Horngren's Accounting, The Financial Chapters (12th Edition)
12th Edition
ISBN: 9780134486789
Author: Tracie L. Miller-Nobles, Brenda L. Mattison, Ella Mae Matsumura
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 14, Problem E14.24E
Journalizing bond transactions
Learning Objective 3
2. Interest Expense $3,430
Anderson Company issued $70,000 of 10-year, 9% bonds payable on January 1,2018. Anderson Company pays interest each January 1 and July 1 and amortizes discount or premium by the
Requirements
- Journalize Anderson Company's issuance of the bonds and first semiannual interest payment assuming the bonds were issued at face value.Explanations are not required.
- Journalize Anderson Company's issuance of the bonds and first semiannual interest payment assuming the bonds were issued at 92. Explanations are not required.
- Journalize Anderson Company's issuance of the bonds and first semiannual interest payment assuming the bonds were issued at 103. Explanations are not required.
- Which
bond price results in the most interest expense for Anderson Company? Explain in detail.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Learning Objective 2: Issue bonds payable (discount); record interest payments andthe related bond amortization using the effective-interest method) Energy Ltd. is authorizedto issue $3,000,000 of 1%, 10-year bonds payable. On December 31, 2018, when the marketinterest rate is 8%, the company issues $2,400,000 of the bonds. Energy amortizes bond discountusing the effective-interest method. The semiannual interest dates are June 30 and December 31.Requirements1. Use the PV function in Excel to calculate the issue price of the bonds.2. Prepare a bond amortization table for the term of the bonds using Excel.3. Record the issuance of the bonds payable on December 31, 2018; the first semiannualinterest payment on June 30, 2019; and the second payment on December 31, 2019.
On january 1 2024 professors crefit union pcu isdued 7 % 20 year bonds payable with face vaule of 800,000.
Learning Objectives 2, 3, 6: Issue convertible bonds at a discount; amortize usingthe effective interest method; convert bonds; report bonds payable on the balance sheet) OnDecember 31, 2018, Herndon Corporation issues 6%, 10-year convertible bonds payable witha face value of $1,000,000. The semiannual interest dates are June 30 and December 31. Themarket interest rate is 7%. Herndon amortizes bond discounts using the effective-interestmethod.Requirements1. Use the PV function in Excel to calculate the issue price of the bonds.2. Prepare an effective-interest method amortization table for the term of the bonds usingExcel.3. Journalize the following transactions:a. Issuance of the bonds on December 31, 2018. Credit Convertible Bonds Payable.b. Payment of interest and amortization of the bond discount on June 30, 2019.c. Payment of interest and amortization of the bond discount on December 31, 2019.d. Conversion by the bondholders on July 1, 2020, of bonds with a total face value…
Chapter 14 Solutions
Horngren's Accounting, The Financial Chapters (12th Edition)
Ch. 14 - Prob. 1QCCh. 14 - Daniels's bonds payable carry a stated interest...Ch. 14 - Prob. 3QCCh. 14 - Prob. 4QCCh. 14 - Prob. 5QCCh. 14 - Prob. 6QCCh. 14 - Prob. 7QCCh. 14 - Prob. 8QCCh. 14 - Prob. 9AQCCh. 14 - 10B Hicks Corporation issued S500.000 of 5%,...
Ch. 14 - Prob. 1RQCh. 14 - Prob. 2RQCh. 14 - Prob. 3RQCh. 14 - Prob. 4RQCh. 14 - Prob. 5RQCh. 14 - Prob. 6RQCh. 14 - Prob. 7RQCh. 14 - Prob. 8RQCh. 14 - Prob. 9RQCh. 14 - Prob. 10RQCh. 14 - Prob. 11RQCh. 14 - Prob. 12RQCh. 14 - 13. What type of account is Premium on Bonds...Ch. 14 - Prob. 14RQCh. 14 - Prob. 15RQCh. 14 - Prob. 16RQCh. 14 - What does the debt to equity ratio show, and how...Ch. 14 - Prob. 18ARQCh. 14 - Prob. 19ARQCh. 14 - Prob. 20ARQCh. 14 - Prob. 21BRQCh. 14 - Accounting fora long-term note payable Learning...Ch. 14 - Prob. S14.2SECh. 14 - Prob. S14.3SECh. 14 - Prob. S14.4SECh. 14 - Determining bond amounts Learning Objective 3...Ch. 14 - Journalizing bond transactions Learning Objective...Ch. 14 - Journalizing bond transactions Learning Objective...Ch. 14 - Prob. S14.8SECh. 14 - Prob. S14.9SECh. 14 - Prob. S14.10SECh. 14 - Prob. S14.11SECh. 14 - Prob. S14.12SECh. 14 - Prob. S14A.13SECh. 14 - Prob. S14A.14SECh. 14 - Prob. S14A.15SECh. 14 - Prob. S14B.16SECh. 14 - Prob. S14B.17SECh. 14 - Accounting for long-term notes payable...Ch. 14 - Prob. E14.19ECh. 14 - Prob. E14.20ECh. 14 - Determining bond prices and interest expense...Ch. 14 - Journalizing bond issuance and interest payments...Ch. 14 - Journalizing bond issuance and interest payments...Ch. 14 - Journalizing bond transactions Learning Objective...Ch. 14 - Journalizing bond issuance and interest payments...Ch. 14 - Retiring bonds payable before maturity Learning...Ch. 14 - Prob. E14.27ECh. 14 - Prob. E14.28ECh. 14 - Prob. E14.29ECh. 14 - Prob. E14A.30ECh. 14 - Prob. E14B.31ECh. 14 - Prob. P14.32APGACh. 14 - Analyzing, journalizing, and reporting bond...Ch. 14 - Analyzing and journalizing bond transactions...Ch. 14 - Prob. P14.35APGACh. 14 - Prob. P14.36APGACh. 14 - Prob. P14AB.37APGACh. 14 - Prob. P14AB.38APGACh. 14 - Journalizing liability transactions and reporting...Ch. 14 - Analyzing, journalizing, and reporting bond...Ch. 14 - Prob. P14.41BPGBCh. 14 - Analyzing and journalizing bond transactions...Ch. 14 - Prob. P14.43BPGBCh. 14 - Prob. P14AB.44BPGBCh. 14 - Prob. P14AB.45BPGBCh. 14 - Prob. P14.46CTCh. 14 - Prob. P14.47CPCh. 14 - Prob. 1CPCh. 14 - Prob. 2CPCh. 14 - Prob. 3CPCh. 14 - Prob. 4CPCh. 14 - Prob. 5CPCh. 14 - Prob. 6CPCh. 14 - Prob. 7CPCh. 14 - Prob. 8CPCh. 14 - Prob. 14.1TIATCCh. 14 - Decision Case 14-1 The following questions are not...Ch. 14 - Ethical Issue 14-1 Raffle's Kids, a nonprofit...Ch. 14 - Prob. 14.1FCCh. 14 - Prob. 14.1FSC
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Dixon Inc. issued bonds with a $500,000 face value, 10% interest rate, and a 4-year term on July 1, 2018 and received $480,000. Interest is payable annually. The discount is amortized using the straight-line method. Prepare journal entries for the following transactions. A. July 1, 2018: entry to record issuing the bonds B. June 30, 2019: entry to record payment of interest to bondholders C. June 30, 2019: entry to record amortization of discount D. June 30, 2020: entry to record payment of interest to bondholders E. June 30, 2020: entry to record amortization of discountarrow_forwardCornerstone Exercise Bonds Issued at a Discount (Effective Interest) Refer to the information for Sicily Corporation above. Required: Prepare the journal entries for December 31, 2020 and 2021. Use the following information for Cornerstone Exercises 9-33 and 9-34: Crafty Corporation issued 5475,000 of 5%, 7-year bonds on January 1, 2020, for $448,484. Interest is paid annually on December 31. The market rate of interest is 6%.arrow_forwardVolunteer Inc. issued bonds with a $500,000 face value, 10% interest rate, and a 4-year term on July 1, 2018 and received $540,000. Interest is payable annually. The premium is amortized using the straightline method. Prepare journal entries for the following transactions. A. July 1, 2018: entry to record issuing the bonds B. June 30, 2019: entry to record payment of interest to bondholders C. June 30, 2019: entry to record amortization of premium D. June 30, 2020: entry to record payment of interest to bondholders E. June 30, 2020: entry to record amortization of premiumarrow_forward
- Brief ExerciseBonds Issued at a Premium (Effective Interest) Refer to the information above for Haley Industries. Required: Prepare the journal entry for December 31, 2022 and 2023. Use the following information for Brief Exercises 9-55 and 9-58: Haley Industries issued $120,000 of 11% , 7-year bonds on January 1, 2020, with $5,842 pre- mium. Interest is paid annually on December 31. The market rate of interest is 10%.arrow_forwardAggies Inc. issued bonds with a $500,000 face value, 10% interest rate, and a 4-year term on July 1, 2018, and received $540,000. Interest is payable semi-annually. The premium is amortized using the straight-line method. Prepare journal entries for the following transactions. A. July 1, 2018: entry to record issuing the bonds B. Dec. 31, 2018: entry to record payment of interest to bondholders C. Dec. 31, 2018: entry to record amortization of premiumarrow_forwardMASTERY PROBLEM Jackson, Inc.s fiscal year ends December 31. Selected transactions for the period 20-1 through 20-8 involving bonds payable issued by Jackson are as follows: 20-1 Oct. 31 Issued 600,000 of 10-year, 7%, callable bonds dated October 31, 20-1, for 612,000. Interest is payable semiannually on October 31 and April 30. The bond indenture provides that Jackson is to pay to the trustee bank 20,000 by May 15 of each year (except the tenth year) as a sinking fund for the retirement of the bonds on call or at maturity. Dec. 31 Made the adjusting entry for interest payable and amortized two months premium on the bonds (straight-line method). 20-2 Jan. 2 Reversed the adjusting entry for interest payable and bond premium amortization. Apr. 30 Paid the semiannual interest on the bonds and amortized six months premium. May 15 Paid the sinking fund trustee 20,000. Oct. 31 Paid the semiannual interest on the bonds and amortized six months premium. Dec. 31 Made the adjusting entry for interest payable and amortized two months premium on the bonds. 31 Sinking fund earnings for the year were 900. 20-8 May 15 Paid the sinking fund trustee 20,000. Oct. 31 Paid the semiannual interest on the bonds and amortized six months premium. 31 Redeemed the bonds, which were called at 97. The balance in the bond premium account is 3,600 after the payment of interest and amortization of premium have been entered. The cash balance in the sinking fund is 200,000, which is applied to the redemption. Jackson paid the sinking fund trustee the additional cash needed to pay off the bonds. (Hint: First make the entry for payment to the sinking fund, then make the entry for redemption of the bonds.) REQUIRED 1. Enter the preceding transactions in general journal form. 2. Calculate the carrying value of the bonds as of December 31, 20-2.arrow_forward
- Exercise Bonds with Annual Interest Payments Kiwi Corporation issued at par $350,000, 9% bonds on January 1, 2020. Interest is paid annually on December 31. The principal and the final interest payment are due on December 31, 2021. Required: Prepare the entry to recognize the issuance of the bonds. Prepare the journal entry for December 31, 2020. Prepare the journal entry to record repayment of the principal on December 31, 2021. CONCEPTUAL CONNECTIONHow would the interest expense for 2020 change if the bonds had been issued at a premium?arrow_forward(Learning Objectives 1, 6: Issue bonds at a discount; amortize using thestraight-line method; report bonds payable and accrued interest payable on the balancesheet) On February 28, 2018, Shark Corp. issued 10%, 10-year bonds payable with a facevalue of $1,500,000. The bonds pay interest on February 28 and August 31. The companyamortizes bond discount using the straight-line method.Requirements1. If the market interest rate is 9% when Shark Corp. issues its bonds, will the bonds bepriced at par, at a premium, or at a discount? Explain.2. If the market interest rate is 11% when Shark Corp. issues its bonds, will the bonds bepriced at par, at a premium, or at a discount? Explain.3. Assume that the issue price of the bonds is 94. Journalize the following bond transactions.a. Issuance of the bonds on February 28, 2018b. Payment of interest and amortization of the bond discount on August 31, 2018c. Accrual of interest and amortization of the bond discount on December 31, 2018…arrow_forward(Learning Objectives 1, 6: Issue bonds at a discount; amortize using thestraight-line method; report bonds payable and accrued interest payable on the balancesheet) On February 28, 2018, Dolphin Corp. issued 10%, 20-year bonds payable with a facevalue of $2,100,000. The bonds pay interest on February 28 and August 31. The companyamortizes bond discount using the straight-line method.Requirements1. If the market interest rate is 9% when Dolphin Corp. issues its bonds, will the bonds bepriced at par, at a premium, or at a discount? Explain.2. If the market interest rate is 11% when Dolphin Corp. issues its bonds, will the bonds bepriced at par, at a premium, or at a discount? Explain.3. Assume that the issue price of the bonds is 94. Journalize the following bonds payabletransactions.a. Issuance of the bonds on February 28, 2018b. Payment of interest and amortization of the bond discount on August 31, 2018c. Accrual of interest and amortization of the bond discount on December 31, 2018…arrow_forward
- Learning Objective 3:Question 1: Straight-line MethodWired Inc. sold 10-year bonds with a total face amount of $1,500,000 and a stated rate of 10%. The bonds sold for $1,400,000 on January 1, 2020, and pay interest semiannually on June 30 and December 31.Required:1. Prepare the entry to recognize the sale of the bonds. 2. Determine the amount of the semiannual interest payment required by the bonds. 3. Prepare the journal entry made by Wired at June 30, 2020, to recognize the interest expense and an interest payment.Record the first interest payment. 4. Determine the amount of interest expense for 2020.arrow_forwardKier company issuedarrow_forwardIssuing Bonds at Face Amount The first day of the fiscal year, a company issues a $700,000, 6%, 10-year bond that pays semiannual interest of $21,000 ($700,000 x 6% x 2 year), receiving cash of $700,000. a. Journalize the entry to record the issuance of the bonds. If an amount box does not require an entry, leave it blank. b. Journalize the entry to record the first interest payment. If an amount box does not require an entry, leave it blank. C. Journalize the entry to record the payment of the principal on the maturity date. If an amount box does not require an entry, leave it blank.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Financial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage Learning
Excel Applications for Accounting PrinciplesAccountingISBN:9781111581565Author:Gaylord N. SmithPublisher:Cengage Learning
Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage Learning
College Accounting, Chapters 1-27AccountingISBN:9781337794756Author:HEINTZ, James A.Publisher:Cengage Learning,
Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College
Financial & Managerial AccountingAccountingISBN:9781285866307Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage Learning
Financial Accounting: The Impact on Decision Make...
Accounting
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Cengage Learning
Excel Applications for Accounting Principles
Accounting
ISBN:9781111581565
Author:Gaylord N. Smith
Publisher:Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Cengage Learning
College Accounting, Chapters 1-27
Accounting
ISBN:9781337794756
Author:HEINTZ, James A.
Publisher:Cengage Learning,
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College
Financial & Managerial Accounting
Accounting
ISBN:9781285866307
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Cengage Learning
Financial Accounting - Long-term Liabilities - Bonds; Author: Finance & Accounting Videos by Prof Coram;https://www.youtube.com/watch?v=_1fwsJIGMos;License: Standard Youtube License