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On June 1, 2020, JetCom Inventors Inc. issued a $500,000 6%, three-year bond. Interest is to be paid semiannually beginning December 1, 2020. Required: a. Calculate the issue price of the bond assuming a market interest rate of 7%. (Do not round intermediate calculations. Round the final answer to the nearest whole dollar.)   Part 1 Prepare journal entries to the following. (Do not round intermediate calculations. Round the final answers to the nearest whole dollar.) a. Issuance of the bonds on June 1, 2020 b. Payment of interest on December 1, 2020 c. Adjusting entry to accrue bond interest and discount amortization on January 31, 2021 d. Payment of interest on June 1, 2021 Assume JetCom Inventors Inc. has a January 31 year-end. June 01, 2020: Record issued bond at discount. December 01, 2020: Record payment of interest. January 31, 2021: Record accrual of interest. June 01, 2021: Record payment of interest.

On June 1, 2020, JetCom Inventors Inc. issued a $500,000 6%, three-year bond. Interest is to be paid semiannually beginning December 1, 2020. Required: a. Calculate the issue price of the bond assuming a market interest rate of 7%. (Do not round intermediate calculations. Round the final answer to the nearest whole dollar.)   Part 1 Prepare journal entries to the following. (Do not round intermediate calculations. Round the final answers to the nearest whole dollar.) a. Issuance of the bonds on June 1, 2020 b. Payment of interest on December 1, 2020 c. Adjusting entry to accrue bond interest and discount amortization on January 31, 2021 d. Payment of interest on June 1, 2021 Assume JetCom Inventors Inc. has a January 31 year-end. June 01, 2020: Record issued bond at discount. December 01, 2020: Record payment of interest. January 31, 2021: Record accrual of interest. June 01, 2021: Record payment of interest.

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 June 1, 2020, JetCom Inventors Inc. issued a $500,000 6%, three-year bond. Interest is to be paid semiannually beginning December 1, 2020.

Required:
a. Calculate the issue price of the bond assuming a market interest rate of 7%. (Do not round intermediate calculations. Round the final answer to the nearest whole dollar.)

 

Part 1
Prepare journal entries to the following. (Do not round intermediate calculations. Round the final answers to the nearest whole dollar.)

a. Issuance of the bonds on June 1, 2020
b. Payment of interest on December 1, 2020
c. Adjusting entry to accrue bond interest and discount amortization on January 31, 2021
d. Payment of interest on June 1, 2021

Assume JetCom Inventors Inc. has a January 31 year-end.

June 01, 2020: Record issued bond at discount.

December 01, 2020: Record payment of interest.

January 31, 2021: Record accrual of interest.

June 01, 2021: Record payment of interest.

 

Part 2 Show how the bonds will appear on the balance sheet under non-current liabilities at January 31, 2022. (Do not round intermediate calculations. Round the final answers to the nearest whole dollar.) Balance Sheet (Partial) Non-current liabilities:
Transcribed Image Text:Part 2 Show how the bonds will appear on the balance sheet under non-current liabilities at January 31, 2022. (Do not round intermediate calculations. Round the final answers to the nearest whole dollar.) Balance Sheet (Partial) Non-current liabilities:
b. Using the effective interest method, prepare an amortization schedule. (Do not round intermediate calculations. Round the final answers to the nearest whole dollar. Enter all the amounts as positive values.) Period Cash Period Interest Discount Unamortized Carrying Value Ending Interest Paid Expense Amort. Discount June 1/20 Dec. 1/20 June 1/21 Dec. 1/21 June 1/22 Dec. 1/22 June 1/23 Totals
Transcribed Image Text:b. Using the effective interest method, prepare an amortization schedule. (Do not round intermediate calculations. Round the final answers to the nearest whole dollar. Enter all the amounts as positive values.) Period Cash Period Interest Discount Unamortized Carrying Value Ending Interest Paid Expense Amort. Discount June 1/20 Dec. 1/20 June 1/21 Dec. 1/21 June 1/22 Dec. 1/22 June 1/23 Totals
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