Arwa Software Ltd. has successfully developed a new spreadsheet program. To produce and market the program, the company needs additional fi nancing. On January 1, 2017, Arwa borrowed money as follows. 1. It issued NT$1 million, 10%, 10-year bonds at face value. Interest is payable annually on January 1. 2. It also issued a NT$400,000, 6%, 15-year mortgage payable. The terms provide for annual installment payments of NT$41,185 on December 31. Instructions 1. For the 10-year, 10% bonds: (a) Journalize the issuance of the bonds on January 1, 2017. (b) Prepare the journal entries for interest expense in 2017. (c) Prepare the entry for the redemption of the bonds at 101 on January 1, 2020, after paying the interest due on this date. 2. For the mortgage payable: Prepare the entry for the issuance of the note on January 1, 2017.
Arwa Software Ltd. has successfully developed a new spreadsheet program. To produce and market the program, the company needs additional fi nancing. On January 1, 2017, Arwa borrowed money as follows. 1. It issued NT$1 million, 10%, 10-year bonds at face value. Interest is payable annually on January 1. 2. It also issued a NT$400,000, 6%, 15-year mortgage payable. The terms provide for annual installment payments of NT$41,185 on December 31. Instructions 1. For the 10-year, 10% bonds: (a) Journalize the issuance of the bonds on January 1, 2017. (b) Prepare the journal entries for interest expense in 2017. (c) Prepare the entry for the redemption of the bonds at 101 on January 1, 2020, after paying the interest due on this date. 2. For the mortgage payable: Prepare the entry for the issuance of the note on January 1, 2017.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Arwa Software Ltd. has successfully developed a new
spreadsheet program. To produce and market the
program, the company needs additional fi nancing. On
January 1, 2017, Arwa borrowed money as follows.
1. It issued NT$1 million, 10%, 10-year bonds at face
value. Interest is payable annually on January 1.
2. It also issued a NT$400,000, 6%, 15-year mortgage
payable. The terms provide for annual installment
payments of NT$41,185 on December 31.
Instructions
1. For the 10-year, 10% bonds:
(a) Journalize the issuance of the bonds on January 1,
2017.
(b) Prepare the journal entries for interest expense in
2017.
(c) Prepare the entry for the redemption of the bonds at
101 on January 1, 2020, after paying the interest due on
this date.
2. For the mortgage payable: Prepare the entry for the
issuance of the note on January 1, 2017.
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