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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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Effective Interest Method Straight-Line Interest Method Note: List multiple debits or credits (when applicable) in alphab Note: Round your answers to the nearest whole dollar. 1. Mar. 1, 2020 Cash Discount on Bonds Payable Bonds Payable Interest Payable 2. Jul. 1, 2020 Interest Expense Interest Payable Cash Discount on Bonds Payable 3. Dec. 31, 2020 Interest Expense Discount on Bonds Payable Interest Payable 4. Jan. 1, 2021 Interest Payable Cash
Transcribed Image Text:Effective Interest Method Straight-Line Interest Method Note: List multiple debits or credits (when applicable) in alphab Note: Round your answers to the nearest whole dollar. 1. Mar. 1, 2020 Cash Discount on Bonds Payable Bonds Payable Interest Payable 2. Jul. 1, 2020 Interest Expense Interest Payable Cash Discount on Bonds Payable 3. Dec. 31, 2020 Interest Expense Discount on Bonds Payable Interest Payable 4. Jan. 1, 2021 Interest Payable Cash
Recording Bond Entries and Reporting Bonds- Effective Interest, Straight-Line Master Corp. issued 5%, $360,000 bonds on January 1, 2020. The bonds pay cash interest semiannually each July 1 and January 1, and were issued to yield 6%. The bonds mature January 1, 2030, and the company uses the effective interest method to amortize bond discounts or premiums. Required a. Prepare journal entries on the following dates. 1. January 1, 2020–Issuance of bonds. 2. July 1, 2020–Interest payment. 3. December 31, 2020–Interest accrual. 4. January 1, 2021–Interest payment. b. Answer part a assuming instead that the company uses the straight-line interest method to amortize discounts and premiums and the bonds were sold on March 1, 2020, for $332,978 (excluding accrued interest). Hint. Amortize discount on bonds payable over a 118 month bond term.
Transcribed Image Text:Recording Bond Entries and Reporting Bonds- Effective Interest, Straight-Line Master Corp. issued 5%, $360,000 bonds on January 1, 2020. The bonds pay cash interest semiannually each July 1 and January 1, and were issued to yield 6%. The bonds mature January 1, 2030, and the company uses the effective interest method to amortize bond discounts or premiums. Required a. Prepare journal entries on the following dates. 1. January 1, 2020–Issuance of bonds. 2. July 1, 2020–Interest payment. 3. December 31, 2020–Interest accrual. 4. January 1, 2021–Interest payment. b. Answer part a assuming instead that the company uses the straight-line interest method to amortize discounts and premiums and the bonds were sold on March 1, 2020, for $332,978 (excluding accrued interest). Hint. Amortize discount on bonds payable over a 118 month bond term.
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