5 InstructionsOn July 1, 20Y1, Danzer Industries Inc. issued $37,400,000 of 10-year, 8% bonds at a market (effective) interest rate of 10%, receiving cash of$32,739,152. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar yearRequired:1. Journalize the entry to record the2. Journalize the entries to record the followinga. The first semiannual interest payment on December 31, 20Y1, and the amortization of the bond discount, using the straight-line methob. The interest payment on June 30, 20Y2, and the amortization of the bond discount, using the straight-line method.3. Determine the total interest expense for 2014. Will the bond proceeds always be less than the face amount of the bonds when the contract rate is less than the market rate of interest?5. Compute the price of $32,739,152 received for the bonds by using the present value tablesDITEHount of cash proceeds from the issuance of the bonds on July 1, 20Y1.ountneeeninornitPORNTSPECTR

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Instructions On July 1, 20Y1, Danzer Industries Inc. issued $37,400,C $32,739,152. Interest on the bonds is payable semiannua Required: amount o 1. Journalize the entry to record the amount of cash 2. Journalize the entries to record the following a. The first semiannual interest payment on Dece b. The interest payment on June 30, 20Y2, and th 3. Determine the total interest expense for 201 4. Will the bond proceeds always be less than the fac 5. Compute the price of $32,739, 152 received for the

Instructions On July 1, 20Y1, Danzer Industries Inc. issued $37,400,C $32,739,152. Interest on the bonds is payable semiannua Required: amount o 1. Journalize the entry to record the amount of cash 2. Journalize the entries to record the following a. The first semiannual interest payment on Dece b. The interest payment on June 30, 20Y2, and th 3. Determine the total interest expense for 201 4. Will the bond proceeds always be less than the fac 5. Compute the price of $32,739, 152 received for the

Financial & Managerial Accounting

13th Edition

ISBN:9781285866307

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter12: Long-Term Liabilities: Bonds And Notes

Section: Chapter Questions

Problem 12.2APR

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Saverin, Inc. produces and sells outdoor equipment. On July 1, 2016, Saverin, Inc. issued 62,500,000 of 10-year, 9% bonds at a market (effective) interest rate of 8%, receiving cash of 66,747,178. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year. Instructions 1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds. 2. Journalize the entries to record the following: a. The first semiannual interest payment on December 31, 2016, and the amortization of the bond premium, using the interest method. (Round to the nearest dollar.) b. The interest payment on June 30, 2017, and the amortization of the bond premium, using the interest method. (Round to the nearest dollar.) 3. Determine the total interest expense for 2016.
Whirlie Inc. issued $300,000 face value, 10% paid annually, 10-year bonds for $319,251 when the market of interest was 9%. The company uses the effective-interest method of amortization. At the end of the year, the company will record ________. A. a credit to cash for $28,733 B. a debit to interest expense for $31,267 C. a debit to Discount on Bonds Payable for $1,267 D. a debit to Premium on Bonds Payable for $1.267
On Jan. 1, Year 1, Foxcroft Inc. issued 100 bonds with a face value of $1,000 for $104,000. The bonds had a stated rate of 6% and paid interest semiannually. What is the journal entry to record the issuance of the bonds?
Lunar Corporation issued $80,000 in bonds for $87,000 on Jan. 1. The bonds had a stated rate of 8% and pay interest quarterly. What is the journal entry to record the first interest payment?
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A company issued $100,000, 5-year bonds, receiving $97,000. What is the balance sheet presentation immediately after the sale?
On Jan. 1, Year 1, Foxcroft Inc. issued 100 bonds with a face value of $1,000 for $104,000. The bonds had a stated rate of 6% and paid interest semi-annually. What is the journal entry to record the first payment to the bondholders?
Dixon Inc. issued bonds with a $500,000 face value, 10% interest rate, and a 4-year term on July 1, 2018 and received $480,000. Interest is payable annually. The discount is amortized using the straight-line method. Prepare journal entries for the following transactions. A. July 1, 2018: entry to record issuing the bonds B. June 30, 2019: entry to record payment of interest to bondholders C. June 30, 2019: entry to record amortization of discount D. June 30, 2020: entry to record payment of interest to bondholders E. June 30, 2020: entry to record amortization of discount
MASTERY PROBLEM Jackson, Inc.s fiscal year ends December 31. Selected transactions for the period 20-1 through 20-8 involving bonds payable issued by Jackson are as follows: 20-1 Oct. 31 Issued 600,000 of 10-year, 7%, callable bonds dated October 31, 20-1, for 612,000. Interest is payable semiannually on October 31 and April 30. The bond indenture provides that Jackson is to pay to the trustee bank 20,000 by May 15 of each year (except the tenth year) as a sinking fund for the retirement of the bonds on call or at maturity. Dec. 31 Made the adjusting entry for interest payable and amortized two months premium on the bonds (straight-line method). 20-2 Jan. 2 Reversed the adjusting entry for interest payable and bond premium amortization. Apr. 30 Paid the semiannual interest on the bonds and amortized six months premium. May 15 Paid the sinking fund trustee 20,000. Oct. 31 Paid the semiannual interest on the bonds and amortized six months premium. Dec. 31 Made the adjusting entry for interest payable and amortized two months premium on the bonds. 31 Sinking fund earnings for the year were 900. 20-8 May 15 Paid the sinking fund trustee 20,000. Oct. 31 Paid the semiannual interest on the bonds and amortized six months premium. 31 Redeemed the bonds, which were called at 97. The balance in the bond premium account is 3,600 after the payment of interest and amortization of premium have been entered. The cash balance in the sinking fund is 200,000, which is applied to the redemption. Jackson paid the sinking fund trustee the additional cash needed to pay off the bonds. (Hint: First make the entry for payment to the sinking fund, then make the entry for redemption of the bonds.) REQUIRED 1. Enter the preceding transactions in general journal form. 2. Calculate the carrying value of the bonds as of December 31, 20-2.
Medhurst Corporation issued $90,000 in bonds for $87,000. The bonds had a stated rate of 8% and pay interest quarterly. What is the journal entry to record the sale of the bonds?