Instructions The following transactions were completed by Winklevoss Inc., whose fiscal year is the calendar year: 20Y1 July Dec. 20Y2 June Dec. 20Y3 June 1 Issued $74,000,000 of 20-year, 11% callable bonds dated July 1, 20Y1, at a market (effective) rate of 13%, receiving cash of $63,532,267. Interest is payable semiannually on December 31 and June 30. Paid the semiannual interest on the bonds. The bond discount amortization of $261,693 is combined with the semiannual interest payment. 31 30 31 30 Paid the semiannual interest on the bonds. The bond discount amortization of $261,693 is combined with the semiannual interest payment. Paid the semiannual interest on the bonds. The bond discount amortization of $261,693 is combined with the semiannual interest payment. Recorded the redemption of the bonds, which were called at 98. The balance in the bond discount account is $9,420,961 after payment of interest and amortization of discount have been recorded. (Record the redemption only.) Required: 1. Journalize the entries to record the transactions. Round all amounts to the nearest dollar. Refer to the Chart of Accounts for exact wording of account titles. 2. Indicate the amount of the interest expense in (a) 20Y1 and (b) 20Y2. 3. Determine the carrying amount of the bonds as of December 31, 20Y2.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Instructions
The following transactions were completed by Winklevoss Inc., whose fiscal year is the calendar
year:
20Y1
July
Dec.
20Y2
June
Dec.
20Y3
June
1 Issued $74,000,000 of 20-year, 11% callable bonds dated July 1, 20Y1,
at a market (effective) rate of 13%, receiving cash of $63,532,267.
Interest is payable semiannually on December 31 and June 30.
Paid the semiannual interest on the bonds. The bond discount
amortization of $261,693 is combined with the semiannual interest
payment.
31
30 Paid the semiannual interest on the bonds. The bond discount
amortization of $261,693 is combined with the semiannual interest
payment.
Paid the semiannual interest on the bonds. The bond discount
amortization of $261,693 is combined with the semiannual interest
payment.
31
30 Recorded the redemption of the bonds, which were called at 98. The
balance in the bond discount account is $9,420,961 after payment of
interest and amortization of discount have been recorded. (Record the
redemption only.)
Required:
1. Journalize the entries to record the transactions. Round all amounts to the nearest
dollar. Refer to the Chart of Accounts for exact wording of account titles.
2. Indicate the amount of the interest expense in (a) 20Y1 and (b) 20Y2.
3. Determine the carrying amount of the bonds as of December 31, 20Y2.
Transcribed Image Text:Instructions The following transactions were completed by Winklevoss Inc., whose fiscal year is the calendar year: 20Y1 July Dec. 20Y2 June Dec. 20Y3 June 1 Issued $74,000,000 of 20-year, 11% callable bonds dated July 1, 20Y1, at a market (effective) rate of 13%, receiving cash of $63,532,267. Interest is payable semiannually on December 31 and June 30. Paid the semiannual interest on the bonds. The bond discount amortization of $261,693 is combined with the semiannual interest payment. 31 30 Paid the semiannual interest on the bonds. The bond discount amortization of $261,693 is combined with the semiannual interest payment. Paid the semiannual interest on the bonds. The bond discount amortization of $261,693 is combined with the semiannual interest payment. 31 30 Recorded the redemption of the bonds, which were called at 98. The balance in the bond discount account is $9,420,961 after payment of interest and amortization of discount have been recorded. (Record the redemption only.) Required: 1. Journalize the entries to record the transactions. Round all amounts to the nearest dollar. Refer to the Chart of Accounts for exact wording of account titles. 2. Indicate the amount of the interest expense in (a) 20Y1 and (b) 20Y2. 3. Determine the carrying amount of the bonds as of December 31, 20Y2.
ASSETS
110 Cash
127 Notes Receivable
CHART OF ACCOUNTS
111 Petty Cash
121 Accounts Receivable
122 Allowance for Doubtful Accounts
126 Interest Receivable
LIABILITIES
Winklevoss Inc.
131 Merchandise Inventory
141 Office Supplies
142 Store Supplies
151 Prepaid Insurance
191 Land
192 Store Equipment
193 Accumulated Depreciation-Store
Equipment
194 Office Equipment
195 Accumulated Depreciation-Office
Equipment
210 Accounts Payable
221 Salaries Payable
231 Sales Tax Payable
232 Interest Payable
241 Notes Payable
251 Bonds Payable
252 Discount on Bonds Payable
253 Premium on Bonds Payable
315 Treasury Stock
321 Preferred Stock
General Ledger
EQUITY
311 Common Stock
312 Paid-In Capital in Excess of Par-
Common Stock
331 Paid-In Capital from Sale of
Treasury Stock
340 Retained Earnings
351 Cash Dividends
352 Stock Dividends
322 Paid-In Capital in Excess of Par-
Preferred Stock
REVENUE
410 Sales
610 Interest Revenue
611 Gain on Redemption of
Bonds
EXPENSES
510 Cost of Merchandise Sold
515 Credit Card Expense
516 Cash Short and Over
521 Sales Salaries Expense
522 Office Salaries Expense
531 Advertising Expense
532 Delivery Expense
533 Repairs Expense
534 Selling Expenses
535 Rent Expense
536 Insurance Expense
537 Office Supplies Expense
538 Store Supplies Expense
541 Bad Debt Expense
561 Depreciation Expense-Store
Equipment
562 Depreciation Expense-Office
Equipment
590 Miscellaneous Expense
710 Interest Expense
711 Loss on Redemption of
Bonds
Transcribed Image Text:ASSETS 110 Cash 127 Notes Receivable CHART OF ACCOUNTS 111 Petty Cash 121 Accounts Receivable 122 Allowance for Doubtful Accounts 126 Interest Receivable LIABILITIES Winklevoss Inc. 131 Merchandise Inventory 141 Office Supplies 142 Store Supplies 151 Prepaid Insurance 191 Land 192 Store Equipment 193 Accumulated Depreciation-Store Equipment 194 Office Equipment 195 Accumulated Depreciation-Office Equipment 210 Accounts Payable 221 Salaries Payable 231 Sales Tax Payable 232 Interest Payable 241 Notes Payable 251 Bonds Payable 252 Discount on Bonds Payable 253 Premium on Bonds Payable 315 Treasury Stock 321 Preferred Stock General Ledger EQUITY 311 Common Stock 312 Paid-In Capital in Excess of Par- Common Stock 331 Paid-In Capital from Sale of Treasury Stock 340 Retained Earnings 351 Cash Dividends 352 Stock Dividends 322 Paid-In Capital in Excess of Par- Preferred Stock REVENUE 410 Sales 610 Interest Revenue 611 Gain on Redemption of Bonds EXPENSES 510 Cost of Merchandise Sold 515 Credit Card Expense 516 Cash Short and Over 521 Sales Salaries Expense 522 Office Salaries Expense 531 Advertising Expense 532 Delivery Expense 533 Repairs Expense 534 Selling Expenses 535 Rent Expense 536 Insurance Expense 537 Office Supplies Expense 538 Store Supplies Expense 541 Bad Debt Expense 561 Depreciation Expense-Store Equipment 562 Depreciation Expense-Office Equipment 590 Miscellaneous Expense 710 Interest Expense 711 Loss on Redemption of Bonds
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