When bonds are issued at par, cash is debited and bonds payable is credited for the bond’s par value.Bonds are issued at a discount when the contract price is less than the market price, making the issue price less than par. To determine: Prepare Journal Entry to record the bonds’ issuance.

Question

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Answer 1

Question

Chapter 10, Problem 5PSB

1.

Summary Introduction

Introduction: When bonds are issued at par, cash is debited and bonds payable is credited for the bond’s par value.Bonds are issued at a discount when the contract price is less than the market price, making the issue price less than par.

To determine: Prepare Journal Entry to record the bonds’ issuance.

1.

Expert Solution

Answer to Problem 5PSB

Journal entry at the time of issuance of bonds on discount $41,506

Explanation of Solution

Date	Particulars	Debit	Credit
1 Jan	Cash	$198,494
	Discount on bonds payable $240,000-198,494=$41,506	$41,506
	Bonds Payable		$240,000
	(Being bonds sold at discount)

2.

Summary Introduction

Introduction: When bonds are issued at par, cash is debited and bonds payable is credited for the bond’s par value.Bonds are issued at a discount when the contract price is less than the market price, making the issue price less than par.

To determine: Compute the amount of total bond interest expense.

2.

Expert Solution

Answer to Problem 5PSB

Total bond interest expense to be recognized over the life of bond is $257,506

Explanation of Solution

Cash payment= Par Value×Rate× No. of years = $240,000×3%×30=$216,000

Total bond interest expense= Cash Payment + Discount amount = $216,000+$41,506=$257,506

3.

Summary Introduction

Introduction: When bonds are issued at par, cash is debited and bonds payable is credited for the bond’s par value.Bonds are issued at a discount when the contract price is less than the market price, making the issue price less than par.

To determine: Prepare first two year amortization table.

3.

Expert Solution

Answer to Problem 5PSB

Two years amortization table and check the amount $202,646

Explanation of Solution

Semi Annual Period End	Unamortized Discount	Carrying Value
01/01/2016	$41,506	$198,494
06/30/2016	$40,122	$199,878
12/31/2016	$38,738	$201,262
06/30/2017	$37,354	$202,646
12/31/2017	$35,970	$204,030

Computation of discount to be amortized for in each semiannual period:

Discount to be amortized= Total unamortized discount / No. of semiannual periods = $41,506/30 =1,384

4.

Summary Introduction

Introduction: When bonds are issued at par, cash is debited and bonds payable is credited for the bond’s par value.Bonds are issued at a discount when the contract price is less than the market price, making the issue price less than par.

To determine: Journal Entries of First two interest payment.

4.

Expert Solution

Answer to Problem 5PSB

Journal Entry for payment of interest on June 30 & 31 December 2016.

Explanation of Solution

Date	Particulars	Debit	Credit
30 June	Interest Expense on bonds	$257,506
	Discount on bonds payable		$41,506
	Cash		$216,000
	(Being semiannual interest paid and discount on bonds amortized)

Date	Particulars	Debit	Credit
31Dec	Interest Expense on bonds	$257,506
	Discount on bonds payable		$41,506
	Cash		$216,000
	(Being semiannual interest paid and discount on bonds amortized)

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A company updates its inventory perpetually. Its beginning inventory is $48,000, goods purchased during the period cost $145,000, and the cost of goods sold for the period is $160,000. What is the amount of the ending inventory?

Answer 2

Question

Chapter 10, Problem 5PSB

1.

Summary Introduction

Introduction: When bonds are issued at par, cash is debited and bonds payable is credited for the bond’s par value.Bonds are issued at a discount when the contract price is less than the market price, making the issue price less than par.

To determine: Prepare Journal Entry to record the bonds’ issuance.

1.

Expert Solution

Answer to Problem 5PSB

Journal entry at the time of issuance of bonds on discount $41,506

Explanation of Solution

Date	Particulars	Debit	Credit
1 Jan	Cash	$198,494
	Discount on bonds payable $240,000-198,494=$41,506	$41,506
	Bonds Payable		$240,000
	(Being bonds sold at discount)

2.

Summary Introduction

Introduction: When bonds are issued at par, cash is debited and bonds payable is credited for the bond’s par value.Bonds are issued at a discount when the contract price is less than the market price, making the issue price less than par.

To determine: Compute the amount of total bond interest expense.

2.

Expert Solution

Answer to Problem 5PSB

Total bond interest expense to be recognized over the life of bond is $257,506

Explanation of Solution

Cash payment= Par Value×Rate× No. of years = $240,000×3%×30=$216,000

Total bond interest expense= Cash Payment + Discount amount = $216,000+$41,506=$257,506

3.

Summary Introduction

Introduction: When bonds are issued at par, cash is debited and bonds payable is credited for the bond’s par value.Bonds are issued at a discount when the contract price is less than the market price, making the issue price less than par.

To determine: Prepare first two year amortization table.

3.

Expert Solution

Answer to Problem 5PSB

Two years amortization table and check the amount $202,646

Explanation of Solution

Semi Annual Period End	Unamortized Discount	Carrying Value
01/01/2016	$41,506	$198,494
06/30/2016	$40,122	$199,878
12/31/2016	$38,738	$201,262
06/30/2017	$37,354	$202,646
12/31/2017	$35,970	$204,030

Computation of discount to be amortized for in each semiannual period:

Discount to be amortized= Total unamortized discount / No. of semiannual periods = $41,506/30 =1,384

4.

Summary Introduction

Introduction: When bonds are issued at par, cash is debited and bonds payable is credited for the bond’s par value.Bonds are issued at a discount when the contract price is less than the market price, making the issue price less than par.

To determine: Journal Entries of First two interest payment.

4.

Expert Solution

Answer to Problem 5PSB

Journal Entry for payment of interest on June 30 & 31 December 2016.

Explanation of Solution

Date	Particulars	Debit	Credit
30 June	Interest Expense on bonds	$257,506
	Discount on bonds payable		$41,506
	Cash		$216,000
	(Being semiannual interest paid and discount on bonds amortized)

Date	Particulars	Debit	Credit
31Dec	Interest Expense on bonds	$257,506
	Discount on bonds payable		$41,506
	Cash		$216,000
	(Being semiannual interest paid and discount on bonds amortized)

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Answer 3

Question

Chapter 10, Problem 5PSB

1.

Summary Introduction

Introduction: When bonds are issued at par, cash is debited and bonds payable is credited for the bond’s par value.Bonds are issued at a discount when the contract price is less than the market price, making the issue price less than par.

To determine: Prepare Journal Entry to record the bonds’ issuance.

1.

Expert Solution

Answer to Problem 5PSB

Journal entry at the time of issuance of bonds on discount $41,506

Explanation of Solution

Date	Particulars	Debit	Credit
1 Jan	Cash	$198,494
	Discount on bonds payable $240,000-198,494=$41,506	$41,506
	Bonds Payable		$240,000
	(Being bonds sold at discount)

2.

Summary Introduction

Introduction: When bonds are issued at par, cash is debited and bonds payable is credited for the bond’s par value.Bonds are issued at a discount when the contract price is less than the market price, making the issue price less than par.

To determine: Compute the amount of total bond interest expense.

2.

Expert Solution

Answer to Problem 5PSB

Total bond interest expense to be recognized over the life of bond is $257,506

Explanation of Solution

Cash payment= Par Value×Rate× No. of years = $240,000×3%×30=$216,000

Total bond interest expense= Cash Payment + Discount amount = $216,000+$41,506=$257,506

3.

Summary Introduction

Introduction: When bonds are issued at par, cash is debited and bonds payable is credited for the bond’s par value.Bonds are issued at a discount when the contract price is less than the market price, making the issue price less than par.

To determine: Prepare first two year amortization table.

3.

Expert Solution

Answer to Problem 5PSB

Two years amortization table and check the amount $202,646

Explanation of Solution

Semi Annual Period End	Unamortized Discount	Carrying Value
01/01/2016	$41,506	$198,494
06/30/2016	$40,122	$199,878
12/31/2016	$38,738	$201,262
06/30/2017	$37,354	$202,646
12/31/2017	$35,970	$204,030

Computation of discount to be amortized for in each semiannual period:

Discount to be amortized= Total unamortized discount / No. of semiannual periods = $41,506/30 =1,384

4.

Summary Introduction

Introduction: When bonds are issued at par, cash is debited and bonds payable is credited for the bond’s par value.Bonds are issued at a discount when the contract price is less than the market price, making the issue price less than par.

To determine: Journal Entries of First two interest payment.

4.

Expert Solution

Answer to Problem 5PSB

Journal Entry for payment of interest on June 30 & 31 December 2016.

Explanation of Solution

Date	Particulars	Debit	Credit
30 June	Interest Expense on bonds	$257,506
	Discount on bonds payable		$41,506
	Cash		$216,000
	(Being semiannual interest paid and discount on bonds amortized)

Date	Particulars	Debit	Credit
31Dec	Interest Expense on bonds	$257,506
	Discount on bonds payable		$41,506
	Cash		$216,000
	(Being semiannual interest paid and discount on bonds amortized)

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Answer 4

Question

Chapter 10, Problem 5PSB

1.

Summary Introduction

Introduction: When bonds are issued at par, cash is debited and bonds payable is credited for the bond’s par value.Bonds are issued at a discount when the contract price is less than the market price, making the issue price less than par.

To determine: Prepare Journal Entry to record the bonds’ issuance.

1.

Expert Solution

Answer to Problem 5PSB

Journal entry at the time of issuance of bonds on discount $41,506

Explanation of Solution

Date	Particulars	Debit	Credit
1 Jan	Cash	$198,494
	Discount on bonds payable $240,000-198,494=$41,506	$41,506
	Bonds Payable		$240,000
	(Being bonds sold at discount)

2.

Summary Introduction

Introduction: When bonds are issued at par, cash is debited and bonds payable is credited for the bond’s par value.Bonds are issued at a discount when the contract price is less than the market price, making the issue price less than par.

To determine: Compute the amount of total bond interest expense.

2.

Expert Solution

Answer to Problem 5PSB

Total bond interest expense to be recognized over the life of bond is $257,506

Explanation of Solution

Cash payment= Par Value×Rate× No. of years = $240,000×3%×30=$216,000

Total bond interest expense= Cash Payment + Discount amount = $216,000+$41,506=$257,506

3.

Summary Introduction

Introduction: When bonds are issued at par, cash is debited and bonds payable is credited for the bond’s par value.Bonds are issued at a discount when the contract price is less than the market price, making the issue price less than par.

To determine: Prepare first two year amortization table.

3.

Expert Solution

Answer to Problem 5PSB

Two years amortization table and check the amount $202,646

Explanation of Solution

Semi Annual Period End	Unamortized Discount	Carrying Value
01/01/2016	$41,506	$198,494
06/30/2016	$40,122	$199,878
12/31/2016	$38,738	$201,262
06/30/2017	$37,354	$202,646
12/31/2017	$35,970	$204,030

Computation of discount to be amortized for in each semiannual period:

Discount to be amortized= Total unamortized discount / No. of semiannual periods = $41,506/30 =1,384

4.

Summary Introduction

Introduction: When bonds are issued at par, cash is debited and bonds payable is credited for the bond’s par value.Bonds are issued at a discount when the contract price is less than the market price, making the issue price less than par.

To determine: Journal Entries of First two interest payment.

4.

Expert Solution

Answer to Problem 5PSB

Journal Entry for payment of interest on June 30 & 31 December 2016.

Explanation of Solution

Date	Particulars	Debit	Credit
30 June	Interest Expense on bonds	$257,506
	Discount on bonds payable		$41,506
	Cash		$216,000
	(Being semiannual interest paid and discount on bonds amortized)

Date	Particulars	Debit	Credit
31Dec	Interest Expense on bonds	$257,506
	Discount on bonds payable		$41,506
	Cash		$216,000
	(Being semiannual interest paid and discount on bonds amortized)

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Answer 5

Chapter 10, Problem 5PSB

1.

Summary Introduction

Introduction: When bonds are issued at par, cash is debited and bonds payable is credited for the bond’s par value.Bonds are issued at a discount when the contract price is less than the market price, making the issue price less than par.

To determine: Prepare Journal Entry to record the bonds’ issuance.

1.

Expert Solution

Answer to Problem 5PSB

Journal entry at the time of issuance of bonds on discount $41,506

Explanation of Solution

Date	Particulars	Debit	Credit
1 Jan	Cash	$198,494
	Discount on bonds payable $240,000-198,494=$41,506	$41,506
	Bonds Payable		$240,000
	(Being bonds sold at discount)

2.

Summary Introduction

Introduction: When bonds are issued at par, cash is debited and bonds payable is credited for the bond’s par value.Bonds are issued at a discount when the contract price is less than the market price, making the issue price less than par.

To determine: Compute the amount of total bond interest expense.

2.

Expert Solution

Answer to Problem 5PSB

Total bond interest expense to be recognized over the life of bond is $257,506

Explanation of Solution

Cash payment= Par Value×Rate× No. of years = $240,000×3%×30=$216,000

Total bond interest expense= Cash Payment + Discount amount = $216,000+$41,506=$257,506

3.

Summary Introduction

Introduction: When bonds are issued at par, cash is debited and bonds payable is credited for the bond’s par value.Bonds are issued at a discount when the contract price is less than the market price, making the issue price less than par.

To determine: Prepare first two year amortization table.

3.

Expert Solution

Answer to Problem 5PSB

Two years amortization table and check the amount $202,646

Explanation of Solution

Semi Annual Period End	Unamortized Discount	Carrying Value
01/01/2016	$41,506	$198,494
06/30/2016	$40,122	$199,878
12/31/2016	$38,738	$201,262
06/30/2017	$37,354	$202,646
12/31/2017	$35,970	$204,030

Computation of discount to be amortized for in each semiannual period:

Discount to be amortized= Total unamortized discount / No. of semiannual periods = $41,506/30 =1,384

4.

Summary Introduction

Introduction: When bonds are issued at par, cash is debited and bonds payable is credited for the bond’s par value.Bonds are issued at a discount when the contract price is less than the market price, making the issue price less than par.

To determine: Journal Entries of First two interest payment.

4.

Expert Solution

Answer to Problem 5PSB

Journal Entry for payment of interest on June 30 & 31 December 2016.

Explanation of Solution

Date	Particulars	Debit	Credit
30 June	Interest Expense on bonds	$257,506
	Discount on bonds payable		$41,506
	Cash		$216,000
	(Being semiannual interest paid and discount on bonds amortized)

Date	Particulars	Debit	Credit
31Dec	Interest Expense on bonds	$257,506
	Discount on bonds payable		$41,506
	Cash		$216,000
	(Being semiannual interest paid and discount on bonds amortized)

Answer 6

Chapter 10, Problem 5PSB

1.

Summary Introduction

Introduction: When bonds are issued at par, cash is debited and bonds payable is credited for the bond’s par value.Bonds are issued at a discount when the contract price is less than the market price, making the issue price less than par.

To determine: Prepare Journal Entry to record the bonds’ issuance.

1.

Expert Solution

Answer to Problem 5PSB

Journal entry at the time of issuance of bonds on discount $41,506

Explanation of Solution

Date	Particulars	Debit	Credit
1 Jan	Cash	$198,494
	Discount on bonds payable $240,000-198,494=$41,506	$41,506
	Bonds Payable		$240,000
	(Being bonds sold at discount)

Answer 7

Chapter 10, Problem 5PSB

1.

Summary Introduction

Introduction: When bonds are issued at par, cash is debited and bonds payable is credited for the bond’s par value.Bonds are issued at a discount when the contract price is less than the market price, making the issue price less than par.

To determine: Prepare Journal Entry to record the bonds’ issuance.

Answer 8

1.

Expert Solution

Answer to Problem 5PSB

Journal entry at the time of issuance of bonds on discount $41,506

Answer 9

1.

Expert Solution

Answer 10

1.

Expert Solution

Answer 11

Expert Solution

Answer 12

Explanation of Solution

Date	Particulars	Debit	Credit
1 Jan	Cash	$198,494
	Discount on bonds payable $240,000-198,494=$41,506	$41,506
	Bonds Payable		$240,000
	(Being bonds sold at discount)

Answer 13

2.

Summary Introduction

Introduction: When bonds are issued at par, cash is debited and bonds payable is credited for the bond’s par value.Bonds are issued at a discount when the contract price is less than the market price, making the issue price less than par.

To determine: Compute the amount of total bond interest expense.

2.

Expert Solution

Answer to Problem 5PSB

Total bond interest expense to be recognized over the life of bond is $257,506

Explanation of Solution

Cash payment= Par Value×Rate× No. of years = $240,000×3%×30=$216,000

Total bond interest expense= Cash Payment + Discount amount = $216,000+$41,506=$257,506

Answer 14

2.

Summary Introduction

Introduction: When bonds are issued at par, cash is debited and bonds payable is credited for the bond’s par value.Bonds are issued at a discount when the contract price is less than the market price, making the issue price less than par.

To determine: Compute the amount of total bond interest expense.

Answer 15

2.

Expert Solution

Answer to Problem 5PSB

Total bond interest expense to be recognized over the life of bond is $257,506

Answer 16

2.

Expert Solution

Answer 17

2.

Expert Solution

Answer 18

Expert Solution

Answer 19

Explanation of Solution

Cash payment= Par Value×Rate× No. of years = $240,000×3%×30=$216,000

Total bond interest expense= Cash Payment + Discount amount = $216,000+$41,506=$257,506

Answer 20

3.

Summary Introduction

Introduction: When bonds are issued at par, cash is debited and bonds payable is credited for the bond’s par value.Bonds are issued at a discount when the contract price is less than the market price, making the issue price less than par.

To determine: Prepare first two year amortization table.

3.

Expert Solution

Answer to Problem 5PSB

Two years amortization table and check the amount $202,646

Explanation of Solution

Semi Annual Period End	Unamortized Discount	Carrying Value
01/01/2016	$41,506	$198,494
06/30/2016	$40,122	$199,878
12/31/2016	$38,738	$201,262
06/30/2017	$37,354	$202,646
12/31/2017	$35,970	$204,030

Computation of discount to be amortized for in each semiannual period:

Discount to be amortized= Total unamortized discount / No. of semiannual periods = $41,506/30 =1,384

Answer 21

3.

Summary Introduction

Introduction: When bonds are issued at par, cash is debited and bonds payable is credited for the bond’s par value.Bonds are issued at a discount when the contract price is less than the market price, making the issue price less than par.

To determine: Prepare first two year amortization table.

Answer 22

3.

Expert Solution

Answer to Problem 5PSB

Two years amortization table and check the amount $202,646

Answer 23

3.

Expert Solution

Answer 24

3.

Expert Solution

Answer 25

Expert Solution

Answer 26

Explanation of Solution

Semi Annual Period End	Unamortized Discount	Carrying Value
01/01/2016	$41,506	$198,494
06/30/2016	$40,122	$199,878
12/31/2016	$38,738	$201,262
06/30/2017	$37,354	$202,646
12/31/2017	$35,970	$204,030

Computation of discount to be amortized for in each semiannual period:

Discount to be amortized= Total unamortized discount / No. of semiannual periods = $41,506/30 =1,384

Answer 27

4.

Summary Introduction

Introduction: When bonds are issued at par, cash is debited and bonds payable is credited for the bond’s par value.Bonds are issued at a discount when the contract price is less than the market price, making the issue price less than par.

To determine: Journal Entries of First two interest payment.

4.

Expert Solution

Answer to Problem 5PSB

Journal Entry for payment of interest on June 30 & 31 December 2016.

Explanation of Solution

Date	Particulars	Debit	Credit
30 June	Interest Expense on bonds	$257,506
	Discount on bonds payable		$41,506
	Cash		$216,000
	(Being semiannual interest paid and discount on bonds amortized)

Date	Particulars	Debit	Credit
31Dec	Interest Expense on bonds	$257,506
	Discount on bonds payable		$41,506
	Cash		$216,000
	(Being semiannual interest paid and discount on bonds amortized)

Answer 28

4.

Summary Introduction

Introduction: When bonds are issued at par, cash is debited and bonds payable is credited for the bond’s par value.Bonds are issued at a discount when the contract price is less than the market price, making the issue price less than par.

To determine: Journal Entries of First two interest payment.

Answer 29

4.

Expert Solution

Answer to Problem 5PSB

Journal Entry for payment of interest on June 30 & 31 December 2016.

Answer 30

4.

Expert Solution

Answer 31

4.

Expert Solution

Answer 32

Expert Solution

Answer 33

Explanation of Solution

Date	Particulars	Debit	Credit
30 June	Interest Expense on bonds	$257,506
	Discount on bonds payable		$41,506
	Cash		$216,000
	(Being semiannual interest paid and discount on bonds amortized)

Date	Particulars	Debit	Credit
31Dec	Interest Expense on bonds	$257,506
	Discount on bonds payable		$41,506
	Cash		$216,000
	(Being semiannual interest paid and discount on bonds amortized)