Question
In: Accounting
On September 30, Jose’s Jalapenos Inc., issued $1,000,000 of 10-year 9% bonds sated September 30, for...
On September 30, Jose’s Jalapenos Inc., issued $1,000,000 of 10-year 9% bonds sated September 30, for $1,067,950 an effective (market) rate of 8%. Interest is payable semi-annually on October 1 and April 1. The bonds were purchased by Juan’s Junk and Basura Inc. Present the entries to record the following transactions for the current year on BOTH sets of books: (Issuing Corporation and Investor)
-
Issuance of bonds
-
Accrual of interest and amortization for the period ended December 31. Use the effective interest method for the amortization not the straight-line method.
-
Redemption of the bonds on January 1 at 102.
THIS IS THE WORK I HAVE SO FAR. MY PROFESSOR SAYS I NEED TO ADD THE INVESTORS BOOKS. PLEASE HELP!
|
(A) |
Date |
General Journal |
Debit |
Credit |
||
|
Sep 30 |
Cash |
1,067,950 |
||||
|
Bonds payable |
1,000,000 |
|||||
|
Premium on bonds payable |
67,950 |
|||||
|
(B) |
Payment Date |
Cash Payment |
Interest Exp. |
Amortization of bond premium |
Carrying Value |
|
|
Sep 30, year |
1,067,950 |
|||||
|
April 1, year 1 |
45,000 |
42,718 |
2,282 |
1,065,668 |
||
|
Oct 1, year 1 |
45,000 |
42,627 |
2,373 |
1,063,295 |
||
|
Dec 31 |
Interest Expense |
21,359 |
(1,067,950 x 8% x 1/2 x 3/6) |
|||
|
Premium on bonds payable |
1,141 |
|||||
|
Interest Payable |
22,500 |
(1,000,000 x 9% x 1/2 x 3/6) |
||||
|
(C) |
Payment date |
Cash Payment |
Interest Exp. |
Amortization on of bond premium |
Carrying value |
|
|
Jan 1 |
Bonds Payable |
1,000,000 |
||||
|
Premium on bonds payable |
66,809 |
(67,950 - 1,141) |
||||
|
Cash |
1,020,000 |
(1,000,000 x 102/100) |
||||
|
Gain on redemption |
46,809 |
Solutions
Expert Solution
| Period | Interest payment | Interest Revenue @ 4% | Decrease in investment | Carrying value of bond investment |
| 0 | 1,067,950 | |||
| 1 | 45,000 | 42,718 | 2,282 | 1,065,668 |
| 2 | 45,000 | 42,627 | 2,373 | 1,063,295 |
| Interest payment = 1000000*9%*6/12 | 45,000 |
| Interest Revenue = previous period's Carrying value of bond investment * 4% | |
| Decrease in investment = Interest payment - Interest Revenue |
| Investor's Book | |||
| Date | General Journal | Debit | Credit |
| Sep 30, Year 1 | Bond Investment | 1,000,000 | |
| Premium - Investment in bond | 67,950 | ||
| Cash | 1,067,950 | ||
| (To record cash invested in long term bond.) | |||
| Dec 31, Year 1 | Interest receivable (1000000*9%*3/12) | 22,500 | |
| Interest revenue (42718*3/6) | 21,359 | ||
| Premium - Investment in bond (2282*3/6) | 1,141 | ||
| (To record accrrued interest revenue.) | |||
| Jan 1, Year 1 | Cash | 22,500 | |
| Interest receivable | 22,500 | ||
| (To record interest received before redemption.) | |||
| Jan 1, Year 1 | Cash (1000000*102%) | 1,020,000 | |
| Loss on disposal of investment | 46,809 | ||
| Bond Investment | 1,000,000 | ||
| Premium - Investment in bond (67950-1141) | 66,809 | ||
| (To record bond investment at early redemtion.) |
ekkarill92 answered 1 year agoRelated Solutions
On September 30, Jose’s Jalapenos Inc., issued $1,000,000 of 10-year 9% bonds sated September 30, for...
On September 30, Jose’s Jalapenos Inc., issued $1,000,000 of
10-year 9% bonds sated September 30, for $1,067,950 an effective
(market) rate of 8%. Interest is payable semi-annually on October 1
and April 1. The bonds were purchased by Juan’s Junk and Basura
Inc. Present the entries to record the following transactions for
the current year on BOTH sets of books: (Issuing Corporation and
Investor) a) Issuance of bonds b) Accrual of interest and
amortization for the period ended December 31....
On September 30, Jose’s Jalapenos Inc., issued $1,000,000 of 10-year 9% bonds sated September 30, for...
On September 30, Jose’s Jalapenos Inc., issued $1,000,000 of
10-year 9% bonds sated September 30, for $1,067,950 an effective
(market) rate of 8%. Interest is payable semi-annually on October 1
and April 1. The bonds were purchased by Juan’s Junk and Basura
Inc. Present the entries to record the following transactions for
the current year on BOTH sets of books: (Issuing Corporation and
Investor) a) Issuance of bonds b) Accrual of interest and
amortization for the period ended December 31....
Problem 1: On September 30, Jose’s Jalapenos Inc., issued $1,000,000 of 10-year 9% bonds sated September...
Problem 1:
On September 30, Jose’s Jalapenos Inc., issued $1,000,000 of
10-year 9% bonds sated September 30, for $1,067,950 an effective
(market) rate of 8%. Interest is payable semi-annually on October 1
and April 1. The bonds were purchased by Juan’s Junk and Basura
Inc. Present the entries to record the following transactions for
the current year on BOTH sets of books: (Issuing Corporation and
Investor)
a) Issuance of bonds
b) Accrual of interest and amortization for the period ended...
P 16-9 on september 30,2017, Gargiola inc. Issued 4millions of 10 year, 8% convertible bonds for...
P 16-9 on september 30,2017, Gargiola inc. Issued 4millions of
10 year, 8% convertible bonds for 4.6millions. The bonds pay
interest on march 31 and September 30 and mature on September 30,
2027. Each 1000$ bond can be converted into 80 no par value common
shares. In addition, each bond include 20 detachable warrants. Each
warrant can be used to purchase one common share at an exercise
price of 15$. Immediately after the bond issuance, the warrants
traded at 3$...
Please answer the following question Travel In Style Limited issued $1,000,000 of 9% bonds on September...
Please answer the following question
Travel In Style Limited issued $1,000,000 of 9% bonds on
September 1, 2017 for $1,058,671. The term of the bonds is
September 1, 2017 to September 1, 2025, with interest payable
quarterly each December 1, March 1, June 1, and September 1. The
company uses the effective interest method with an effective rate
of 8%.
1) Prepare the company’s journal entry for the September 1
issuance.
2) Prepare the company’s journal entry for the December...
on september 30,2017, Gargiola inc. Issued 4millions of 10 year, 8% convertible bonds for 4.6millions. The...
on september 30,2017, Gargiola inc. Issued 4millions of 10 year,
8% convertible bonds for 4.6millions. The bonds pay interest on
march 31 and September 30 and mature on September 30, 2027. Each
1000$ bond can be converted into 80 no par value common shares. In
addition, each bond include 20 detachable warrants. Each warrant
can be used to purchase one common share at an exercise price of
15$. Immediately after the bond issuance, the warrants traded at 3$
each. Without...
on september 30,2017, Gargiola inc. Issued 4millions of 10 year, 8% convertible bonds for 4.6millions. The...
on september 30,2017, Gargiola inc. Issued 4millions of 10 year,
8% convertible bonds for 4.6millions. The bonds pay interest on
march 31 and September 30 and mature on September 30, 2027. Each
1000$ bond can be converted into 80 no par value common shares. In
addition, each bond include 20 detachable warrants. Each warrant
can be used to purchase one common share at an exercise price of
15$. Immediately after the bond issuance, the warrants traded at 3$
each. Without...
On July 1, Year 1, Danzer Industries Inc. issued $1,300,000 of 9-year, 10% bonds at a...
On July 1, Year 1,
Danzer Industries Inc. issued $1,300,000 of 9-year, 10% bonds at a
market (effective) interest rate of 11%, receiving cash of
$1,226,906. Interest on the bonds is payable semiannually on
December 31 and June 30. The fiscal year of the company is the
calendar year.
Required:
1.
Journalize the entry to record the amount of cash proceeds from the
issuance of the bonds on July 1, Year 1. If an amount box does not
require an...
On July 1, Year 1, Danzer Industries Inc. issued $1,900,000 of 10-year, 9% bonds at a...
On July 1, Year 1, Danzer Industries Inc. issued $1,900,000 of
10-year, 9% bonds at a market (effective) interest rate of 10%,
receiving cash of $1,781,610. Interest on the bonds is payable
semiannually on December 31 and June 30. The fiscal year of the
company is the calendar year.
Required:
1. Journalize the entry to record the amount of
cash proceeds from the issuance of the bonds on July 1, Year 1. If
an amount box does not require an...
On July 1, Year 1, Danzer Industries Inc. issued $48,800,000 of 10-year, 9% bonds at a...
On July 1, Year 1, Danzer Industries Inc. issued $48,800,000 of
10-year, 9% bonds at a market (effective) interest rate of 11%,
receiving cash of $42,968,258. Interest on the bonds is payable
semiannually on December 31 and June 30. The fiscal year of the
company is the calendar year. Required: 1. Journalize the entry to
record the amount of cash proceeds from the issuance of the bonds
on July 1, Year 1.* 2. Journalize the entries to record the
following:*...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Journal article summary on inter-group conflict Peer Reviewed Journal article from past 3 years. Please include...
- "Ethical Considerations" Please respond to the following: Reflect upon the responsibilities placed on auditors by the...
- A Japanese company has a bond outstanding that sells for 93 percent of its ¥100,000 par...
- What is the difference among the principles of modularization, abstraction, encapsulation, and separation of interface and...
- An investment project costs $20,100 and has annual cash flows of $4,400 for six years. ...
- PUT IN JAVA PROGRAMMING The StockB class: Design a class named StockB that contains the following...
- Draw a DFA for the following ( ∑ = {0,1}): Set of all strings with.
ADVERTISEMENT