Question

In: Accounting

On March 1, 2017, Jagger Metal Corp. issued 8% bonds dated January 1, 2017. The bonds...

  1. On March 1, 2017, Jagger Metal Corp. issued 8% bonds dated January 1, 2017. The bonds have a $900,000 par value, mature in 20 years, and pay interest semiannually on June 30 and December 31. The bonds were sold to investors at their par value plus the two months’ interest that had accrued since the original issue date.

    a. How much accrued interest was paid to Jagger by the purchasers of these bonds on March 1, 2017?

Accrued Interest

b. Prepare the journal entries that Jagger would make to record: (1) the issuance of the bonds on March 1, 2017; (2) the first interest payment on June 30, 2017; and (3) the second interest payment on December 31, 2017.

No

Date

General Journal

Debit

Credit

1

March 01, 2017

2

June 30, 2017

3

December 31, 2017

Solutions

Expert Solution

a
Accrued Interest 12000 =900000*8%*2/12
b
Date General Journal Debit Credit
1 March 01, 2017 Cash 912000
    Bonds payable 900000
    Interest payable 12000
2 June 30, 2017 Interest expense 24000 =900000*8%*4/12
Interest payable 12000
     Cash 36000
3 December 31, 2017 Interest expense 36000 =900000*8%*6/12
     Cash 36000

ekkarill92 answered 1 year ago
Next > < Previous

Related Solutions

On January 1, 2017, Albany Company issued 8% bonds dated January 1, 2017, with a face...
On January 1, 2017, Albany Company issued 8% bonds dated January 1, 2017, with a face amount of $10 million. The bonds mature January 1, 2027 (10 years). For bonds of similar risk and maturity, the market yield is 10%. Interest is paid semiannually on June 30 and December 31.                     Required: Determine the price of the bonds at January 1, 2017. You must show all of the steps to receive full credit. Prepare the journal entry to record...
On January 1, 2017, Bishop Company issued 12% bonds dated January 1, 2017, with a face...
On January 1, 2017, Bishop Company issued 12% bonds dated January 1, 2017, with a face amount of $20 million. The bonds mature in 10 years. For bonds of similar risk and maturity, the market yield is 10%. Interest is paid semiannually on June 30 and December 31. 1. Determine the price of the bonds at January 1, 2017 2. Prepare the journal entry to record the bond issuance by Bishop on January 1, 2017. 3. Prepare the journal entry...
On January 1, 2018, Entity A issued 8% bonds dated January 1, 2018, with a face...
On January 1, 2018, Entity A issued 8% bonds dated January 1, 2018, with a face amount of $10 million. The bonds mature in 2022 (5 years). For bonds of similar risk and maturity, the market yield is 10%. Interest is paid semiannually on June 30 and December 31. A. What was the issue price of the bonds? B. Prepare the journal entry to record the bond issuance. C. Prepare the journal entry to record interest on June 30, 2018,...
On January 1, 2018, Entity A issued 8% bonds dated January 1, 2018, with a face...
On January 1, 2018, Entity A issued 8% bonds dated January 1, 2018, with a face amount of $10 million. The bonds mature in 2022 (5 years). For bonds of similar risk and maturity, the market yield is 10%. Interest is paid semiannually on June 30 and December 31. A. Prepare a partial balance sheet showing the bonds at December 31, assuming that Entity A had used the effective interest method from the inception. B. Why might a company utilize...
38) Trent Corp. issued $800,000 of 8%, 5-year bonds at 102 on January 1, 2017. The...
38) Trent Corp. issued $800,000 of 8%, 5-year bonds at 102 on January 1, 2017. The straight-line method of amortization is used and the bonds pay interest annually on January 1. The amount of bond interest expense that Trent should report on its December 31, 2017, income statement is Select one: a. $60,800. b. $67,200. c. $65,280. d. $64,000.
Bramble Corp. issues 4200, 10-year, 8%, $1000 bonds dated January 1, 2017, at 97. The journal...
Bramble Corp. issues 4200, 10-year, 8%, $1000 bonds dated January 1, 2017, at 97. The journal entry to record the issuance will show a A) credit to Cash for $4074000. B) debit to Cash of $4200000. C) credit to Bonds Payable for $4074000. D)debit to Discount on Bonds Payable for $126000.
On January 1, 2018, Bishop Company issued 8% bonds dated January 1, 2018, with a face...
On January 1, 2018, Bishop Company issued 8% bonds dated January 1, 2018, with a face amount of $20.2 million. The bonds mature in 2027 (10 years). For bonds of similar risk and maturity, the market yield is 10%. Interest is paid semiannually on June 30 and December 31. (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. Round your intermediate calculations to...
On March 1, 2021, Baddour, Inc., issued 12% bonds, dated January 1, with a face amount...
On March 1, 2021, Baddour, Inc., issued 12% bonds, dated January 1, with a face amount of $175 million. The bonds were priced at $153.6 million (plus accrued interest) to yield 14%. Interest is paid semiannually on June 30 and December 31. Baddour’s fiscal year ends September 30. Required: 1. to 3. What would be the amount(s) related to the bonds Baddour would report in its balance sheet, income statement and statement of cash flows for the year ended September...
  On March 1, 2018, Greenway Corporation issued 5% bonds dated January 1, 2018 with a par...
  On March 1, 2018, Greenway Corporation issued 5% bonds dated January 1, 2018 with a par value of $1,000,000. The bonds were sold for the present value of the bonds on March 1, 2018 plus two-month accrued interest. The bonds mature on December 31, 2023. Interest is paid semiannually on Jun 30 and December 31. Greenway's fiscal year ends on December 31 each year. The effective interest rate is 7%. ​​ ​Required: a. Determine the present value the bonds on...
The Vaughn Company issued $320,000 of 8% bonds on January 1, 2017. The bonds are due...
The Vaughn Company issued $320,000 of 8% bonds on January 1, 2017. The bonds are due January 1, 2022, with interest payable each July 1 and January 1. The bonds are issued at face value. Prepare Vaughn’s journal entries for (a) the January issuance, (b) the July 1 interest payment, and (c) the December 31 adjusting entry. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT