Question

In: Accounting

On January 1, 2019, Jackson Manufacturing issued $ 150,000 of 10%, 10-year bonds for $157,446. Interest...

On January 1, 2019, Jackson Manufacturing issued $ 150,000 of 10%, 10-year bonds for $157,446. Interest is payable semiannually on June 30 and December 31. Using the given information, answer the following. Show all work for credit. (Round all answers to two decimal places as appropriate.)

#1: Record the journal entry to account for the issuance of these bonds.

#2: Record the remaining journal entries in 2019 related to the bond issue. Assume that Jackson uses the straight-line method to account for amortization.

Expert Solution

1.

Journal

Date	Account title	Debit	Credit
January 1, 2019	Cash	$157,446
	Bonds payable		$150,000
	Premium on bonds payable		$7,446
	(To record issue of bonds at premium)

Par value of bonds = $150,000

Cash receipts from issue of bonds = $157,446

Premium on bonds payable = Cash receipts from issue of bonds - Par value of bonds

= $157,446 - $150,000

= $7,446

2.

Journal

June 30, 2019	Interest expense	$7,128
	Premium on bonds payable	372
	Cash		$7,500
	(To record semi annual interest expense)

Semi annual interest payment on June 30, 2019 = Par value of bonds x Interest rate x 6/12

= 150,000 x 10% x 6/12

= $7,500

Semi annual amortization of bond premium = 7,446/20

= $372

December 31, 2019	Interest expense	7,128
	Premium on bonds payable	372
	Cash		$7,500
	(To record semi annual interest expense)

Kindly comment if you need further assistance. Thanks

ekkarill92 answered 2 years ago

On January 1, 2018, Bradley recreational Products issued $150,000, 9%, 4 year bonds. Interest is paid...

On January 1, 2018, Bradley recreational Products issued $150,000, 9%, 4 year bonds. Interest is paid semi-annually on June 30 and December 31. The bonds were issued at $136,028 to yield an annual return of 12%. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1, and PVAD of $1)( Use appropriate factor(s) from the tables provided.) Required: 1. Prepare an amortization schedule that determines interest at the effective interest rate. (Enter your answer in...

On January 1, 2021, Bradley Recreational Products issued $150,000, 9%, four-year bonds. Interest is paid semiannually...

On January 1, 2021, Bradley Recreational Products issued $150,000, 9%, four-year bonds. Interest is paid semiannually on June 30 and December 31. The bonds were issued at $136,028 to yield an annual return of 12%. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. Prepare an amortization schedule that determines interest at the effective interest rate. 2. Prepare an amortization schedule...

On January 1, 2018, Bradley Recreational Products issued $150,000, 12%, four-year bonds. Interest is paid semiannually...

On January 1, 2018, Bradley Recreational Products issued $150,000, 12%, four-year bonds. Interest is paid semiannually on June 30 and December 31. The bonds were issued at $141,044 to yield an annual return of 14%. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. Prepare an amortization schedule that determines interest at the effective interest rate. 2. Prepare an amortization schedule...

On January 1, 2019, Garner issued 10-year, $200,000

On January 1, 2019, Garner issued 10-year, $200,000 face value, 6% bonds at par. Each $1,000 bond is convertible into 30 shares of Garner $2 par value common stock. The company has had 10,000 shares of common stock (and no preferred stock) outstanding throughout its life. None of the bonds have been converted as of the end of 2020. (Ignore all tax effects.) Requirement 1: Accounting Prepare the journal entry Garner would have made on January 1, 2019,...

3. On January 1, issued 10-year, 10%, $100,000 bonds at 97. Annual interest payments are due...

3. On January 1, issued 10-year, 10%, $100,000 bonds at 97. Annual interest payments are due December 31 of each year. 4. On December 31, sells merchandise ($100,000 cost) to customers for $200,000 cash in a state where the state sales tax rate is 5%. 5. On December 31, make first $8,042 payment made on $20,000 note issued to First National Bank in Event 2. Hint: remember to allocate the $8,042 payment between principal reduction and 10% interest payment. (amortization...

On January 1, Year 2017, Kennard Co. issued $2,000,000, 5%, 10-year bonds, with interest payable on...

On January 1, Year 2017, Kennard Co. issued $2,000,000, 5%, 10-year bonds, with interest payable on June 30 and December 31 when the market rate of interest for similar bonds was 6%. Use the following format and round figures to nearest dollar. 1. Actual proceeds received from the issuance of the bonds 2. Prepare an amortization schedule for Year 1 and Year 2 using the effective interest rate method. Date Cash Paid Interest Expense Amortization Bond Carry...

On January 1, 2018, Noriyal Manufacturing Corporation issued$5,000,000, 10%, 6-year bonds dated January 1, 2018,...

On January 1, 2018, Noriyal Manufacturing Corporation issued $5,000,000, 10%, 6-year bonds dated January 1, 2018, at 105. The bonds pay semi-annual interest on January 1 and July 1. The company uses the straight-line method ofamortization and has a December 31, year end. Instructions: Prepare the journal entries to record the following: 1. The issuance of bonds on January 1, 2018. 2. The payment of interest and the discount (or premium) amortization on July 1, 2018. 3. The accrual of...

Sandhill Company issued $444,000 of 10%, 20-year bonds on January 1, 2017, at 102. Interest is...

Sandhill Company issued $444,000 of 10%, 20-year bonds on January 1, 2017, at 102. Interest is payable semiannually on July 1 and January 1. Sandhill Company uses the effective-interest method of amortization for bond premium or discount. Assume an effective yield of 9.7705%. Prepare the journal entries to record the following. (a)The issuance of the bonds. (b)The payment of interest and related amortization on July 1, 2017. (c)The accrual of interest and the related amortization on December 31, 2017.

Bramble Company issued $432,000 of 10%, 20-year bonds on January 1, 2020, at 102. Interest is...

Bramble Company issued $432,000 of 10%, 20-year bonds on January 1, 2020, at 102. Interest is payable semiannually on July 1 and January 1. Bramble Company uses the effective-interest method of amortization for bond premium or discount. Assume an effective yield of 9.7705%. Prepare the journal entries to record the following. (Round intermediate calculations to 6 decimal places, e.g. 1.251247 and final answer to 0 decimal places, e.g. 38,548. If no entry is required, select "No Entry" for the account...

On January 1, 2014, Housen Company issued 10-year bonds of $500,000 at 102. Interest is payable...

On January 1, 2014, Housen Company issued 10-year bonds of $500,000 at 102. Interest is payable on January 1 and July 1 at 10%. April 1, 2015, Housen Company reacquires and retired 50 of its own $1000 bonds at 98 plus accrued interest. The fiscal period for Honsen Company is the calendar year. Prepare entries to record (1) the issuance of the bonds, (2) the interest payments and adjustments relating to the debt in 2014, (3) the reacquistion and retirement...