1. Flint Corporation issued a 4-year, $48,000, zero-interest-bearing note to Garcia Company on January 1, 2017,...

1. Flint Corporation issued a 4-year, $48,000, zero-interest-bearing note to Garcia Company on January 1, 2017, and received cash of $48,000. In addition, Flint agreed to sell merchandise to Garcia at an amount less than regular selling price over the 4-year period. The market rate of interest for similar notes is 12%.

Prepare Flint Corporation’s January 1 journal entry.

2. At December 31, 2017, Wildhorse Corporation has the following account balances:

Bonds payable, due January 1, 2026		$2,400,000
Discount on bonds payable		100,000
Interest payable		94,000

Show how the above accounts should be presented on the December 31, 2017, balance sheet, including the proper classifications.

3. The Vaughn Company issued $340,000 of 10% 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.

4. The Cullumber Company issued $220,000 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 were issued at 99.

Prepare the journal entries for (a) January 1, (b) July 1, and (c) December 31. Assume The Cullumber Company records straight-line amortization semiannually.

Solutions

Expert Solution

ekkarill92 answered 1 year ago

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