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Green Mountain Power Company obtained authorization to issue 20-year bonds with a face value of $10 million. The bonds are dated May 1, 2021, and have a contract rate of interest of 10 percent. They pay interest on November 1 and May 1. The bonds were issued on August 1, 2021, at 100 plus three months' accrued interest. Required: Prepare the necessary journal entries in general journal form on the following. a. August 1, 2021, to record the issuance of the bonds. b. November 1, 2021, to record the first semiannual interest payment on the bond issue. c. December 31, 2021, to record interest expense accrued through year-end. (Round to the nearest dollar.) d. May 1, 2022, to record the second semiannual interest payment. (Round to the nearest dollar.) e. What was the prevailing market rate of interest on the date that the bonds were issued? (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your answers to the nearest dollar amount. Enter your answer in dollars not millions.)

Green Mountain Power Company obtained authorization to issue 20-year bonds with a face value of $10 million. The bonds are dated May 1, 2021, and have a contract rate of interest of 10 percent. They pay interest on November 1 and May 1. The bonds were issued on August 1, 2021, at 100 plus three months' accrued interest. Required: Prepare the necessary journal entries in general journal form on the following. a. August 1, 2021, to record the issuance of the bonds. b. November 1, 2021, to record the first semiannual interest payment on the bond issue. c. December 31, 2021, to record interest expense accrued through year-end. (Round to the nearest dollar.) d. May 1, 2022, to record the second semiannual interest payment. (Round to the nearest dollar.) e. What was the prevailing market rate of interest on the date that the bonds were issued? (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your answers to the nearest dollar amount. Enter your answer in dollars not millions.)

FINANCIAL ACCOUNTING
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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ACCT 102 HW(Ch. 10)

Saved Green Mountain Power Company obtained authorization to issue 20-year bonds with a face value of $10 million. The bonds are dated May 1, 2021, and have a contract rate of interest of 10 percent. They pay interest on November 1 and May 1. The bonds were issued on August 1, 2021, at 100 plus three months' accrued interest. Required: Prepare the necessary journal entries in general journal form on the following. a. August 1, 2021, to record the issuance of the bonds. b. November 1, 2021, to record the first semiannual interest payment on the bond issue. c. December 31, 2021, to record interest expense accrued through year-end. (Round to the nearest dollar.) d. May 1, 2022, to record the second semiannual interest payment. (Round to the nearest dollar) e. What was the prevailing market rate of interest on the date that the bonds were issued? (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your answerS to the nearest dollar amount. Enter your answer in dollars not millions.) Complete this question by entering your answers in the tabs below. Req A to D Req E View transaction list Journal entry worksheet 1. 3. 4 Record the issuance of the bonds. Note: Enter debits before credits. Date General Journal Debit Credit Aug 01, 2021
Transcribed Image Text:Saved Green Mountain Power Company obtained authorization to issue 20-year bonds with a face value of $10 million. The bonds are dated May 1, 2021, and have a contract rate of interest of 10 percent. They pay interest on November 1 and May 1. The bonds were issued on August 1, 2021, at 100 plus three months' accrued interest. Required: Prepare the necessary journal entries in general journal form on the following. a. August 1, 2021, to record the issuance of the bonds. b. November 1, 2021, to record the first semiannual interest payment on the bond issue. c. December 31, 2021, to record interest expense accrued through year-end. (Round to the nearest dollar.) d. May 1, 2022, to record the second semiannual interest payment. (Round to the nearest dollar) e. What was the prevailing market rate of interest on the date that the bonds were issued? (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your answerS to the nearest dollar amount. Enter your answer in dollars not millions.) Complete this question by entering your answers in the tabs below. Req A to D Req E View transaction list Journal entry worksheet 1. 3. 4 Record the issuance of the bonds. Note: Enter debits before credits. Date General Journal Debit Credit Aug 01, 2021
On September 1, 2021, Evansville Lumber Company issued $80 million in 20-year, 10 percent bonds payable. Interest is payable semiannually on March 1 and September 1. Bond discounts and premiums are amortized at each interest payment date and at year- end. The company's fiscal year ends at December 31. Required: a-1. Prepare the necessary adjusting entries at December 31, 2021, and the journal entry to record the payment of bond interest on March 1, 2022, under the assumption that the bonds were issued at 98. a-2. Prepare the necessary adjusting entries at December 31, 2021, and the journal entry to record the payment of bond interest on March 1, 2022, under the assumption that the bonds were issued at 101. b. Compute the net bond liability at December 31, 2022, under assumptions a-1 and a-2 above. c. Under which of the following assumptions would the investor's effective rate of interest be higher? 1. The bonds were issued at 98. 2 The bonds were issued at 101. Complete this question by entering your answers in the tabs below. Req A1 Req A2 Req B Req C Prepare the necessary adjusting entries at December 31, 2021, and the journal entry to record the payment of bond interest on March 1, 2022, under the assumption that the bonds were issued at 98, (If no entry is required for required" in the first account field. Round your answers to the nearest dollar amount. Enter you answers in dollars not millions.) a transaction/event, select "No journal entry View transaction list Journal entry worksheet <> Record the accrual of bond interest expense for four months in 2021. Note: Enter debits before credits. Doblt
Transcribed Image Text:On September 1, 2021, Evansville Lumber Company issued $80 million in 20-year, 10 percent bonds payable. Interest is payable semiannually on March 1 and September 1. Bond discounts and premiums are amortized at each interest payment date and at year- end. The company's fiscal year ends at December 31. Required: a-1. Prepare the necessary adjusting entries at December 31, 2021, and the journal entry to record the payment of bond interest on March 1, 2022, under the assumption that the bonds were issued at 98. a-2. Prepare the necessary adjusting entries at December 31, 2021, and the journal entry to record the payment of bond interest on March 1, 2022, under the assumption that the bonds were issued at 101. b. Compute the net bond liability at December 31, 2022, under assumptions a-1 and a-2 above. c. Under which of the following assumptions would the investor's effective rate of interest be higher? 1. The bonds were issued at 98. 2 The bonds were issued at 101. Complete this question by entering your answers in the tabs below. Req A1 Req A2 Req B Req C Prepare the necessary adjusting entries at December 31, 2021, and the journal entry to record the payment of bond interest on March 1, 2022, under the assumption that the bonds were issued at 98, (If no entry is required for required" in the first account field. Round your answers to the nearest dollar amount. Enter you answers in dollars not millions.) a transaction/event, select "No journal entry View transaction list Journal entry worksheet <> Record the accrual of bond interest expense for four months in 2021. Note: Enter debits before credits. Doblt
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Answer 1

Journal entry - It refers to the process where the business transactions are recorded in the books of accounts for the first time.

The double-entry system becomes a base for the purpose of recording the journal entry.

A transaction is documented on the same day that it occurs, hence it is also known as Day Book.

Journal entry types:

  • Transfer entries
  • Closing entries
  • Adjusting entries
  • Compound entries
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