The following transactions were completed by Winklevoss Inc., whose fiscal year is the calendar year: Year 1 July 1 Issued $75,100,000 of 20-year, 8% callable bonds dated July 1, Year 1, at a market (effective) rate of 10%, receiving cash of $62,213,861. Interest is payable semiannually on December 31 and June 30. Oct. 1 Borrowed $440,000 by issuing a six-year, 7% installment note to Nicks Bank. The note requires annual payments of $92,310, with the first payment occurring on September 30, Year 2. Dec. 31 Accrued $7,700 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 $322,153 is combined with the semiannual interest payment. Year 2 June 30 Paid the semiannual interest on the bonds. The bond discount amortization of $322,153 is combined with the semiannual interest payment. Sept. 30 Paid the annual payment on the note, which consisted of interest of $30,800 and principal of $61,510. Dec. 31 Accrued $6,624 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 $322,153 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 $11,597,527 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 $26,494 and principal of $65,816. Required: 1. Journalize the entries to record the foregoing transactions. Round all amounts to the nearest dollar. Refer to the Chart of Accounts for exact wording of account titles. 2. Indicate the amount of the interest expense in (a) Year 1 and (b) Year 2. 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 $75,100,000 of 20-year, 8% callable bonds dated July 1, Year 1, at a market (effective) rate of 10%, receiving cash of $62,213,861. Interest is payable semiannually on December 31 and June 30. Oct. 1 Borrowed $440,000 by issuing a six-year, 7% installment note to Nicks Bank. The note requires annual payments of $92,310, with the first payment occurring on September 30, Year 2. Dec. 31 Accrued $7,700 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 $322,153 is combined with the semiannual interest payment. Year 2 June 30 Paid the semiannual interest on the bonds. The bond discount amortization of $322,153 is combined with the semiannual interest payment. Sept. 30 Paid the annual payment on the note, which consisted of interest of $30,800 and principal of $61,510. Dec. 31 Accrued $6,624 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 $322,153 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 $11,597,527 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 $26,494 and principal of $65,816. Required: 1. Journalize the entries to record the foregoing transactions. Round all amounts to the nearest dollar. Refer to the Chart of Accounts for exact wording of account titles. 2. Indicate the amount of the interest expense in (a) Year 1 and (b) Year 2. 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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The following transactions were completed by Winklevoss Inc., whose fiscal year is the calendar year:

Year 1
July	1	Issued $75,100,000 of 20-year, 8% callable bonds dated July 1, Year 1, at a market (effective) rate of 10%, receiving cash of $62,213,861. Interest is payable semiannually on December 31 and June 30.
Oct.	1	Borrowed $440,000 by issuing a six-year, 7% installment note to Nicks Bank. The note requires annual payments of $92,310, with the first payment occurring on September 30, Year 2.
Dec.	31	Accrued $7,700 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 $322,153 is combined with the semiannual interest payment.
Year 2
June	30	Paid the semiannual interest on the bonds. The bond discount amortization of $322,153 is combined with the semiannual interest payment.
Sept.	30	Paid the annual payment on the note, which consisted of interest of $30,800 and principal of $61,510.
Dec.	31	Accrued $6,624 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 $322,153 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 $11,597,527 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 $26,494 and principal of $65,816.

Required:

1.	Journalize the entries to record the foregoing transactions. Round all amounts to the nearest dollar. Refer to the Chart of Accounts for exact wording of account titles.
2.	Indicate the amount of the interest expense in (a) Year 1 and (b) Year 2.
3.	Determine the carrying amount of the bonds as of December 31, Year 2.

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