At December 31, MediSharp Precision Instruments owes $55,000 on Accounts Payable, Salaries Payable of $13,000, and Income Tax Payable of $9,000. MediSharp also has $280,000 of Bonds Payable that were issued at face value that require payment of a $20,000 installment next year and the remainder in later years. The bonds payable require an annual interest payment of $7,000, and MediSharp still owes this interest for the current year. Report MediSharp's liabilities on its classified balance sheet on December 31, 2018. MediSharp Precision Instruments Balance Sheet (Partial) December 31, 2018 Liabilities

At December 31, MediSharp Precision Instruments owes $55,000 on Accounts Payable, Salaries Payable of $13,000, and Income Tax Payable of $9,000. MediSharp also has $280,000 of Bonds Payable that were issued at face value that require payment of a $20,000 installment next year and the remainder in later years. The bonds payable require an annual interest payment of $7,000, and MediSharp still owes this interest for the current year. Report MediSharp's liabilities on its classified balance sheet on December 31, 2018. MediSharp Precision Instruments Balance Sheet (Partial) December 31, 2018 Liabilities

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

At January 1, 2020, Konerko Corp. issued $40,000,000 of 6%, 12-year bonds that paid interest semiannually on June 30 and December 31. The bonds were issued at $36,788,326 to earn 7%. How much interest expense should Konerko report for these bonds on its income statement for the full year ended December 31, 2020? Please round your answer to the nearest dollar.
On January 1, 2021, Shay Company issues $300,000 of 10%, 15-year bonds. The bonds sell for $293,250. Six years later, on January 1, 2027, Shay retires these bonds by buying them on the open market for $315,750. All interest is accounted for and paid through December 31, 2026, the day before the purchase. The straight-line method is used to amortize any bond discount. 1. What is the amount of the discount on the bonds at issuance?2. How much amortization of the discount is recorded on the bonds for the entire period from January 1, 2021, through December 31, 2026?3. What is the carrying (book) value of the bonds as of the close of business on December 31, 2026?4. Prepare the journal entry to record the bond retirement.
On January 1, 2025, Concord Corporation issued $500,000 of 7% bonds, due in 10 years. The bonds were issued for $537.196, and pay interest each July 1 and January 1. The effective-interest rate is 6%. Prepare the company's journal entries for (a) the January 1 issuance. (b) the July 1 interest payment, and (c) the December 31 adjusting entry. Concord uses the effective interest method. (Round answers to 0 decimal places, eg, 38,548. If no entry is required, select "No Entry for the account titles and enter O for the amounts Credit account titles are automatically indented when the amount is entered. Do not indent manually List all debit entries before credit entries) No. (4) Date Account Titles and Explanation Debit Cred
Jacobs Company issued bonds with a $168,000 face value on January 1, Year 1. The bonds were issued at 105 and carried a 5-year term to maturity. They had a 9% stated rate of interest that was payable in cash on December 31st of each year. Jacobs uses the straight-line method to amortize bond discounts and premiums. Based on this information alone, how does the recognition of interest expense during Year 1 affect the company's accounting equation? Multiple Choice Decreases both assets and stockholders' equity by $13,440 Decreases stockholders' equity by $13,440, decreases liabilities $1,680, and decreases assets by $15,120 Increases liabilities by $1,680, decreases assets by $13,440, and decreases stockholders' equity by $15,120 Decreases both assets and stockholders' equity by $15,120
On January 1, 2025, Stellar Corporation issued $450,000 of 7% bonds, due in 10 years. The bonds were issued for $423,783, and pay interest each July 1 and January 1. Stellar uses the effective-interest method. Prepare the company's journal entries for (a) the January 1 issuance, (b) the July 1 interest payment, and (c) the December 31 adjusting entry. Assume an effective-interest rate of 8%. (Round answers to O decimal places, e.g. 38,548. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually. List all debit entries before credit entries.)
On January 1, 2020, Novak Corporation issued $510,000 of 7% bonds, due in 8 years. The bonds were issued for $480,288, and pay interest each July 1 and January 1. Novak uses the effective-interest method. Prepare the company's journal entries for (a) the January 1 issuance, (b) the July 1 interest payment, and (c) the December 31 adjusting entry. Assume an effective-interest rate of 8%. (Round intermediate calculations to 6 decimal places, e.g. 1.251247 and final answer to 0 decimal places, e.g. 38,548. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Cash Discount on Bonds Payable Bonds Payable Interest Expense Discount on Bonds Payable Cash Interest Expense Discount on Bonds Payable Interest Payable Debit Credit
On the first day of it's fiscal year, Ebert Co. issued $11,000,000 of 10-year, 7% bonds to finance it's operations. Interest is payable semiannually. The bonds were issued at a market interest rate of 9%, resulting in Ebert receiving cash of $9,569,097. The company uses the interest method. What is the first interest payment on June 30, and second interest payment on Dec. 31 including amortization of discount?
At January 1, 2024, Mahmoud Industries, Incorporated, owed Second BancCorp $12 million under a 10% note due December 31, 2026. Interest was paid last on December 31, 2022. Mahmoud was experiencing severe financial difficulties and asked Second BancCorp to modify the terms of the debt agreement. After negotiation Second BancCorp agreed to: Forgive the interest accrued for the year just ended. Reduce the remaining two years’ interest payments to $1 million each and delay the first payment until December 31, 2025. Reduce the unpaid principal amount to $11 million. Required: Prepare the journal entries by Mahmoud Industries, Incorporated, necessitated by the restructuring of the debt at (1) January 1, 2024; (2) December 31, 2025; and (3) December 31, 2026.
On January 1, 2020, Martinez Corporation issued $570,000 of 9% bonds, due in 8 years. The bonds were issued for $603,210, and pay interest each July 1 and January 1. The effective-interest rate is 8%.Prepare the company’s journal entries for (a) the January 1 issuance, (b) the July 1 interest payment, and (c) the December 31 adjusting entry. Martinez uses the effective-interest method. ( No. Date Account Titles and Explanation Debit Credit (a) Jan. 1, 2020July 1, 2020Dec. 31, 2020 (b) Jan. 1, 2020July 1, 2020Dec. 31, 2020 (c) Jan. 1, 2020July 1, 2020Dec. 31, 2020
Alvin Jackson Co. issued $10,000 of bonds on January 1, 2021. The bonds pay interest semi-annually. This is a partial bond amortization schedule for the bonds. Payment Cash Effective interest Decrease in balance Outstanding balance 9,080 1 400 409 9 9,089 2 400 409 9 9,098 3 400 409 9 9,107 4 400 What is the interest expense on the bonds for the year ended December 31, 2022? A. $800. B. $819. C. $818. D. $809.
On January 1, 2014 Victory Falls Company issued $2,100,000 in bonds that mature in 5 years. The bonds have a stated interest rate of 8% and pay interest quarterly each year. When the bonds were sold, the market rate of interest was 6%. These bonds, when issued and sold, contained a call feature, which allowed the company to retire the bonds early, if they elected, for a one-time payment equal to 1% of the book value at the time of retirement. Required: 1- Provide the adjusting journal entries to record interest expense on June 30, 2014, and December 31, 2014 using the straight-line method and using the effective-interest method. 2- What is the book value of the bonds on June 30, 2014 and December 31, 2014 using straight-line method and using effective-interest method?