In: Accounting
The following transactions were completed by Winklevoss Inc., whose fiscal year is the calendar year:
20Y1 | ||
July | 1 | Issued $74,000,000 of 20-year, 11% callable bonds dated July 1, 20Y1, at a market (effective) rate of 13%, receiving cash of $63,532,267. Interest is payable semiannually on December 31 and June 30. |
Dec. | 31 | Paid the semiannual interest on the bonds. The bond discount amortization of $261,693 is combined with the semiannual interest payment. |
20Y2 | ||
June | 30 | Paid the semiannual interest on the bonds. The bond discount amortization of $261,693 is combined with the semiannual interest payment. |
Dec. | 31 | Paid the semiannual interest on the bonds. The bond discount amortization of $261,693 is combined with the semiannual interest payment. |
20Y3 | ||
June | 30 | Recorded the redemption of the bonds, which were called at 98. The balance in the bond discount account is $9,420,961 after payment of interest and amortization of discount have been recorded. (Record the redemption only.) |
Required:
1. | Journalize the entries to record the transactions. Round all amounts to the nearest dollar. Refer to the Chart of Accounts for exact wording of account titles. |
2. | Indicate the amount of the interest expense in (a) 20Y1 and (b) 20Y2. |
3. | Determine the carrying amount of the bonds as of December 31, 20Y2. |
CHART OF ACCOUNTSWinklevoss Inc.General Ledger
ASSETS | |
110 | Cash |
111 | Petty Cash |
121 | Accounts Receivable |
122 | Allowance for Doubtful Accounts |
126 | Interest Receivable |
127 | Notes Receivable |
131 | Merchandise Inventory |
141 | Office Supplies |
142 | Store Supplies |
151 | Prepaid Insurance |
191 | Land |
192 | Store Equipment |
193 | Accumulated Depreciation-Store Equipment |
194 | Office Equipment |
195 | Accumulated Depreciation-Office Equipment |
LIABILITIES | |
210 | Accounts Payable |
221 | Salaries Payable |
231 | Sales Tax Payable |
232 | Interest Payable |
241 | Notes Payable |
251 | Bonds Payable |
252 | Discount on Bonds Payable |
253 | Premium on Bonds Payable |
EQUITY | |
311 | Common Stock |
312 | Paid-In Capital in Excess of Par-Common Stock |
315 | Treasury Stock |
321 | Preferred Stock |
322 | Paid-In Capital in Excess of Par-Preferred Stock |
331 | Paid-In Capital from Sale of Treasury Stock |
340 | Retained Earnings |
351 | Cash Dividends |
352 | Stock Dividends |
REVENUE | |
410 | Sales |
610 | Interest Revenue |
611 | Gain on Redemption of Bonds |
EXPENSES | |
510 | Cost of Merchandise Sold |
515 | Credit Card Expense |
516 | Cash Short and Over |
521 | Sales Salaries Expense |
522 | Office Salaries Expense |
531 | Advertising Expense |
532 | Delivery Expense |
533 | Repairs Expense |
534 | Selling Expenses |
535 | Rent Expense |
536 | Insurance Expense |
537 | Office Supplies Expense |
538 | Store Supplies Expense |
541 | Bad Debt Expense |
561 | Depreciation Expense-Store Equipment |
562 | Depreciation Expense-Office Equipment |
590 | Miscellaneous Expense |
710 | Interest Expense |
711 | Loss on Redemption of Bonds |
1a. Journalize the entries to record the 20Y1 transactions. Round all amounts to the nearest dollar. Refer to the Chart of Accounts for exact wording of account titles.
How does grading work?
PAGE 10
JOURNAL
ACCOUNTING EQUATION
Score: 67/75
DATE | DESCRIPTION | POST. REF. | DEBIT | CREDIT | ASSETS | LIABILITIES | EQUITY | |
---|---|---|---|---|---|---|---|---|
1 |
✔ |
✔ |
✔ |
|||||
2 |
✔ |
✔ |
||||||
3 |
✔ |
✔ |
||||||
4 |
✔ |
✔ |
||||||
5 |
✔ |
✔ |
||||||
6 |
✔ |
Points:
12.51 / 14
1b. Journalize the entries to record the 20Y2 transactions. Refer to the Chart of Accounts for exact wording of account titles. Round all amounts to the nearest dollar.
How does grading work?
PAGE 11
JOURNAL
ACCOUNTING EQUATION
Score: 61/75
DATE | DESCRIPTION | POST. REF. | DEBIT | CREDIT | ASSETS | LIABILITIES | EQUITY | |
---|---|---|---|---|---|---|---|---|
1 |
||||||||
2 |
✔ |
✔ |
||||||
3 |
✔ |
|||||||
4 |
✔ |
✔ |
✔ |
|||||
5 |
✔ |
✔ |
||||||
6 |
✔ |
✔ |
Points:
11.39 / 14
1c. Journalize the entries to record the 20Y3 transactions. Refer to the Chart of Accounts for exact wording of account titles. Round all amounts to the nearest dollar.
How does grading work?
PAGE 12
JOURNAL
ACCOUNTING EQUATION
Score: 20/49
DATE | DESCRIPTION | POST. REF. | DEBIT | CREDIT | ASSETS | LIABILITIES | EQUITY | |
---|---|---|---|---|---|---|---|---|
1 |
||||||||
2 |
||||||||
3 |
||||||||
4 |
✔ |
2. Indicate the amount of the interest expense in (a) 20Y1 and (b) 20Y2. Enter amounts as positive number.
20Y1: | |
20Y2: |
Points:
0 / 2
3. Determine the carrying amount of the bonds as of December 31, 20Y2.
Points:
0 / 1
Feedback