E. Assuming the company closets it's books on December 31, prepare the journal entres for 12/31/2019 and 1/1/2020 COURSE LEARNING OBJECTIVE: Students will use electronic worksheets or other productivity tools tosolve problems and develop models.EXCEL LEARNING OBJECTIVES:- Use the built-in formulas to determine the present value (PV) of a bondUse the built-in formulas to determine the effective issuance rate of a bond with issue costs (RATE)Set up an automated bond amortization schedule.Name cells using the Name BoxUse Scenario Manager to create a scenario describing the effects of a change in the market interest rate (anindependent variable) on the proceeds from issuing the bond (a dependent variable) and the correspondingtotal interest expense (a dependent variable) over the term of the bond.1Correcting entries for bonds transactionsAAA Inc. recently hired a new accountant with extensive experience in tax accounting. Because of thepressures of the new job, the accountant was unable to review the topic of accounting for bonds payable.During the first year, he made the following entries for the issuance of new bonds and the two interestpayments.DR607,434CR01/01/19 CashAccounts Payable(Issued $600,000, of 12%, 3-year bonds. Interest is payable semiannually onJune 30 and January 1. The effective rate was 11.5%.)607,43406/30/19 Interest Expense36,000Cash(First semiannual interest payment)36,00012/31/19 Interest ExpenseInterest Payable(Second semiannual interest)36,00036,000INSTRUCTIONS:Based on the explanation of each entry,a. Set up an Excel sheet similar to the example below.b. Determine the proceeds from the issuance of bonds using Excel's built-in formula for PRESENT VALUE =PV.Function ArgumentsRate- numberNper- numberPmtFv- numberTypeA- numberReturns the present value of an investment: the total amount that a series of future payments is worth now.Rate is the interest rate per period. For example, use 64 for quarterlypayments at 6N APR.c. Set up an amortization schedule (entirely using formulas) in Excel under the effective interest method.d. Prepare the entries (in Excel) that should have been made on 1/1/19 and 6/30/19 assuming the companyuses the effective interest method to amortize the premium and discount on its bonds.e. Assuming the company closes its books on December 31st, prepare the journal entries for 12/31/19 and1/1/20.f. What is the effect of these errors on Net Income, Earnings per Share, Total Liabilities and RetainedEarnings if they are not discovered (detected) before the publication of the annual report?g. Assuming the error was discovered at the end of 2019 but before closing the books, prepare the necessaryjournal entry(ies) to correct the error.h. Assuming the error was discovered at the beginning of January of 2020, prepare the necessary journalentry(ies) to correct the error.Prof. Aníbal Báez-Díaz ©2019•..

A journal entry is a form of accounting entry that is used to report a business transaction in a…

Answered: E. Assuming the company closets it's…

Business

Accounting

E. Assuming the company closets it's books on December 31, prepare the journal entres for 12/31/2019 and 1/1/2020

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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Should we record account payable at 12/31, if the invoice date is after 12/31, lets say 1/3, for example the utility or telephone bill for December.
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