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Corporate Financial Accounting
14th Edition
ISBN: 9781305653535
Author: Carl Warren, James M. Reeve, Jonathan Duchac
Publisher: Cengage Learning
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Textbook Question
Chapter 11, Problem 11.3APR
Entries for bonds payable, including bond redemption
The following transactions were completed by Winklevoss Inc., whose fiscal year is the calendar year:
Year 1. | |
July 1 | Issued $74,000,000 of 20-year, 11 % callable bonds dated July 1, Year 1, at a market (effective) rate of 13%, receiving cash of $63,532,267. Interest is payable semiannually on December 31 and June 30. |
Dec. 31. | Paid the semiannual interest on the bonds. The bond discount amortization of $261,693 is combined with the semiannual interest payment. |
31. | Closed the interest expense account. |
Year 2 | |
June 30. | Paid the semiannual interest on the bonds. The bond discount amortization of $261,693 is combined with the semiannual interest payment. |
Dec. 31. | Paid the semiannual interest on the bonds. The bond discount amortization of $261,693 is combined with the semiannual interest payment. |
31. | Closed the interest expense account. |
Year 3 | |
June 30. | Recorded the redemption of the bonds, which were called at 98. The balance in the bond discount account is $9,420,961 after payment of interest and amortization of discount have been recorded. (Record the redemption only.) |
Instructions
1.
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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Entries for Bonds Payable, including bond redemption
The following transactions were completed by Winklevoss Inc., whose fiscal year is the calendar year:
Year 1
July 1.
Issued $4,530,000 of five-year, 10% callable bonds dated July 1, Year 1, at a market (effective) rate of 11%, receiving cash of $4,359,272. Interest is payable semiannually on December 31 and June 30.
Dec. 31.
Paid the semiannual interest on the bonds. The bond discount amortization of $17,073 is combined with the semiannual interest payment.
Dec. 31.
Closed the interest expense account.
Year 2
June 30.
Paid the semiannual interest on the bonds. The bond discount amortization of $17,073 is combined with the semiannual interest payment.
Dec. 31.
Paid the semiannual interest on the bonds. The bond discount amortization of $17,073 is combined with the semiannual interest payment.
Dec. 31.
Closed the interest expense account.
Year 3
June 30.
Recorded the redemption of the bonds, which were called…
Chapter 11 Solutions
Corporate Financial Accounting
Ch. 11 - Describe the two distinct obligations incurred by...Ch. 11 - Explain the meaning of each of the following terms...Ch. 11 - If you asked your broker to purchase for you a 12%...Ch. 11 - A corporation issues 26,000,000 of 9% bonds to...Ch. 11 - If bonds issued by a corporation are sold at a...Ch. 11 - Prob. 6DQCh. 11 - Bonds Payable has a balance of 5,000,000 and...Ch. 11 - Prob. 8DQCh. 11 - Prob. 9DQCh. 11 - Issuing bonds at face amount On January 1, the...
Ch. 11 - Issuing bonds at a discount On the first day of...Ch. 11 - Prob. 11.3BECh. 11 - Prob. 11.4BECh. 11 - Prob. 11.5BECh. 11 - Redemption of bonds payable A 500,000 bond issue...Ch. 11 - Prob. 11.1EXCh. 11 - Entries for issuing bonds Thomson Co. produces and...Ch. 11 - Prob. 11.3EXCh. 11 - Prob. 11.4EXCh. 11 - Entries for issuing and calling bonds; loss Hoover...Ch. 11 - Entries for issuing and calling bonds; gain Mia...Ch. 11 - Prob. 11.7EXCh. 11 - Present value of amounts due Assume that you are...Ch. 11 - Prob. 11.9EXCh. 11 - Present value of an annuity On January 1 you win...Ch. 11 - Prob. 11.11EXCh. 11 - Prob. 11.12EXCh. 11 - Present value of bonds payable; premium Moss Co....Ch. 11 - Amortize discount by interest method On the first...Ch. 11 - Amortize premium by interest method Shunda...Ch. 11 - Prob. 11.16EXCh. 11 - Prob. 11.17EXCh. 11 - Bond discount, entries for bonds payable...Ch. 11 - Prob. 11.2APRCh. 11 - Entries for bonds payable, including bond...Ch. 11 - Prob. 11.4APRCh. 11 - Prob. 11.5APRCh. 11 - Bond discount, entries for bonds payable...Ch. 11 - Prob. 11.2BPRCh. 11 - Prob. 11.3BPRCh. 11 - Bond discount, entries for bonds payable...Ch. 11 - Prob. 11.5BPRCh. 11 - Continuing Company AnalysisAmazon: Times interest...Ch. 11 - Arch Coal:Times interest earned Arch Coal, Inc. is...Ch. 11 - Aeropostale: Times interest earned Aeropostale,...Ch. 11 - Prob. 11.4ADMCh. 11 - Ethics in Action CLG Capital Inc. is a large...Ch. 11 - Prob. 11.3TIF
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