On January 1, the first day of the fiscal year, a company issues a $5,000,000, 6%, 10-year bond that pays semiannual interest of $150,000 ($5,000,000 x6% x % year), receiving cash of $5,000,000.Journalize the entries to record (a) the issuance of the bonds, (b) the first interest payment on June 30, and (c) the payment of the principal on the maturitydate of December 31. Refer to the Chart of Accounts for exact wording of account titles.

Bonds: Bonds are financial debt instruments issued by the corporations to raise for the purposes of…

Answered: On January 1, the first day of the…

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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On the first day of the fiscal year, a company issues a $1,350,000, 11%, five-year bond that pays semiannual interest of $74,250 (S1,350,000 x 11% x ½), receiving cash of $1,512,610. Journalize the first interest payment and the amortization of the related bond premium. Round to the nearest dollar. Refer to the Chart of Accounts for exact wording of account titles.
On the first day of the fiscal year, a company issues an $800,000, 6%, 5-year bond that pays semiannual interest of $24,000 ($800,000 x 6% x 1/2), receiving cash of $748,500. Journalize the entry to record the first interest payment and the amortization of the related bond discount/premium using the straight-line method.
On January 1, the first day of the fiscal year, Designer Fabric Inc. issues a $700,000, 5%, 10-year bond that pays semiannual interest of $17,500 ($700,000 x 5% x ½ year), receiving cash of $700,000. Journalize the entries to record (a) the issuance of the bonds, (b) the first interest payment on June 30, and (c) the payment of the principal on the maturity date of December 31 on page 11. Refer to the Chart of Accounts for exact wording of account titles. Chart of Accounts CHART OF ACCOUNTS Designer Fabric Inc. General Ledger ASSETS 110 Cash 111 Petty Cash 121 Accounts Receivable 122 Allowance for Doubtful Accounts 126 Interest Receivable 127 Notes Receivable 131 Merchandise Inventory 141 Office Supplies 191 Land 194 Office Equipment 195 Accumulated Depreciation-Office Equipment LIABILITIES 210 Accounts Payable 221 Salaries Payable 231 Sales Tax Payable 232 Interest Payable 241 Notes Payable 251 Bonds…
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A company issues bonds with a face value of $12 million on June 1, Year One, for the face value plus accrued interest. The bonds pay an annual cash interest rate of 10 percent with payments made on April 1 and October 1 of each year. On financial statements as of December 31, Year One, and the year then ended, which of the following balances will appear? Responses Interest expense: $400,000; interest payable: -0- Interest expense: $600,000; interest payable: -0- Interest expense: $900,000; interest payable: $300,000 Interest expense: $700,000; interest payable: $300,000
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