Bonds
Bonds are a kind of interest bearing notes payable, usually issued by companies, universities and governmental organizations. It is a debt instrument used for the purpose of raising fund of the corporations or governmental agencies. If selling price of the bond is equal to its face value, it is called as par on bond. If selling price of the bond is lesser than the face value, it is known as discount on bond. If selling price of the bond is greater than the face value, it is known as premium on bond.
Redemption of Bonds
The process of repaying the sale amount of bonds to bondholders at the time of maturity or before the maturity period is called as redemption of bonds. It is otherwise called as retirement of bonds.
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Financial Accounting: Tools for Business Decision Making, 8th Edition
- Pharoah Company issued $500,000 of bonds on January 1, 2020. (a) Prepare the journal entry to record the redemption of the bonds at maturity, assuming the bonds were issued at 100. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. List all debit entries before credit entries.) Account Titles and Explanation Debit Creditarrow_forwardOn August 1, 2022, Bramble Corp. issued $482,400, 8%, 10-year bonds at face value. Interest is payable annually on August 1. Bramble’s year-end is December 31. Prepare the journal entry to record the issuance of the bonds. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Aug. 1 enter an account title to record the issuance of the bonds on August 1 enter a debit amount enter a credit amount enter an account title to record the issuance of the bonds on August 1 enter a debit amount enter a credit amount eTextbook and Media List of Accounts Prepare the journal entry to record the accrual of interest on December 31, 2022. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Dec. 31 enter an…arrow_forwardSheridan Company issued $311,500 of 7%, 10-year bonds on January 1, 2020, at face value. Interest is payable annually on January 1. 1.Prepare the journal entry to record the payment of interest on January 1, 2021. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Jan. 1, 2021arrow_forward
- On January 1, 2014, Blossom World issued bonds with a face value of $160,000. The bonds carry a stated interest of 6% payable each January 1. Prepare the journal entry for the issuance of the bonds if the bonds are issued at 98.5. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Creditarrow_forwardOn October 1, 2021, Monty Corp. issued $828,000, 7%, 10-year bonds at face value. The bonds were dated October 1, 2021, and pay interest annually on October 1. Financial statements are prepared annually on December 31. (a) Prepare the journal entry to record the issuance of the bonds. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Oct. 1, 2021 enter an account title for the journal entry on October 1, 2021enter an account title for the journal entry on October 1, 2021 enter a debit amountenter a debit amount enter a credit amountenter a credit amount enter an account title for the journal entry on October 1, 2021enter an account title for the journal entry on October 1, 2021 enter a debit amountenter a debit amount enter a credit amountenter a credit amountarrow_forwardOn October 1, 2021, Pronghorn Corp. issued $864,000, 8%, 10-year bonds at face value. The bonds were dated October 1, 2021, and pay interest annually on October 1. Financial statements are prepared annually on December 31. Prepare the journal entry to record the issuance of the bonds. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Oct. 1, 2021 enter an account title for the journal entry on October 1, 2021 enter a debit amount enter a credit amount enter an account title for the journal entry on October 1, 2021arrow_forward
- On January 1, 2016, Crammer Inc. issues five-year bonds with a total face amount of $1,000,000 and a stated rate of 8%. The bonds were issued at 103 on January 1, 2016. Interest is paid semiannually on June 30 and December 31. What is the balance in the Premium or Discount account after the June 30, 2016 entry? Show your calculation. What is the carrying value of the bonds after the June 30, 2016 entry? Show your calculation. Give the journal entry to record the repayment of the bond at maturity on January 1, 2021, after all interest has been paid.arrow_forwardGreener Pastures Corporation borrowed $1,000,000 on November 1, 2015. The note carried a9 percent interest rate with the principal and interest payable on June 1, 2016. Show the accountingequation effects and prepare the journal entries for ( a ) the note issued on November 1 and ( b ) theinterest accrual on December 31.arrow_forwardKing Company issued bonds with a face amount of $1,600,000 in 2015. As of January 1, 2020, the balance in Discount on Bonds Payable is $4,800. At that time, King redeemed the bonds at 102.Assuming that no interest is payable, make the entry to record the redemption. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Jan. 1arrow_forward
- On January 1, 2018, Educators Credit Union issued 7%, 20-year bonds payable with a face value of $100,000. The bonds pay interest on June 30 and December 31. How do I Journalize the payment of interest and amortization on June 30, 2018.?arrow_forwardCrane Corporation issued 2,100, 9%, 5-year, $1,000 bonds dated January 1, 2020, at 100. Interest is paid each January 1. prepare the adjusting journal entry on December 31, 2020, to record interest expense. what is the account title and explanation? what is debit or credited?arrow_forwardThe balance sheet for Cullumber Consulting reports the following information on July 1, 2020. Long-term liabilities Bonds payable $3,100,000 Less: Discount on bonds payable 217,000 $2,883,000 Cullumber decides to redeem these bonds at 103 after paying annual interest.Prepare the journal entry to record the redemption on July 1, 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)arrow_forward
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