Financial Accounting (12th Edition) (What's New in Accounting)
12th Edition
ISBN: 9780134725987
Author: C. William Thomas, Wendy M. Tietz, Walter T. Harrison Jr.
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 9, Problem 9.50AP
1-a.
To determine
To prepare:
b.
To determine
To prepare: Journal entry for payment of interest on November 30, 2018.
c.
To determine
To Prepare: Journal entry for accrual of interest expense on December 31, 2018.
d.
To determine
To prepare: Journal entry for payment of interest on May 31, 2019.
2.
To determine
To Report: Interest payable and bonds payable on Company C’s
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
(Learning Objectives 1, 6: Record bond transactions at par; report bonds payableon the balance sheet) The board of directors of Canterbury Plus authorized the issue of$9,000,000 of 7%, 15-year bonds payable. The semiannual interest dates are May 31 andNovember 30. The bonds are issued on May 31, 2018, at par.Requirements1. Journalize the following transactions:a. Issuance of half of the bonds on May 31, 2018b. Payment of interest on November 30, 2018c. Accrual of interest on December 31, 2018d. Payment of interest on May 31, 20192. Report interest payable and bonds payable as they would appear on the company’s balancesheet at December 31, 2018.
(Learning Objectives 1, 6: Record bond transactions at par; report bonds payableon the balance sheet) The board of directors of Mailroom Plus authorized the issue of$8,000,000 of 6%, 10-year bonds payable. The semiannual interest dates are May 31 andNovember 30. The bonds are issued on May 31, 2018, at par.Requirements1. Journalize the following transactions:a. Issuance of half of the bonds on May 31, 2018b. Payment of interest on November 30, 2018c. Accrual of interest on December 31, 2018d. Payment of interest on May 31, 20192. Report interest payable and bonds payable as they would appear on the company’s balancesheet at December 31, 2018.
(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…
Chapter 9 Solutions
Financial Accounting (12th Edition) (What's New in Accounting)
Ch. 9 - Brownlee Company issued 525,000, 8%, six-year...Ch. 9 - A bond with a face value of 250,000 and a quoted...Ch. 9 - Mission Furniture issued 500,000 in bonds payable...Ch. 9 - Bonds with an 8% stated interest rate were issued...Ch. 9 - Brimfest Corporation issued 2,400,000, 10-year, 6%...Ch. 9 - The Discount on Bonds Payable account a.is an...Ch. 9 - The discount on a bond payable becomes...Ch. 9 - The carrying value of Bonds Payable equals a.Bonds...Ch. 9 - Prob. 9QCCh. 9 - Prob. 10QC
Ch. 9 - Prob. 11QCCh. 9 - When a company retires bonds early, the gain or...Ch. 9 - Which type of lease will not increase a companys...Ch. 9 - Prob. 14QCCh. 9 - The debt ratio is calculated by dividing: a. total...Ch. 9 - Prob. 16QCCh. 9 - Prob. 17QCCh. 9 - Prob. 9.1ECCh. 9 - Prob. 9.1SCh. 9 - (Learning Objective 1: Determine bond prices at...Ch. 9 - (Learning Objective 1: Journalize basic bond...Ch. 9 - Prob. 9.4SCh. 9 - Prob. 9.5SCh. 9 - Prob. 9.6SCh. 9 - Prob. 9.7SCh. 9 - Prob. 9.8SCh. 9 - (Learning Objective 2: Account for bonds payable...Ch. 9 - Prob. 9.10SCh. 9 - LO 4,5 (Learning Objectives 4, 5: Deferred income...Ch. 9 - LO 5 (Learning Objective 5: Compute and evaluate...Ch. 9 - LO 5 (Learning Objective 5: Calculate the leverage...Ch. 9 - LO 6 (Learning Objective 6: Report liabilities)...Ch. 9 - (Learning Objective 1: Issue bonds payable...Ch. 9 - Prob. 9.16AECh. 9 - Prob. 9.17AECh. 9 - LO 2 (Learning Objective 2: Issue bonds payable...Ch. 9 - Prob. 9.19AECh. 9 - LO 4 (Learning Objective 4: Account for deferred...Ch. 9 - (Learning Objective 5: Evaluate debt-paying...Ch. 9 - LO 4, 5 (Learning Objectives 4, 5: Analyze current...Ch. 9 - Prob. 9.23AECh. 9 - (Learning Objective 1: Issue bonds payable...Ch. 9 - Prob. 9.25BECh. 9 - Prob. 9.26BECh. 9 - Prob. 9.27BECh. 9 - Prob. 9.28BECh. 9 - LO 4 (Learning Objective 4: Account for deferred...Ch. 9 - Prob. 9.30BECh. 9 - Prob. 9.31BECh. 9 - Prob. 9.32BECh. 9 - A bond with a face amount of 12,000 has a current...Ch. 9 - The carrying value on bonds equals Bends Payable...Ch. 9 - Prob. 9.35QCh. 9 - Prob. 9.36QCh. 9 - Prob. 9.37QCh. 9 - Prob. 9.38QCh. 9 - Prob. 9.39QCh. 9 - Prob. 9.40QCh. 9 - Prob. 9.41QCh. 9 - Prob. 9.42QCh. 9 - Prob. 9.43QCh. 9 - Prob. 9.44QCh. 9 - Prob. 9.45QCh. 9 - Prob. 9.46QCh. 9 - Prob. 9.47QCh. 9 - Prob. 9.48QCh. 9 - Prob. 9.49QCh. 9 - Prob. 9.50APCh. 9 - (Learning Objectives 1, 6: Issue bonds at a...Ch. 9 - Prob. 9.52APCh. 9 - Prob. 9.53APCh. 9 - (Learning Objectives 2, 3, 6: Issue convertible...Ch. 9 - Prob. 9.55APCh. 9 - Prob. 9.56BPCh. 9 - Prob. 9.57BPCh. 9 - Prob. 9.58BPCh. 9 - Prob. 9.59BPCh. 9 - (Learning Objectives 2, 3, 6: Issue convertible...Ch. 9 - (Learning Objectives 4, 5, 6: Report liabilities...Ch. 9 - Prob. 9.62CEPCh. 9 - Prob. 9.63CEPCh. 9 - Prob. 9.64SCCh. 9 - (Learning Objective 5: Explore an actual...Ch. 9 - Prob. 1FF
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
- (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_forwardLearning 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.arrow_forwardLearning 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…arrow_forward
- (Learning Objective 1: Issue bonds payable (discount), pay and accrue interest,and amortize bond discount using the straight-line method) On January 31, 2018, DunkinLogistics, Inc., issued five-year, 3% bonds payable with a face value of $8,000,000. The bondswere issued at 93 and pay interest on January 31 and July 31. Dunkin Logistics amortizes bonddiscounts using the straight-line method. Record (a) the issuance of the bonds on January 31,2018, (b) the semiannual interest payment and amortization of the bond discount on July 31,2018, and (c) the interest accrual and discount amortization on December 31, 2018.E9-16A. (Learning Objective 1: Measure cash amounts for a bond payable (premium);amortize bond premium using the straight-line method) Perry Bank has $450,000 of 9%debenture bonds outstanding. The bonds were issued at 105 in 2018 and mature in 2038. Thebonds have annual interest payments.Requirements1. How much cash did Perry Bank receive when it issued these bonds?2. How much…arrow_forward(Learning Objective 1: Journalize basic bond payable transactions and bonds issuedat par) Yancy Corp. issued 6% seven-year bonds payable with a face amount of $110,000when the market interest rate was 6%. Yancy’s fiscal year-end is December 31. The bonds payinterest on January 1 and July 1. Journalize the following transactions for Yancy. Include anexplanation for each entry.a. Issuance of the bonds payable at par on July 1, 2018b. Accrual of interest expense on December 31, 2018c. Payment of cash interest on January 1, 2019d. Payment of the bonds payable at maturity (give the date)arrow_forward(Learning Objectives 2, 3, 6: Issue convertible bonds at a discount, amortize usingthe effective-interest method, and convert bonds; report bonds payable on the balancesheet) On December 31, 2018, Mainland Corporation issues 6%, 10-year convertible bondspayable with a face value of $4,000,000. The semiannual interest dates are June 30 andDecember 31. The market interest rate is 8%. Mainland amortizes bond discounts using theeffective-interest method.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…arrow_forward
- (Learning Objective 2: Issue bonds payable (premium); record interest paymentand the related bond amortization using the effective-interest method) On June 30, 2018,the market interest rate is 9%. Ramsey Corporation issues $550,000 of 12%, 20-year bondspayable. The bonds pay interest on June 30 and December 31. The company amortizes bondpremium using the effective-interest method.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 bonds payable on June 30, 2018; the payment of interest onDecember 31, 2018; and the payment of interest on June 30, 2019.arrow_forward(Learning Objective 2: Issue bonds payable (premium); record interest paymentand the related bond amortization using the effective-interest method) On June 30, 2018,the market interest rate is 9%. Randall Corporation issues $600,000 of 10%, 15-year bondspayable. The bonds pay interest on June 30 and December 31. The company amortizes bondpremium using the effective-interest method.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 bonds payable on June 30, 2018; the payment of interest onDecember 31, 2018; and the payment of interest on June 30, 2019.arrow_forward(Learning Objective 2: Issue bonds payable at a premium and amortize bonds using theeffective-interest method) Leon Corporation issued $400,000 of 10%, 10-year bonds payableon January 1, 2019. The market interest rate at the date of issuance was 8%, and the bonds payinterest semiannually (on June 30 and December 31). Leon Corporation’s year-end is June 30.1. Using the PV function in Excel, calculate the issue price of the bonds.2. Prepare an effective-interest amortization table for the bonds through the first three interestpayments. Round amounts to the nearest dollar.3. Record Leon Corporation’s issuance of the bonds on January 1, 2019, and payment of thefirst semiannual interest amount and amortization of the bond premium on June 30, 2019.Explanations are not required.arrow_forward
- (Learning Objectives 1, 3: Account for bonds payable retired prior to maturity)On January 1, 2017, Kittle Corporation issued five-year, 4% bonds payable with a face valueof $2,500,000. The bonds were issued at 95 and pay interest on January 1 and July 1. Kittleamortizes bond discounts using the straight-line method. On December 31, 2019, Kittle retiredthe bonds early by purchasing them at a market price of 97. The company’s fiscal year ends onDecember 31.Requirements1. Journalize the issuance of the bonds on January 1, 2017.2. Record the semiannual interest payment and amortization of bond discount on July 1,2017.3. Record the interest accrual and discount amortization on December 31, 2017.4. Calculate the carrying value of the bonds payable on December 31, 2019, prior to theirretirement.5. Calculate the gain or loss on the retirement of the bonds payable on December 31, 2019.Indicate where this gain or loss will appear in the financial statements.arrow_forward2. Proctec Trust Inc. issued S100,000, 5 year bond on January 1, 2018 paying 4% intereston a semi-annual basis every January 1 and July 1. Instructions Using a financial calculator, or tables on pg. 550 – 551(students can also use pre-built excel formulas if they are expert users of excel program) prepare the first year journal entries for the bond issue and interest expense assuming that the company uses the effective interest method, a market interest rate of 6% and has a year-end of December 31, 2018arrow_forwardThe 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 × 6% × ½ year), receiving cash of $700,000. Question Content Area a. Journalize the entry to record the issuance of the bonds. If an amount box does not require an entry, leave it blank. Cash Cash Bonds Payable Bonds Payable Feedback Area Feedback Bonds Payable is always recorded at face value. Any difference in issue price is reflected in a premium or discount account. Question Content Area b. Journalize the entry to record the first interest payment. If an amount box does not require an entry, leave it blank. Interest Expense Interest Expense Cash Cash Feedback Area Feedback The interest payment is calculated using the following formula: Principle x Interest Rate x Time. Question Content Area c. Journalize the entry to record the payment of…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College