Bonds: Bonds are long-term promissory notes that are represented by a company while borrowing money from investors to raise fund for financing the operations. Bonds Payable: Bonds payable are referred to long-term debts of the business, issued to various lenders known as bondholders, generally in multiples of $1,000 per bond, to raise fund for financing the operations. Premium on bonds payable: It occurs when the bonds are issued at a high price than the face value. To prepare : Journal entry to record issuance of the bonds.

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Answer 1

Question

Chapter 14, Problem 14.7EX

(a)

To determine

Bonds: Bonds are long-term promissory notes that are represented by a company while borrowing money from investors to raise fund for financing the operations.

Bonds Payable: Bonds payable are referred to long-term debts of the business, issued to various lenders known as bondholders, generally in multiples of $1,000 per bond, to raise fund for financing the operations.

Premium on bonds payable: It occurs when the bonds are issued at a high price than the face value.

To prepare: Journal entry to record issuance of the bonds.

(b)

To determine

To prepare: Journal entry to record first interest payment and amortization of premium on bonds.

(c)

To determine

To explain: The reason why the company was able to issue the bonds for $13,023,576 rather than $12,000,000.

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Entries for issuing bonds and amortizing premium by straight-line method Smiley Corporation wholesales repair products to equipment manufacturers. On April 1, 2011, Smiley issued $20,000,000 of five-year, 9% bonds at a market (effective) interest rate of 8%, receiving cash of $20,811,010. Interest is payable semiannually on April 1 and October 1. Journalize the entries to record the following: a. Issuance of bonds on April 1, 2011.b. First interest payment on October 1, 2011, and amortization of bondpremium for six months, using the straight-line method.c. Explain why the company was able to issue the bonds for $20,811,010 rather than for die face amount of $20,000,000.

Answer 2

Question

Chapter 14, Problem 14.7EX

(a)

To determine

Bonds: Bonds are long-term promissory notes that are represented by a company while borrowing money from investors to raise fund for financing the operations.

Bonds Payable: Bonds payable are referred to long-term debts of the business, issued to various lenders known as bondholders, generally in multiples of $1,000 per bond, to raise fund for financing the operations.

Premium on bonds payable: It occurs when the bonds are issued at a high price than the face value.

To prepare: Journal entry to record issuance of the bonds.

(b)

To determine

To prepare: Journal entry to record first interest payment and amortization of premium on bonds.

(c)

To determine

To explain: The reason why the company was able to issue the bonds for $13,023,576 rather than $12,000,000.

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Answer 3

Question

Chapter 14, Problem 14.7EX

(a)

To determine

Bonds: Bonds are long-term promissory notes that are represented by a company while borrowing money from investors to raise fund for financing the operations.

Bonds Payable: Bonds payable are referred to long-term debts of the business, issued to various lenders known as bondholders, generally in multiples of $1,000 per bond, to raise fund for financing the operations.

Premium on bonds payable: It occurs when the bonds are issued at a high price than the face value.

To prepare: Journal entry to record issuance of the bonds.

(b)

To determine

To prepare: Journal entry to record first interest payment and amortization of premium on bonds.

(c)

To determine

To explain: The reason why the company was able to issue the bonds for $13,023,576 rather than $12,000,000.

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Answer 4

Question

Chapter 14, Problem 14.7EX

(a)

To determine

Bonds: Bonds are long-term promissory notes that are represented by a company while borrowing money from investors to raise fund for financing the operations.

Bonds Payable: Bonds payable are referred to long-term debts of the business, issued to various lenders known as bondholders, generally in multiples of $1,000 per bond, to raise fund for financing the operations.

Premium on bonds payable: It occurs when the bonds are issued at a high price than the face value.

To prepare: Journal entry to record issuance of the bonds.

(b)

To determine

To prepare: Journal entry to record first interest payment and amortization of premium on bonds.

(c)

To determine

To explain: The reason why the company was able to issue the bonds for $13,023,576 rather than $12,000,000.

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Answer 5

Chapter 14, Problem 14.7EX

(a)

To determine

Bonds: Bonds are long-term promissory notes that are represented by a company while borrowing money from investors to raise fund for financing the operations.

Bonds Payable: Bonds payable are referred to long-term debts of the business, issued to various lenders known as bondholders, generally in multiples of $1,000 per bond, to raise fund for financing the operations.

Premium on bonds payable: It occurs when the bonds are issued at a high price than the face value.

To prepare: Journal entry to record issuance of the bonds.

(b)

To determine

To prepare: Journal entry to record first interest payment and amortization of premium on bonds.

(c)

To determine

To explain: The reason why the company was able to issue the bonds for $13,023,576 rather than $12,000,000.

Answer 6

Chapter 14, Problem 14.7EX

(a)

To determine

Bonds: Bonds are long-term promissory notes that are represented by a company while borrowing money from investors to raise fund for financing the operations.

Bonds Payable: Bonds payable are referred to long-term debts of the business, issued to various lenders known as bondholders, generally in multiples of $1,000 per bond, to raise fund for financing the operations.

Premium on bonds payable: It occurs when the bonds are issued at a high price than the face value.

To prepare: Journal entry to record issuance of the bonds.

Answer 7

Chapter 14, Problem 14.7EX

(a)

To determine

Bonds: Bonds are long-term promissory notes that are represented by a company while borrowing money from investors to raise fund for financing the operations.

Bonds Payable: Bonds payable are referred to long-term debts of the business, issued to various lenders known as bondholders, generally in multiples of $1,000 per bond, to raise fund for financing the operations.

Premium on bonds payable: It occurs when the bonds are issued at a high price than the face value.

To prepare: Journal entry to record issuance of the bonds.

Answer 8

(b)

To determine

To prepare: Journal entry to record first interest payment and amortization of premium on bonds.

Answer 9

(b)

To determine

To prepare: Journal entry to record first interest payment and amortization of premium on bonds.

Answer 10

(c)

To determine

To explain: The reason why the company was able to issue the bonds for $13,023,576 rather than $12,000,000.

Answer 11

(c)

To determine

To explain: The reason why the company was able to issue the bonds for $13,023,576 rather than $12,000,000.

Answer 12

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Answer 13

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Answer 14

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Answer 15

Ch. 14 - Describe the two distinct obligations incurred by...Ch. 14 - Explain the meaning of each of the following terms...Ch. 14 - If you asked your broker to buy you a 12% bond...Ch. 14 - Prob. 4DQ Ch. 14 - If bonds issued by a corporation are sold at...Ch. 14 - The following data relate to a 2,000,000, 8% bond...Ch. 14 - Bonds Payable has a balance of 5,000,000, and...Ch. 14 - What is a mortgage note?Ch. 14 - Fleeson Company needs additional funds to purchase...Ch. 14 - In what section of the balance sheet would a bond...

Solution Summary: The author explains that bonds are long-term promissory notes that are represented by a company while borrowing money from investors to raise fund for financing the operations.

To prepare: Journal entry to record first interest payment and amortization of premium on bonds.

To explain: The reason why the company was able to issue the bonds for $13,023,576 rather than $12,000,000.

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Chapter 14 Solutions