The following transactions were completed by Winklevoss Inc., whose fiscal year is the calendar year: Year 1 July 1. Issued $8,630,000 of five-year, 10% callable bonds dated July 1, Year 1, at a market (effective) rate of 11%, receiving cash of $8,304,751. Interest is payable semiannually on December 31 and June 30. Oct. 1. Borrowed $310,000 by issuing a 10-year, 7% installment note to Nicks Bank. The note requires annual payments of $44,137, with the first payment occurring on September 30, Year 2. Dec. 31. Accrued $5,425 of interest on the installment note. The interest is payable on the date of the next installment note payment. 31. Paid the semiannual interest on the bonds. The bond discount amortization of $32,525 is combined with the semiannual interest payment. Year 2 June 30. Paid the semiannual interest on the bonds. The bond discount amortization of $32,525 is combined with the semiannual interest payment. Sept. 30. Paid the annual payment on the note, which consisted of interest of $21,700 and principal of $22,437. Dec. 31. Accrued $5,032 of interest on the installment note. The interest is payable on the date of the next installment note payment. 31. Paid the semiannual interest on the bonds. The bond discount amortization of $32,525 is combined with the semiannual interest payment. Year 3 June 30. Recorded the redemption of the bonds, which were called at 98. The balance in the bond discount account is $195,149 after payment of interest and amortization of discount have been recorded. Record the redemption only. Sept. 30. Paid the second annual payment on the note, which consisted of interest of $20,129 and principal of $24,008. Required: Round all amounts to the nearest dollar. 1. Journalize the entries to record the foregoing transactions. If an amount box does not require an entry, leave it blank. 2. Indicate the amount of the interest expense in (a) Year 1 and (b) Year 2. a. Year 1 $fill in the blank 91 b. Year 2 $fill in the blank 92 3. Determine the carrying amount of the bonds as of December 31, Year 2.

The following transactions were completed by Winklevoss Inc., whose fiscal year is the calendar year: Year 1 July 1. Issued $8,630,000 of five-year, 10% callable bonds dated July 1, Year 1, at a market (effective) rate of 11%, receiving cash of $8,304,751. Interest is payable semiannually on December 31 and June 30. Oct. 1. Borrowed $310,000 by issuing a 10-year, 7% installment note to Nicks Bank. The note requires annual payments of $44,137, with the first payment occurring on September 30, Year 2. Dec. 31. Accrued $5,425 of interest on the installment note. The interest is payable on the date of the next installment note payment. 31. Paid the semiannual interest on the bonds. The bond discount amortization of $32,525 is combined with the semiannual interest payment. Year 2 June 30. Paid the semiannual interest on the bonds. The bond discount amortization of $32,525 is combined with the semiannual interest payment. Sept. 30. Paid the annual payment on the note, which consisted of interest of $21,700 and principal of $22,437. Dec. 31. Accrued $5,032 of interest on the installment note. The interest is payable on the date of the next installment note payment. 31. Paid the semiannual interest on the bonds. The bond discount amortization of $32,525 is combined with the semiannual interest payment. Year 3 June 30. Recorded the redemption of the bonds, which were called at 98. The balance in the bond discount account is $195,149 after payment of interest and amortization of discount have been recorded. Record the redemption only. Sept. 30. Paid the second annual payment on the note, which consisted of interest of $20,129 and principal of $24,008. Required: Round all amounts to the nearest dollar. 1. Journalize the entries to record the foregoing transactions. If an amount box does not require an entry, leave it blank. 2. Indicate the amount of the interest expense in (a) Year 1 and (b) Year 2. a. Year 1 $fill in the blank 91 b. Year 2 $fill in the blank 92 3. Determine the carrying amount of the bonds as of December 31, Year 2.

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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Question

The following transactions were completed by Winklevoss Inc., whose fiscal year is the calendar year:

Year 1
July 1.	Issued $8,630,000 of five-year, 10% callable bonds dated July 1, Year 1, at a market (effective) rate of 11%, receiving cash of $8,304,751. Interest is payable semiannually on December 31 and June 30.
Oct. 1.	Borrowed $310,000 by issuing a 10-year, 7% installment note to Nicks Bank. The note requires annual payments of $44,137, with the first payment occurring on September 30, Year 2.
Dec. 31.	Accrued $5,425 of interest on the installment note. The interest is payable on the date of the next installment note payment.
31.	Paid the semiannual interest on the bonds. The bond discount amortization of $32,525 is combined with the semiannual interest payment.
Year 2
June 30.	Paid the semiannual interest on the bonds. The bond discount amortization of $32,525 is combined with the semiannual interest payment.
Sept. 30.	Paid the annual payment on the note, which consisted of interest of $21,700 and principal of $22,437.
Dec. 31.	Accrued $5,032 of interest on the installment note. The interest is payable on the date of the next installment note payment.
31.	Paid the semiannual interest on the bonds. The bond discount amortization of $32,525 is combined with the semiannual interest payment.
Year 3
June 30.	Recorded the redemption of the bonds, which were called at 98. The balance in the bond discount account is $195,149 after payment of interest and amortization of discount have been recorded. Record the redemption only.
Sept. 30.	Paid the second annual payment on the note, which consisted of interest of $20,129 and principal of $24,008.

Required:

Round all amounts to the nearest dollar.

1. Journalize the entries to record the foregoing transactions. If an amount box does not require an entry, leave it blank.

2. Indicate the amount of the interest expense in (a) Year 1 and (b) Year 2.

a. Year 1 $fill in the blank 91

b. Year 2 $fill in the blank 92

3. Determine the carrying amount of the bonds as of December 31, Year 2.

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