PA5 Assignment #1EA10. LO 12.4Barkers Baked Goods purchases dog treats from a supplier on February 2 at aquantity of 6,000 treats at $1 per treat. Terms of the purchase are 2/10, n/30. Barkers pays halfthe amount due in cash on February 28 but cannot pay the remaining balance due in four days.The supplier renegotiates the terms on March 4 and allows Barkers to convert its purchasepayment into a short-term note, with an annual interest rate of 6%, payable in 9 months.Show the entries for the initial purchase, the partial payment, and the conversion.EB7, LO 12.2McMasters Inc. specializes in BBQ accessories. In order for the company toexpand its business, they take out a long-term loan in the amount of $800,000. Assume that anyloans are created on January 1. The terms of the loan include a periodic payment plan, whereinterest payments are accumulated each year but are only computed against the outstandingprincipal balance during that current period. The annual interest rate is 9%. Each year onDecember 31, the company pays down the principal balance by $50,000. This payment isconsidered part of the outstanding principal balance when computing the interest accumulationthat also occurs on December 31 of that year.Determine the outstanding principal balance on December 31 of the first year that is computedfor interest.Compute the interest accrued on December 31 of the first year.Make a journal entry to record interest accumulated during the first year, but not paid as ofDecember 31 of that first year.PA5. LO 13.3Volunteer Inc. issued bonds with a $500,000 face value, 10% interest rate, and a 4-year term on July 1, 2018 and received $540,000. Interest is payable annually. The premium isamortized using the straight-line method. Prepare journal entries for the following transactions.July 1, 2018: entry to record issuing the bondsJune 30, 2019: entry to record payment of interest to bondholdersJune 30, 2019: entry to record amortization of premiumJune 30, 2020: entry to record payment of interest to bondholdersJune 30, 2020: entry to record amortization of premiumPB5. LO 13.3Dixon Inc. issued bonds with a $500,000 face value, 10% interest rate, and a 4-yearterm on July 1, 2018 and received $480,000. Interest is payable annually. The discount isamortized using the straight-line method. Prepare journal entries for the following transactions.July 1, 2018: entry to record issuing the bondsJune 30, 2019: entry to record payment of interest to bondholdersJune 30, 2019: entry to record amortization of discount

The journal entries are prepared to record daily transactions of the business. JOURNAL Date Particulars Debit Credit July 1, 2018 Cash 540,000 Premium on bonds payable 40,000 Bonds payable 500,000 (To record issuance of bonds payable) June 30, 2019 Interest expense 40,000 Premium on bonds payable (40,000 / 4) 10,000 Cash (500,000 * 10%) 50,000 (To record payment of interest and amortization of premium) June 30, 2020 Interest expense 40,000 Premium on bonds payable (40,000 / 4) 10,000 Cash (500,000 * 10%) 50,000 (To record payment of interest and amortization of premium)

Business

Accounting

PA5. LO 13.3Volunteer Inc. issued bonds with a $500,000 face value, 10% interest rate, and a 4- year term on July 1, 2018 and received $540,000. Interest is payable annually. The premium is amortized using the straight-line method. Prepare journal entries for the following transactions. July 1, 2018: entry to record issuing the bonds une 30, 2019: entry to record payment of interest to bondholders une 30, 2019: entry to record amortization of premium une 30, 2020: entry to record payment of interest to bondholders une 30, 2020: entry to record amortization of premium