Prepare journal entries for the following transactions.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
On July1, 2018, Dixon Inc. issued bonds with a $500,000 face value at 96.0 and the 5-year bonds have a 10% interest rate in a market with a rate of 11%. Interest is payable annually and the effective-interest method is used for amortization. Prepare journal entries for the following transactions.
![laps
I OutiooR
ATA
On July1, 2018, Dixon Inc. issued bonds with a $500,000 face value at 96.0 and the 5-year bonds have a 10% interest rate in a market with a rate of 11%. Interest is payable annually and the
effective-interest method is used for amortization. Prepare journal entries for the following transactions.
Premium on Bonds Payable
Interest Income
Discount on Bonds Payable
Interest Expense
Cash
Bonds Payable
PLEASE NOTE: For each of the following journal entries there is one account's treatment (DR or CR), that depends on whether it is a bond issued at a premium or a discount. You are to
identify if it is a DR or a CR.
You must enter the account names exactly as written above and all dollar amounts will be rounded to whole dollars with "$" and commas as needed (i.e. $12,345).
[HINT - You definitely will want to use this EXCEL spreadsheet Chapter13 HW-03 #1-#4 Worksheets.xlsx + to assist in your calculations. You will need to complete the worksheet in order
to answer all the questions. In order to use the worksheet, you will also need to apply the Market Price of Bonds (% of Face).]
. July 1, 2018: to record issuing the bonds
DR
DR/CR ?
CR
June 30, 2019: to record the amortization & payment
interest to bondholders:
DR
DR/CR ?
CR
• June 30, 2020: to record the amortization & payment of interest to bondholders:
DR
DR/CR ?
CR](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fb4a47542-819f-4db0-82ad-3784d4341daa%2F3b963df2-815f-4a04-899b-87806b4a1e47%2F48zwsau_processed.jpeg&w=3840&q=75)
Transcribed Image Text:laps
I OutiooR
ATA
On July1, 2018, Dixon Inc. issued bonds with a $500,000 face value at 96.0 and the 5-year bonds have a 10% interest rate in a market with a rate of 11%. Interest is payable annually and the
effective-interest method is used for amortization. Prepare journal entries for the following transactions.
Premium on Bonds Payable
Interest Income
Discount on Bonds Payable
Interest Expense
Cash
Bonds Payable
PLEASE NOTE: For each of the following journal entries there is one account's treatment (DR or CR), that depends on whether it is a bond issued at a premium or a discount. You are to
identify if it is a DR or a CR.
You must enter the account names exactly as written above and all dollar amounts will be rounded to whole dollars with "$" and commas as needed (i.e. $12,345).
[HINT - You definitely will want to use this EXCEL spreadsheet Chapter13 HW-03 #1-#4 Worksheets.xlsx + to assist in your calculations. You will need to complete the worksheet in order
to answer all the questions. In order to use the worksheet, you will also need to apply the Market Price of Bonds (% of Face).]
. July 1, 2018: to record issuing the bonds
DR
DR/CR ?
CR
June 30, 2019: to record the amortization & payment
interest to bondholders:
DR
DR/CR ?
CR
• June 30, 2020: to record the amortization & payment of interest to bondholders:
DR
DR/CR ?
CR
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 4 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education