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On July 1, 20Y1, Danzer Industries Inc. issued $40,000,000 of 10-year, 7% bonds at a market (effective) interest rate of 8%, receiving cash of $37,282,062. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year. Required: 1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds.* 2. Journalize the entries to record the following:* a. The first semiannual interest payment on December 31, 20Y1, and the amortization of the bond discount, using the interest method. (Round to the nearest dollar.) b. The interest payment on June 30, 20Y2, and the amortization of the bond discount, using the interest method. (Round to the nearest dollar.) 3. Determine the total interest expense for 20Y1. *Refer to the Chart of Accounts for exact wording of account titles.

On July 1, 20Y1, Danzer Industries Inc. issued $40,000,000 of 10-year, 7% bonds at a market (effective) interest rate of 8%, receiving cash of $37,282,062. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year. Required: 1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds.* 2. Journalize the entries to record the following:* a. The first semiannual interest payment on December 31, 20Y1, and the amortization of the bond discount, using the interest method. (Round to the nearest dollar.) b. The interest payment on June 30, 20Y2, and the amortization of the bond discount, using the interest method. (Round to the nearest dollar.) 3. Determine the total interest expense for 20Y1. *Refer to the Chart of Accounts for exact wording of account titles.

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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On July 1, 20Y1, Danzer Industries Inc. issued $40,000,000 of 10-year, 7% bonds at a market (effective) interest rate of 8%, receiving cash of $37,282,062. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year.

Required: 1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds.*

2. Journalize the entries to record the following:* a. The first semiannual interest payment on December 31, 20Y1, and the amortization of the bond discount, using the interest method. (Round to the nearest dollar.) b. The interest payment on June 30, 20Y2, and the amortization of the bond discount, using the interest method. (Round to the nearest dollar.)

3. Determine the total interest expense for 20Y1. *Refer to the Chart of Accounts for exact wording of account titles.

Chart of Accounts Instructions Journal On July 1, 20Y1, Danzer Industries Inc. issued $40,000,000 of 10-year, CHART OF ACCOUNTS 7% bonds at a market (effective) interest rate of 8%, receiving cash of Danzer Industries Inc. $37,282,062. Interest on the bonds is payable semiannually on 1. and 2. Journalize the entries to record the transactions. Round to the nearest dollar. Refer to the Chart of Accounts for exact wording of account titles. General Ledger December 31 and June 30. The fiscal year of the company is the calendar year. PAGE 10 ASSETS REVENUE 110 Cash 410 Sales Required: JOURNAL ACCOUNTING EQUATION 111 Petty Cash 610 Interest Revenue 1. Journalize the entry to record the amount of cash proceeds DATE POST. REF. ASSETS LIABILITIES DESCRIPTION DEBIT CREDIT EQUITY from the issuance of the bonds.* 121 Accounts Receivable 611 Gain on Redemption of Bonds 2. Journalize the entries to record the following:* 122 Allowance for Doubtful Accounts 2 EXPENSES a. The first semiannual interest payment on December 31, 126 Interest Receivable 3 20Y1, and the amortization of the bond discount, using 127 Notes Receivable 510 Cost of Merchandise Sold 4 the interest method. (Round to the nearest dollar.) 131 Merchandise Inventory 515 Credit Card Expense 5 b. The interest payment on June 30, 20Y2, and the 141 Office Supplies 516 Cash Short and Over 6 amortization of the bond discount, using the interest 142 Store Supplies 521 Sales Salaries Expense method. (Round to the nearest dollar.) 151 Prepaid Insurance 522 Office Salaries Expense 3. Determine the total interest expense for 20Y1. 191 Land 531 Advertising Expense *Refer to the Chart of Accounts for exact wording of PAGE 10 192 Store Equipment 532 Delivery Expense account titles. JOURNAL ACCOUNTING EQUATION 193 Accumulated Depreciation-Store Equipment 533 Repairs Expense 194 Office Equipment 534 Selling Expenses DATE DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY 195 Accumulated Depreciation-Office Equipment 535 Rent Expense 1 536 Insurance Expense 2 LIABILITIES 537 Office Supplies Expense 3 210 Accounts Payable 538 Store Supplies Expense 221 Salaries Payable 541 Bad Debt Expense 231 Sales Tax Payable 561 Depreciation Expense-Store Equipment 232 Interest Payable 562 Depreciation Expense-Office Equipment Final Question 241 Notes Payable 590 Miscellaneous Expense 251 Bonds Payable 710 Interest Expense 3. Determine the total interest expense for 2OY1. $ 252 Discount on Bonds Payable 711 Loss on Redemption of Bonds 253 Premium on Bonds Payable EQUITY 311 Common Stock || 312 Paid-In Capital in Excess of Par-Common Stock 315 Treasury Stock 321 Preferred Stock 322 Paid-In Capital in Excess of Par-Preferred Stock 331 Paid-In Capital from Sale of Treasury Stock 340 Retained Earnings 351 Cash Dividends 352 Stock Dividends
Transcribed Image Text:Chart of Accounts Instructions Journal On July 1, 20Y1, Danzer Industries Inc. issued $40,000,000 of 10-year, CHART OF ACCOUNTS 7% bonds at a market (effective) interest rate of 8%, receiving cash of Danzer Industries Inc. $37,282,062. Interest on the bonds is payable semiannually on 1. and 2. Journalize the entries to record the transactions. Round to the nearest dollar. Refer to the Chart of Accounts for exact wording of account titles. General Ledger December 31 and June 30. The fiscal year of the company is the calendar year. PAGE 10 ASSETS REVENUE 110 Cash 410 Sales Required: JOURNAL ACCOUNTING EQUATION 111 Petty Cash 610 Interest Revenue 1. Journalize the entry to record the amount of cash proceeds DATE POST. REF. ASSETS LIABILITIES DESCRIPTION DEBIT CREDIT EQUITY from the issuance of the bonds.* 121 Accounts Receivable 611 Gain on Redemption of Bonds 2. Journalize the entries to record the following:* 122 Allowance for Doubtful Accounts 2 EXPENSES a. The first semiannual interest payment on December 31, 126 Interest Receivable 3 20Y1, and the amortization of the bond discount, using 127 Notes Receivable 510 Cost of Merchandise Sold 4 the interest method. (Round to the nearest dollar.) 131 Merchandise Inventory 515 Credit Card Expense 5 b. The interest payment on June 30, 20Y2, and the 141 Office Supplies 516 Cash Short and Over 6 amortization of the bond discount, using the interest 142 Store Supplies 521 Sales Salaries Expense method. (Round to the nearest dollar.) 151 Prepaid Insurance 522 Office Salaries Expense 3. Determine the total interest expense for 20Y1. 191 Land 531 Advertising Expense *Refer to the Chart of Accounts for exact wording of PAGE 10 192 Store Equipment 532 Delivery Expense account titles. JOURNAL ACCOUNTING EQUATION 193 Accumulated Depreciation-Store Equipment 533 Repairs Expense 194 Office Equipment 534 Selling Expenses DATE DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY 195 Accumulated Depreciation-Office Equipment 535 Rent Expense 1 536 Insurance Expense 2 LIABILITIES 537 Office Supplies Expense 3 210 Accounts Payable 538 Store Supplies Expense 221 Salaries Payable 541 Bad Debt Expense 231 Sales Tax Payable 561 Depreciation Expense-Store Equipment 232 Interest Payable 562 Depreciation Expense-Office Equipment Final Question 241 Notes Payable 590 Miscellaneous Expense 251 Bonds Payable 710 Interest Expense 3. Determine the total interest expense for 2OY1. $ 252 Discount on Bonds Payable 711 Loss on Redemption of Bonds 253 Premium on Bonds Payable EQUITY 311 Common Stock || 312 Paid-In Capital in Excess of Par-Common Stock 315 Treasury Stock 321 Preferred Stock 322 Paid-In Capital in Excess of Par-Preferred Stock 331 Paid-In Capital from Sale of Treasury Stock 340 Retained Earnings 351 Cash Dividends 352 Stock Dividends
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