Entries for issuing bonds and amortizing premium by straight-line methodSmiley Company wholesales repair products to equipment manufacturers. On April 1, 20Y1, Smiley issued$2,400,000 of 5-year, 9% bonds at a market (effective) interest rate of 7%, receiving cash of $2,599,598. Interestis payable semiannually on April 1 and October 1.a. Journalize the entry to record the issuance of bonds on April 1, 20Y1. If an amount box does not require anentry, leave it blank.b. Journalize the entry to record the first interest payment on October 1, 20Y1, and amortization of bond premiumfor 6 months, using the straight-line method. Round to the nearest dollar. If an amount box does not require anentry, leave it blank.c. Why was the company able to issue the bonds for $2,599,598 rather than for the face amount of $2,400,000?The market rate of interest isthe contract rate of interest.

Journal entries refer to the recording of the business activities into the books of accounts or into…

Answered: Smiley Company wholesales repair…

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 $5,000,000, 10%, 4-year bond that pays semiannual interest of $250,000 ($5,000,000 × 10% × ½), receiving cash of $5,336,638. Journalize the bond issuance. If an amount box does not require an entry, leave it blank.
On Jan. 1, Year 1, Foxcroft Inc. issued 110 bonds with a face value of $1,000 for $113,900. The bonds had a stated rate of 5% and paid interest semi-annually. What is the journal entry to record the issuance of the bonds? If an amount box does not require an entry, leave it blank. Jan. 1 fill in the blank 2 fill in the blank 3 fill in the blank 5 fill in the blank 6 fill in the blank 8 fill in the blank 9
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On the first day of the fiscal year, a company issues a $980,000, 10%, 5-year bond that pays semiannual interest of $49,000 ($980,000 x 10% × 1/2), receiving cash of $884,178. Journalize the entry to record the issuance of the bonds. If an amount box does not require an entry, leave it blank.

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