Entries for issuing bonds and amortizing premium by straight-line methodSmiley Corporation wholesales repair products to equipment manufacturers. On April 1, 20Y1, Smiley issued $8,100,000 of 5-year, 12% bonds at a market (effective) interest rate of 10%, receiving cash of $8,725,460. Interest is payablesemiannually 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 an entry, leave it blank.CashPremium on Bonds PayableBonds Payable ✓Feedback✓Interest Expense✓Premium on Bonds PayableCash✓✓ Check My WorkBonds Payable is always recorded at face value. Any difference in issue price is reflected in a premium or discount account.The straight-line method of amortization provides equal amounts of amortization over the life of the bond.Feedback8,725,460b. Journalize the entry to record the first interest payment on October 1, 20Y1, and amortization of bond premium for 6 months, using the straight-line method. Round to the nearest dollar. If an amount box does not require an entry,leave it blank.✓8,100,000EE4

The bonds payable are the long term liabilities for the business. The premium on bonds payable is…

Answered: Smiley Corporation 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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Kingbird, Inc. issues $4.1 million, 10-year. 9% bonds at 102, with interest payable on January 1. The straight-line method is used to amortize bond premium (a) Your answer is partially correct Prepare the journal entry to record the sale of these bonds on January 1, 2022. (Credit account titles are automatically indented when amount is entered. Do not indent manually) Date Account Tities and Explanation Jan 1 Cash Premium on Bonds Payable Bons Payable Debit 369000 82000 Credit 4100000
On the first day of the fiscal year, a company issues a $3,400,000, 9%, 5-year bond that pays semiannual interest of $153,000 ($3,400,000 x 9% × 1), receiving cash of $3,682,766. Journalize the first interest payment and the amortization of the related bond premium. Round to the nearest dollar. If an amount box does not require an entry, leave it blank. UQ Interest Expense Discount on Bonds Payable Cash
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Hillside issues $1,900,000 of 5%, 15-year bonds dated January 1, 2019, that pay interest semiannually on June 30 and December 31. The bonds are issued at a price of $1,641,812. Required: 1. Prepare the January 1 journal entry to record the bonds’ issuance. 2(a) For each semiannual period, complete the table below to calculate the cash payment. 2(b) For each semiannual period, complete the table below to calculate the straight-line discount amortization. 2(c) For each semiannual period, complete the table below to calculate the bond interest expense. 3. Complete the below table to calculate the total bond interest expense to be recognized over the bonds' life. 4. Prepare the first two years of a straight-line amortization table. 5. Prepare the journal entries to record the first two interest payments.
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On the first day of the fiscal year, a company issues a $4,900,000, 6%, 6-year bond that pays semiannual interest of $147,000 ($4,900,000 × 6% × ½), receiving cash of $4,440,130. Journalize the first interest payment and the amortization of the related bond discount. Round to the nearest dollar. If an amount box does not require an entry, leave it blank.
On January 1, the first day of the fiscal year, Designer Fabric Inc. issues a $5,000,000, 6%, 10-year bond that pays semiannual interest of $150,000 ($5,000,000 × 6% × ½ year), receiving cash of $5,000,000. a. Journalize the entry to record the issuance of the bonds. If an amount box does not require an entry, leave it blank. b. Journalize the entry to record the first interest payment on June 30. If an amount box does not require an entry, leave it blank. c. Journalize the entry to record the payment of the principal on the maturity date. If an amount box does not require an entry, leave it blank.

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