A company issues $90,000 of 6%, 10-year bonds dated January 1 that pay interest semiannually on each June 30 and December 31. If the issuer accepts$85,000 for the bonds, the issuer will record the sale with a (debit/credit) creditto Discount on Bonds Payable in the amount of $

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Answered: A company issues $90,000 of 6%, 10-year…

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 the first day of the fiscal year, a company issues a $950,000, 10%, 5-year bond that pays semiannual interest of $47,500 ($950,000 × 10% × 1/2), receiving cash of $884,174. Required: Journalize the entry to record the issuance of the bonds. 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 Payable 253 Premium on Bonds Payable EQUITY…
On the first day of the fiscal year, a company issues a $1,450,000, 5%, five-year bond that pays semiannual interest of $36,250 ($1,450,000 × 5% × ½), receiving cash of $1,408,720. Journalize the first interest payment and the amortization of the related bond discount. Round to the nearest dollar. 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 121 Accounts Receivable 122 Allowance for Doubtful Accounts 126 Interest Receivable 127 Notes Receivable 131 Merchandise Inventory 141 Office Supplies 191 Land 194 Office Equipment 195 Accumulated Depreciation-Office Equipment LIABILITIES 210 Accounts Payable 221 Salaries Payable 231 Sales Tax Payable 232 Interest Payable 241 Notes Payable 251 Bonds Payable 252 Discount on Bonds Payable 253 Premium on Bonds Payable EQUITY 311 Common Stock 312…
On Jan. 1, Year 1, Foxcroft Inc. issued 100 bonds with a face value of $1,000 each for $104,000. The bonds had a stated rate of 6% and paid interest semiannually. Premium on Bonds Payable Interest Income Discount on Bonds Payable Interest Expense Cash Bonds Payable What is the journal entry to record the issuance of the bonds? What is the journal entry to record the first interest payment?
A company issues bonds with a face value of $12 million on June 1, Year One, for the face value plus accrued interest. The bonds pay an annual cash interest rate of 10 percent with payments made on April 1 and October 1 of each year. On financial statements as of December 31, Year One, and the year then ended, which of the following balances will appear? Responses Interest expense: $400,000; interest payable: -0- Interest expense: $600,000; interest payable: -0- Interest expense: $900,000; interest payable: $300,000 Interest expense: $700,000; interest payable: $300,000
Hillside issues $1,900,000 of 5%, 15-year bonds dated January 1, 2019, that pay interest semiannually on June 30 and December 31. The bonds are issued at a price of $1,641,812. Required: 1. Prepare the January 1 journal entry to record the bonds’ issuance. 2(a) For each semiannual period, complete the table below to calculate the cash payment. 2(b) For each semiannual period, complete the table below to calculate the straight-line discount amortization. 2(c) For each semiannual period, complete the table below to calculate the bond interest expense. 3. Complete the below table to calculate the total bond interest expense to be recognized over the bonds' life. 4. Prepare the first two years of a straight-line amortization table. 5. Prepare the journal entries to record the first two interest payments.
On the first day of the fiscal year, a company issues an $2,750,000, 8%, five-year bond that pays semiannual interest of $110,000 ($2,750,000 x 8% x ½), receiving cash of $2,938,110. Journalize the first interest payment and the amortization of the related bond premium. Round to the nearest dollar. 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 121 Accounts Receivable 122 Allowance for Doubtful Accounts 126 Interest Receivable 127 Notes Receivable 131 Merchandise Inventory 141 Office Supplies 191 Land 194 Office Equipment 195 Accumulated Depreciation-Office Equipment LIABILITIES 210 Accounts Payable 221 Salaries Payable 231 Sales Tax Payable 232 Interest Payable 241 Notes Payable 251 Bonds Payable 252 Discount on Bonds Payable 253 Premium on Bonds Payable EQUITY 311 Common Stock…
On January 1, 2018, Technicians Credit Union, (TCU), issued 8%, 20-year bonds payable with a face value of $900,000. These bonds pay interest on June 30 and December 31. The issue price of the bonds is 108. How do I Journalize the payment of interest and amortization on December 31, 2018?
Mitchell Inc. issued 600 of its 6%, $1,000 bonds on January 1 of Year 1. The bonds pay cash interest semiannually each June 30 and December 31 and were issued to yield 5%. The bonds mature in five years on December 31, and the company uses the effective interest method to amortize bond discounts or premiums. Required a. Determine the selling price of the bonds.
On January 1, $2,000,000, 5-year, 10% bonds, were issued for $1,960,000. Interest is paid semiannually on January 1 and July 1. If the issuing corporation uses the straight-line method to amortize discount on bonds payable, the semiannual amortization amount is
On the first day of the fiscal year, a company issues a $8,400,000, 12%, 8-year bond that pays semiannual interest of $504,000 ($8,400,000 × 12% × ½), receiving cash of $8,839,411. Journalize the first interest payment and the amortization of the related bond premium. Round to the nearest dollar. If an amount box does not require an entry, leave it blank.
On January 1, the first day of the fiscal year, Designer Fabric Inc. issues a $850,000, 8%, 10-year bond that pays semiannual interest of $34,000 ($850,000 × 8% × ½ year), receiving cash of $850,000.(a) Journalize the entry to record the issuance of the bonds. If an amount box does not require an entry(b) Journalize the entry to record the first interest payment on June 30. If an amount box does not require an entry(c) Journalize the entry to record the payment of the principal on the maturity date. If an amount box does not require an entry
On January 1, a company issued and sold a $391,000, 7%, 10-year bond payable, and received proceeds of $386,000. Interest is payable each June 30 and December 31. The company uses the straight-line method to amortize the discount. The journal entry to record the first interest payment is: Multiple Choice Debit Bond Interest Expense $13,685; credit Cash $13,685. Debit Bond Interest Expense $27,370; credit Cash $27,370. Debit Bond Interest Expense $13,435; debit Discount on Bonds Payable $250; credit Cash $13,685. Debit Bond Interest Expense $13,685; debit Discount on Bonds Payable $250; credit Cash $13,935. Debit Bond Interest Expense $13,935; credit Cash $13,685; credit Discount on Bonds Payable $250.

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A company issues $90,000 of 6%, 10-year bonds dated January 1 that pay interest semiannually on each June 30 and December 31. If the issuer accepts $85,000 for the bonds, the issuer will record the sale with a (debit/credit) credit to Discount on Bonds Payable in the amount of $