360 days for calculation. Do not round intermediate calculations.) Date of Note April 1 July 2 March 7 Save for Later Terms 60 days 30 days 6 months Maturity Date # Principal $720,000 90,000 125,200 Annual Interest Rate 5% $ 9% $ Total Interest Attempts: 0 of 1 used $600 Submit Answer
On the first day of the fiscal year, a company issues a $621,000, 11%, 10-year bond that pays semiannual interest of $34,155 ($621,000 × 11% × 1/2), receiving cash of $652,050. Required: Journalize the entry to record the first interest payment and amortization of premium using the straight-line method. Refer to the Chart of Accounts for exact wording of account titles. Chart Of Accounts CHART OF ACCOUNTS General Ledger ASSETS 110 Cash 111 Petty Cash 112 Accounts Receivable 113 Allowance for Doubtful Accounts 114 Notes Receivable 115 Interest Receivable 121 Merchandise Inventory 122 Supplies 131 Prepaid Insurance 140 Land 151 Building 152 Accumulated Depreciation-Building 153 Equipment 154 Accumulated Depreciation-Equipment LIABILITIES 210 Accounts Payable 221 Salaries Payable 231 Sales Tax Payable 241 Notes Payable 242 Interest Payable 251 Bonds Payable 252 Discount on Bonds…
On January 1, a company issued 5%, 10-year bonds with a face amount of $60 million for $55,537,005 to yield 6%. Interest is paid semiannually. What was the straight-line interest expense on the December 31 annual income statement? (Enter your answer in whole dollars. Round your intermediate calculations to the nearest dollar amount.)
The following bond investment transactions were completed by Starks Company: Jan. 31 Purchased 42, $1,000 government bonds at 100 plus accrued interest of $210 (1 month). The bonds pay 6% annual interest on July 1 and January 1. July 1 Received semiannual interest on bond investment. Aug. 30 Sold 18, $1,000 bonds at 98 plus $180 accrued interest (2 months). a. Journalize the entries for these transactions. Assume a 360-day year. Do not round interim calculations. Round final answers to nearest dollar. If an amount box does not require an entry, leave it blank. Jan. 31 - Select - - Select - - Select - - Select - - Select - - Select - July 1 - Select - - Select - - Select - - Select - - Select - - Select - Aug. 30 - Select - - Select - - Select - - Select - - Select - - Select - - Select - - Select - b. Journalize the December 31 adjusting entry for semiannual interest earned on…
On the first day the fiscal year, a company issue a $437,000, 7%, 10years bond that pays semiannual interest of $15,295 ($437,000 x 7% x 1/2), receiving cash of $458,900. Journalize the entry for the first interest payment and amortization of premium using the straight-in line method. If an amount box does not require an entry, leave in blank. ____________ _____ _______ _____________ ______ ________
3. On January 1, Esly Company obtained a $125,000, 7-year 5% installment note from Farmers Bank. The note requires annual payments of $21,602, with the first payment occurring on the last day of the fiscal year. (a) Prepare an amortization schedule for Year 1 and Year 2 Date January 1 carrying amount Note payment Interest expense Decrease in Notes payable (b) Journalize the following entries: a. Issued the installment notes for cash on January 1. Dec 31 carrying amount

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