Question
In: Accounting
On December 31, 2020, Gibbs Co. acquired bonds issued by Walden Co. for $112,290. They have...
On December 31, 2020, Gibbs Co. acquired bonds issued by Walden Co. for $112,290. They have a face amount of $100,000, pay 12% interest, and were purchased to yield 10%. The maturity date is December 31, 2030, and interest is due every December 31. The fair value of the bonds on December 31, 2021, is $108,500. Required: (1) Complete the amortization schedule through the first interest payment on December 31, 2021. (2) Prepare the journal entry(ies) that Gibbs would make on December 31, 2021, assuming the company will sell the bonds if it needs cash at any time before December 31, 2030.
Solutions
ekkarill92 answered 1 year agoRelated Solutions
Convertible Bonds. Garr Co. issued $6,000,000 of 12%, 5-year convertible bonds on December 1, 2020 for...
Convertible Bonds. Garr Co. issued $6,000,000 of 12%, 5-year
convertible bonds on December 1, 2020 for $6,025,480 plus accrued
interest. The bonds were dated April 1, 2020 with interest payable
April 1 and October 1. Bond premium is amortized each interest
period on a straight-line basis. Garr Co. has a fiscal year end of
September 30.
On October 1, 2021, $3,000,000 of these bonds were converted
into 42,000 shares of $15 par common stock. Accrued interest was
paid in cash...
5a) If MSG Corporation issued $102,000 of 3-year, 7% bonds outstanding on December 31, 2020 for...
5a) If MSG Corporation issued $102,000 of 3-year, 7% bonds
outstanding on December 31, 2020 for $106,000. The bonds pay
interest annually and MSG uses straight-line amortization. On May
1, 2021, $10,200 of the bonds were retired at 120. As a result of
the retirement, MSG will report: (Do not round intermediate
calculations and round final answer to nearest whole
dollar.)
Multiple Choice
a $1,640 loss.
a $1,684 loss.
a $3,280 loss.
a $3,280 gain.
5b) But then on January...
Oriole Corporation has municipal bonds classified as a held-to-maturity at December 31, 2020. These bonds have...
Oriole Corporation has municipal bonds classified as a
held-to-maturity at December 31, 2020. These bonds have a par value
of $766,000, an amortized cost of $766,000, and a fair value of
$688,000. The company believes that impairment accounting is now
appropriate for these bonds.
Prepare the journal entry to recognize the impairment
What is the new cost basis of the municipal bonds?
Given that the maturity value of the bonds is $766,000, should
Oriole Corporation amortize the difference between the...
1. Garr Co. issued $6,000,000 of 12%, 5-year convertible bonds on December 1, 2020 for $6,025,480...
1. Garr Co. issued $6,000,000 of 12%, 5-year
convertible bonds on December 1, 2020 for $6,025,480 plus accrued
interest. The bonds were dated April 1, 2020 with interest
payable
April 1 and October 1. Bond premium is amortized each interest
period on a straight-line basis. Garr Co. has a fiscal year end of
September 30.
On October 1, 2021, $3,000,000 of these bonds were converted
into 42,000 shares of $15 par common stock. Accrued interest was
paid in cash at...
On January 1, 2016, Gates Corporation issued $100,000 of 5-year bonds due December 31, 2020, for...
On January 1, 2016, Gates Corporation issued $100,000 of 5-year
bonds due December 31, 2020, for $103,604.79 minus debt issuance
costs of $3,000. The bonds carry a stated rate of interest of 13%
payable annually on December 31 and were issued to yield 12%. The
company uses the effective interest method of amortization to
amortize any discounts or premiums and the straight-line method to
amortize the debt issuance costs.
Required:
Prepare the journal entries to
record the issuance of the...
On January 1, 2016, Gates Corporation issued $100,000 of 5-year bonds due December 31, 2020, for...
On January 1, 2016, Gates Corporation issued $100,000 of 5-year
bonds due December 31, 2020, for $103,604.79 minus debt issuance
costs of $3,000. The bonds carry a stated rate of interest of 13%
payable annually on December 31 and were issued to yield 12%. The
company uses the effective interest method of amortization to
amortize any discounts or premiums and the straight-line method to
amortize the debt issuance costs.
Required: Prepare the journal entries to record the issuance of
the...
As of December 31, 2020, Gill Co. reported accounts receivable of $226,000 and an allowance for...
As of December 31, 2020, Gill Co. reported accounts receivable of
$226,000 and an allowance for uncollectible accounts of $8,600.
During 2021, accounts receivable increased by $22,500, (that change
includes $7,700 of bad debts that were written off). An analysis of
Gill Co.'s December 31, 2021, accounts receivable suggests that the
allowance for uncollectible accounts should be 1% of accounts
receivable. Bad debt expense for 2021 would be:
Multiple
Choice
·
$1,585.
·
$7,700.
·
$2,485.
·
None of these...
On December 31, 2020, Ed Abbey Co. performed environmental consulting services for Hayduke Co. Hayduke was...
On December 31, 2020, Ed Abbey Co. performed environmental
consulting services for Hayduke Co. Hayduke was short of cash, and
Abbey Co. agreed to accept a $200,000 zero-interest-bearing note
due December 31, 2022, as payment in full. Hayduke is somewhat of a
credit risk and typically borrows funds at a rate of 10%. Abbey is
much more creditworthy and has various lines of credit at 6%.
Instructions a. Prepare the journal entry to record the transaction
of December 31, 2020,...
On December 31, 2020, Ed Abbey Co. performed environmental consulting services for Hayduke Co. Hayduke was...
On December 31, 2020, Ed Abbey Co. performed environmental
consulting services for Hayduke Co. Hayduke was short of cash, and
Abbey Co. agreed to accept a $200,000 zero-interest-bearing note
due December 31, 2022, as payment in full. Hayduke is somewhat of a
credit risk and typically borrows funds at a rate of 10%. Abbey is
much more creditworthy and has various lines of credit at 6%.
a. Prepare the journal entry to record the transaction of
December 31, 2020, for...
On December 31, 2020, Nash Company acquired a computer from Plato Corporation by issuing a $609,000...
On December 31, 2020, Nash Company acquired a computer from
Plato Corporation by issuing a $609,000 zero-interest-bearing note,
payable in full on December 31, 2024. Nash Company’s credit rating
permits it to borrow funds from its several lines of credit at 12%.
The computer is expected to have a 5-year life and a $63,000
salvage value.
Prepare the journal entry for the purchase on December 31, 2020.
(Round present value factor calculations to 5 decimal
places, e.g. 1.25124 and the...
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