(Learning Objective 1: Journalize basic bond payable transactions and bonds issuedat par) Yancy Corp. issued 6% seven-year bonds payable with a face amount of $110,000when the market interest rate was 6%. Yancy’s fiscal year-end is December 31. The bonds payinterest on January 1 and July 1. Journalize the following transactions for Yancy. Include anexplanation for each entry.a. Issuance of the bonds payable at par on July 1, 2018b. Accrual of interest expense on December 31, 2018c. Payment of cash interest on January 1, 2019d. Payment of the bonds payable at maturity (give the date)

(Learning Objective 1: Journalize basic bond payable transactions and bonds issuedat par) Yancy Corp. issued 6% seven-year bonds payable with a face amount of $110,000when the market interest rate was 6%. Yancy’s fiscal year-end is December 31. The bonds payinterest on January 1 and July 1. Journalize the following transactions for Yancy. Include anexplanation for each entry.a. Issuance of the bonds payable at par on July 1, 2018b. Accrual of interest expense on December 31, 2018c. Payment of cash interest on January 1, 2019d. Payment of the bonds payable at maturity (give the date)

Excel Applications for Accounting Principles

4th Edition

ISBN:9781111581565

Author:Gaylord N. Smith

Publisher:Gaylord N. Smith

ChapterMB: Model-building Problems

Section: Chapter Questions

Problem 13M

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(Learning Objectives 1, 6: Record bond transactions at par; report bonds payableon the balance sheet) The board of directors of Mailroom Plus authorized the issue of$8,000,000 of 6%, 10-year bonds payable. The semiannual interest dates are May 31 andNovember 30. The bonds are issued on May 31, 2018, at par.Requirements1. Journalize the following transactions:a. Issuance of half of the bonds on May 31, 2018b. Payment of interest on November 30, 2018c. Accrual of interest on December 31, 2018d. Payment of interest on May 31, 20192. Report interest payable and bonds payable as they would appear on the company’s balancesheet at December 31, 2018.
(Learning Objectives 1, 6: Issue bonds at a discount; amortize using thestraight-line method; report bonds payable and accrued interest payable on the balancesheet) On February 28, 2018, Dolphin Corp. issued 10%, 20-year bonds payable with a facevalue of $2,100,000. The bonds pay interest on February 28 and August 31. The companyamortizes bond discount using the straight-line method.Requirements1. If the market interest rate is 9% when Dolphin Corp. issues its bonds, will the bonds bepriced at par, at a premium, or at a discount? Explain.2. If the market interest rate is 11% when Dolphin Corp. issues its bonds, will the bonds bepriced at par, at a premium, or at a discount? Explain.3. Assume that the issue price of the bonds is 94. Journalize the following bonds payabletransactions.a. Issuance of the bonds on February 28, 2018b. Payment of interest and amortization of the bond discount on August 31, 2018c. Accrual of interest and amortization of the bond discount on December 31, 2018…
(Learning Objective 1: Issue bonds payable (discount), pay and accrue interest,and amortize bond discount using the straight-line method) On January 31, 2018, DunkinLogistics, Inc., issued five-year, 3% bonds payable with a face value of $8,000,000. The bondswere issued at 93 and pay interest on January 31 and July 31. Dunkin Logistics amortizes bonddiscounts using the straight-line method. Record (a) the issuance of the bonds on January 31,2018, (b) the semiannual interest payment and amortization of the bond discount on July 31,2018, and (c) the interest accrual and discount amortization on December 31, 2018.E9-16A. (Learning Objective 1: Measure cash amounts for a bond payable (premium);amortize bond premium using the straight-line method) Perry Bank has $450,000 of 9%debenture bonds outstanding. The bonds were issued at 105 in 2018 and mature in 2038. Thebonds have annual interest payments.Requirements1. How much cash did Perry Bank receive when it issued these bonds?2. How much…
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Learning Objectives 2, 3, 6: Issue convertible bonds at a discount; amortize usingthe effective interest method; convert bonds; report bonds payable on the balance sheet) OnDecember 31, 2018, Herndon Corporation issues 6%, 10-year convertible bonds payable witha face value of $1,000,000. The semiannual interest dates are June 30 and December 31. Themarket interest rate is 7%. Herndon amortizes bond discounts using the effective-interestmethod.Requirements1. Use the PV function in Excel to calculate the issue price of the bonds.2. Prepare an effective-interest method amortization table for the term of the bonds usingExcel.3. Journalize the following transactions:a. Issuance of the bonds on December 31, 2018. Credit Convertible Bonds Payable.b. Payment of interest and amortization of the bond discount on June 30, 2019.c. Payment of interest and amortization of the bond discount on December 31, 2019.d. Conversion by the bondholders on July 1, 2020, of bonds with a total face value…
(Learning Objective 2: Issue bonds payable (premium); record interest paymentand the related bond amortization using the effective-interest method) On June 30, 2018,the market interest rate is 9%. Randall Corporation issues $600,000 of 10%, 15-year bondspayable. The bonds pay interest on June 30 and December 31. The company amortizes bondpremium using the effective-interest method.Requirements1. Use the PV function in Excel to calculate the issue price of the bonds.2. Prepare a bond amortization table for the term of the bonds using Excel.3. Record the issuance of bonds payable on June 30, 2018; the payment of interest onDecember 31, 2018; and the payment of interest on June 30, 2019.
(Learning Objective 2: Issue bonds payable (premium); record interest paymentand the related bond amortization using the effective-interest method) On June 30, 2018,the market interest rate is 9%. Ramsey Corporation issues $550,000 of 12%, 20-year bondspayable. The bonds pay interest on June 30 and December 31. The company amortizes bondpremium using the effective-interest method.Requirements1. Use the PV function in Excel to calculate the issue price of the bonds.2. Prepare a bond amortization table for the term of the bonds using Excel.3. Record the issuance of bonds payable on June 30, 2018; the payment of interest onDecember 31, 2018; and the payment of interest on June 30, 2019.
(Learning Objectives 2, 3, 6: Issue convertible bonds at a discount, amortize usingthe effective-interest method, and convert bonds; report bonds payable on the balancesheet) On December 31, 2018, Mainland Corporation issues 6%, 10-year convertible bondspayable with a face value of $4,000,000. The semiannual interest dates are June 30 andDecember 31. The market interest rate is 8%. Mainland amortizes bond discounts using theeffective-interest method.Requirements1. Use the PV function in Excel to calculate the issue price of the bonds.2. Prepare an effective-interest method amortization table for the term of the bonds usingExcel.3. Journalize the following transactions:a. Issuance of the bonds on December 31, 2018. Credit Convertible Bonds Payable.b. Payment of interest and amortization of the bond discount on June 30, 2019.c. Payment of interest and amortization of the bond discount on December 31, 2019.d. Conversion by the bondholders on July 1, 2020, of bonds with a total face value…
(Learning Objective 2: Issue bonds payable at a premium and amortize bonds using theeffective-interest method) Leon Corporation issued $400,000 of 10%, 10-year bonds payableon January 1, 2019. The market interest rate at the date of issuance was 8%, and the bonds payinterest semiannually (on June 30 and December 31). Leon Corporation’s year-end is June 30.1. Using the PV function in Excel, calculate the issue price of the bonds.2. Prepare an effective-interest amortization table for the bonds through the first three interestpayments. Round amounts to the nearest dollar.3. Record Leon Corporation’s issuance of the bonds on January 1, 2019, and payment of thefirst semiannual interest amount and amortization of the bond premium on June 30, 2019.Explanations are not required.
Learning Objective 3:Question 1: Straight-line MethodWired Inc. sold 10-year bonds with a total face amount of $1,500,000 and a stated rate of 10%. The bonds sold for $1,400,000 on January 1, 2020, and pay interest semiannually on June 30 and December 31.Required:1. Prepare the entry to recognize the sale of the bonds. 2. Determine the amount of the semiannual interest payment required by the bonds. 3. Prepare the journal entry made by Wired at June 30, 2020, to recognize the interest expense and an interest payment.Record the first interest payment. 4. Determine the amount of interest expense for 2020.
Additional Exercises:Learning Objective 2:Question 1 The company issues 8%, 20-year bonds payable with a maturity/face value of $300,000. Interest is paid every 6 months. Using these same bonds, record the issuance of the bonds when they sell for 98. Record the first interest payment.