Adcock Company issued $96,000, 8%, 20-year bonds on January 1, 2015, at 102. Interest is payable...

Adcock Company issued $96,000, 8%, 20-year bonds on January 1, 2015, at 102. Interest is payable semiannually on July 1 and January 1. Adcock uses straight-line amortization for bond premium or discount.

1) Prepare the journal entry to record the issuance of the bonds

2) Prepare the journal entry to record the payment of interest and the premium amortization on July 1, 2015, assuming that interest was not accrued on June 30.

3) Prepare the journal entry to record the accrual of interest and the premium amortization on December 31, 2015.

4) Prepare the journal entry to record the redemption of the bonds at maturity, assuming interest for the last interest period has been paid and recorded.

Expert Solution

--Required journal entries

Date	Accounts title	Debit	Credit
01-Jan-15	Cash ($96000 x 102/100)	$97,920
	Premium on Bonds Payable		$1,920
	Bonds Payable		$96,000
	(to record issuance)

01-Jun-15	Interest Expense	$3,792
	Premium on Bonds Payable ($1920 / 40 payments)	$48
	Cash ($96000 x 8% x 6/12)		$3,840
	(to record interest and amortisation)

31-Dec-15	Interest Expense	$3,792
	Premium on Bonds Payable ($1920 / 40 payments)	$48
	Interest payable ($96000 x 8% x 6/12)		$3,840
	(to record interest accrual and amortisation)

01-Jan-35	Bonds Payable	$96,000
	Cash		$96,000
	(to record redemption)

ekkarill92 answered 2 years ago

On January 1, 2014, Housen Company issued 10-year bonds of $500,000 at 102. Interest is payable...

On January 1, 2014, Housen Company issued 10-year bonds of $500,000 at 102. Interest is payable on January 1 and July 1 at 10%. April 1, 2015, Housen Company reacquires and retired 50 of its own $1000 bonds at 98 plus accrued interest. The fiscal period for Honsen Company is the calendar year. Prepare entries to record (1) the issuance of the bonds, (2) the interest payments and adjustments relating to the debt in 2014, (3) the reacquistion and retirement...

Sandhill Company issued $444,000 of 10%, 20-year bonds on January 1, 2017, at 102. Interest is...

Sandhill Company issued $444,000 of 10%, 20-year bonds on January 1, 2017, at 102. Interest is payable semiannually on July 1 and January 1. Sandhill Company uses the effective-interest method of amortization for bond premium or discount. Assume an effective yield of 9.7705%. Prepare the journal entries to record the following. (a)The issuance of the bonds. (b)The payment of interest and related amortization on July 1, 2017. (c)The accrual of interest and the related amortization on December 31, 2017.

Bramble Company issued $432,000 of 10%, 20-year bonds on January 1, 2020, at 102. Interest is...

Bramble Company issued $432,000 of 10%, 20-year bonds on January 1, 2020, at 102. Interest is payable semiannually on July 1 and January 1. Bramble Company uses the effective-interest method of amortization for bond premium or discount. Assume an effective yield of 9.7705%. Prepare the journal entries to record the following. (Round intermediate calculations to 6 decimal places, e.g. 1.251247 and final answer to 0 decimal places, e.g. 38,548. If no entry is required, select "No Entry" for the account...

1) K Company issued $672,000 of 11%, 20-year bonds on January 1, 2017, at 102. Interest is...

1) K Company issued $672,000 of 11%, 20-year bonds on January 1, 2017, at 102. Interest is payable semiannually on July 1 and January 1. K Company uses the straight-line method of amortization for bond premium or discount. Prepare journal entries for the following: a) The issuance of the bonds. b) The payment of interest and the related amortization on July 1,2017. c) The accrual of interest and the related amortization on December 31, 2017. 2) Coronado Co. sold $1,930,000 of...

On January 1, 20x1, Smith Company issued $15,000,000 of 20-year, 5% bonds, with interest payable annually...

On January 1, 20x1, Smith Company issued $15,000,000 of 20-year, 5% bonds, with interest payable annually on December 31 of each year. The bonds were sold at an effective rate of 7% for $11,821,800. 22. What is the maturity value of the bond issue? 23. What is the coupon rate? 24. What is the yield? 25. This is a multi-part problem because the answers are dependent upon one another such that missing one part would likely result in missing...

McGee Company issued $400,000 of 8%, 10-year bonds on January 1, 2017. Interest is payable semiannually...

McGee Company issued $400,000 of 8%, 10-year bonds on January 1, 2017. Interest is payable semiannually on July 1 and January 1. Mcgee Company uses the effective interest method of amortization for bond premium or discount. Assume an effective yield of 6% in Pricing the bond. Prepare the journal entries to record the following (round to the nearest dollar.) The issuance of the bonds. The payment of interest and related amortization July 1. The accrual of interest and the related...

PROBLEM 5: ON JANUARY 1, 2016 SMITH COMPANY ISSUED 8%, 20-YEAR BONDS PAYABLE WITH FACE VALUE...

PROBLEM 5: ON JANUARY 1, 2016 SMITH COMPANY ISSUED 8%, 20-YEAR BONDS PAYABLE WITH FACE VALUE OF $300,000. THE BONDS PAY INTEREST ON JUNE 30 AND DECEMBER 31. THE ISSUE PRICE OF THE BONDS IS 98. INSTRUCTIONS: JOURNALIZE THE FOLLOWING BOND TRANSACTIONS: A) ISSUANCE OF THE BONDS ON JANUARY 1, 2016 B) PAYMENT OF INTEREST AND AMORTIZATION ON JUNE 30, 2016

Accounting for Bonds Payable On January 1, 2015, Crabb & Co. issued 10-year bonds with a...

Accounting for Bonds Payable On January 1, 2015, Crabb & Co. issued 10-year bonds with a total face value of $500,000. The bond requires annual interest payments on December 31 at a stated rate of 6%. Bonds with similar features are discounted in the market at 8% .1. DATE ACCOUNT NAME DEBIT CREDIT BALANCE SHEET INCOME STMT A = L + E R - E 01/01/15 DATE ACCOUNT NAME DEBIT CREDIT BALANCE SHEET INCOME STMT A = L + E...

On January 1, 2017, Park Rapids Lumber Company issued $80 million in 20-year, 10% bonds payable. Interest...

On January 1, 2017, Park Rapids Lumber Company issued $80 million in 20-year, 10% bonds payable. Interest is payable semiannually on June 30th and December 31st. Bond discounts and premiums are amortized straight-line at each interest payment date. a. Record the journal entry when the bonds were issued on January 1, 2017, make the necessary the journal entry to record the payment of bond interest on June 30, 2017, under each of the following assumptions: 1. The bonds were issued at 98....

On January 1 of this year, Olive Corporation issued bonds. Interest is payable once a year...

On January 1 of this year, Olive Corporation issued bonds. Interest is payable once a year on December 31. The bonds mature at the end of four years. Olive uses the effective-interest amortization method. The partially completed amortization schedule below pertains to the bonds: Date Cash Interest Amortization Balance January 1, Year 1 $ 46,831 End of Year 1 $2,162 $ 1,967 $ 195 46,636 End of Year 2 ? ? ? 46,433 End of Year 3 ? ? 212...

Question