On January 1, 2025, Stellar Corporation issued $450,000 of 7% bonds, due in 10 years. The bonds were issued for $423,783, and pay interest each July 1 and January 1. Stellar uses the effective-interest method. Prepare the company's journal entries for (a) the January 1 issuance, (b) the July 1 interest payment, and (c) the December 31 adjusting entry. Assume an effective-interest rate of 8%. (Round answers to 0 decimal places, e.g. 38,548. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually. List all debit entries before credit entries.)

On January 1, 2025, Stellar Corporation issued $450,000 of 7% bonds, due in 10 years. The bonds were issued for $423,783, and pay interest each July 1 and January 1. Stellar uses the effective-interest method. Prepare the company's journal entries for (a) the January 1 issuance, (b) the July 1 interest payment, and (c) the December 31 adjusting entry. Assume an effective-interest rate of 8%. (Round answers to 0 decimal places, e.g. 38,548. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually. List all debit entries before credit entries.)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Crane Company issued $310,000,6 %, 10-year bonds on January 1, 2022, for $333,936. This price resulted in an effective - interest rate of 5% on the bonds. Interest is payable annually on January 1. Crane uses the effective - interest method to amortize bond premium or discount. Prepare the journal entry to record accrual of interest and the premium amortization on December 31, 2022.
On January 1, 2021, Daniel Corp. issued $500,000 of 10-year, 8% bonds for $385,298, yielding a market (discount, yield) rate of 12% per year. Interest is paid semi-annually on June 30 and December 31. Daniel uses the effective interest rate method to account for bonds. Required: a. Prepare JEs to record the issue on Jan. 1, 2021. Include the Discount on B/P b. What interest expense is reported on I/S for year ending December 31,2021? C. On December 31, 2029, after paying the December 31 interest (Coupon), Daniel Corp retires the bonds for $486,153. Determine the gain/loss on bonds retirement and prepare journal entries to record the retirement. Include the unamortized bond discount. d. Ignore (b) and suppose that on December 31, 2029, the yield decreases from 12% to 10% per year. What is the present value of the remaining cash flows of the bonds?
On January 1, 2020, Flounder Corporation issued $540,000 of 7% bonds, due in 10 years. The bonds were issued for $580,171, and pay interest each July 1 and January 1. The effective-interest rate is 6%. Prepare the company's journal entries for (a) the January 1 issuance, (b) the July 1 interest payment, and (c) the December 31 adjusting entry. Flounder uses the effective-interest method. (Round intermediate calculations to 6 decimal places, eg, 1.251247 and final answer to O decimal places, eg. 38,548. If no entry is required, select "No Entry" for the account titles and enter O for the amounts, Credit account titles are automatically Indented when amount is entered. Do not indent manually) No. Date Account Titles and Explanation Debit Cre (a) (b)
Crane Company issued $310,000,6%,10-year bonds on January 1, 2022, for $333,936. This price resulted in an effective-interest rate of 5% on the bonds. Interest is payable annually on January 1. Crane uses the effective-interest method to amortize bond premium or discount. Prepare the journal entry to record accrual of interest and the premium amortization on December 31, 2022.
On May 1, 2021, Ligertwood Co. issued P5,000,000, 10%, three-year bonds to yield 8%. The bonds pay interest every October 31 and April 30. 1. Prepare the journal entry to recognize the accrual of interest on December 31, 2021, and the payment of interest on April 30, 2022. 2. Determine the carrying amount of the bonds at the end of each year from 2021 to 2023.
Laudie Company issued $400,000 of 5%, 10-year bonds on January 1, 2020, at 94. Interest is payable annually on January 1, 2021. Instructions: Prepare the journal entries to record the following events. a. The issuance of the bonds. b. The accrual of interest and amortization of the discount on December 31, 2020. c. The payment of interest on January 1, 2021. d. Calculate the carrying value of the bond on 12/31/20. #2 Gridley Company issued $800,000, 11%, 10-year bonds on December 31, 2019, at 104. Interest is payable annually on December 31. Gridley Company uses the straight-line method to amortize bond premium or discount. Instructions: Prepare the journal entries to record the following. a. The issuance of the bonds. b. The payment of interest December 31, 2020. (Extra credit for amortization of the premium entry) c. The redemption of the bond at maturity
On January 1, 2025, Shamrock Corporation issued $680,000 of 9% bonds, due in 8 years. The bonds were issued for $643,152, and pay interest each July 1 and January 1. Shamrock uses the effective-interest method. Prepare the company's journal entries for (a) the January 1 issuance, (b) the July 1 interest payment, and (c) the December 31 adjusting entry. Assume an effective-interest rate of 10%. (Round answers to O decimal places, e.g. 38,548. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually. List all debit entries before credit entries.) No. (a) (b) (c) Date Jan. 1, 2025 July 1, 2025 Dec. 31, 2025 Account Titles and Explanation Debit Cre
Hillside issues $1,900,000 of 5%, 15-year bonds dated January 1, 2019, that pay interest semiannually on June 30 and December 31. The bonds are issued at a price of $1,641,812. Required: 1. Prepare the January 1 journal entry to record the bonds’ issuance. 2(a) For each semiannual period, complete the table below to calculate the cash payment. 2(b) For each semiannual period, complete the table below to calculate the straight-line discount amortization. 2(c) For each semiannual period, complete the table below to calculate the bond interest expense. 3. Complete the below table to calculate the total bond interest expense to be recognized over the bonds' life. 4. Prepare the first two years of a straight-line amortization table. 5. Prepare the journal entries to record the first two interest payments.
On January 1, 2020, Swifty Corporation issued $450,000 of 7% bonds, due in 8 years. The bonds were issued for $423,784, and pay interest each July 1 and January 1. Swifty uses the effective-interest method.Prepare the company’s journal entries for (a) the January 1 issuance, (b) the July 1 interest payment, and (c) the December 31 adjusting entry. Assume an effective-interest rate of 8%.
On January 1, 2018, Technicians Credit Union, (TCU), issued 8%, 20-year bonds payable with a face value of $900,000. These bonds pay interest on June 30 and December 31. The issue price of the bonds is 108. How do I Journalize the payment of interest and amortization on December 31, 2018?
On January 1, 2020, Cullumber Company issued $400,000, 10%, 10-year bonds at face value. Interest is payable annually on January 1.(a) Prepare the journal entry to record the issuance of the bonds. Date Account Titles and Explanation Debit Credit Jan. 1 (b) Prepare the journal entry to record the accrual of interest on December 31, 2020. Date Account Titles and Explanation Debit Credit Dec. 31 (c) Prepare the journal entry to record the payment of interest on January 1, 2021. Date Account Titles and Explanation Debit Credit Jan. 1
Flamingo Inc. issued $2,000,000, 5%, 5-year bonds on January 1, 2019, at 104. Interest is payable annually on December 31. Flamingo uses straight-line amortization for bond premium or discount. Prepare the journal entries to record the following events.