Question
In: Accounting
The following information is taken from Grouper Corp.’s balance sheet at December 31, 2016. Current liabilities...
The following information is taken from Grouper Corp.’s balance
sheet at December 31, 2016.
| Current liabilities | ||||
| Interest payable | $ 89,000 | |||
| Long-term liabilities | ||||
| Bonds payable (7%, due January 1, 2027) | $3,360,000 | |||
| Less: Discount on bonds payable | 33,600 | 3,326,400 |
Interest is payable annually on January 1. The bonds are callable
on any annual interest date. Grouper uses straight-line
amortization for any bond premium or discount. From December 31,
2016, the bonds will be outstanding for an additional 10 years (120
months).
| (a) | Journalize the payment of bond interest on January 1, 2017. | |
| (b) | Prepare the entry to amortize bond discount and to accrue the interest on December 31, 2017. | |
| (c) | Assume on January 1, 2018, after paying interest, that Grouper Corp. calls bonds having a face value of $560,000. The call price is 102. Record the redemption of the bonds. | |
| (d) |
Prepare the adjusting entry at December 31, 2018, to amortize bond discount and to accrue interest on the remaining bonds. |
Solutions
Expert Solution
(a) Journal entry for payment of interest
Interest Payable Dr 89000
To Cash 89000 (Cr)
Note- It is assumed that bond is issued during the year 2016.
Hence, whatever interest accrued as aon balance sheet date is paid
on 1st Jan, 2017.
(b) Journal entry as on Dec 31, 2017
Interest Expense (3360000*7%) Dr 235200
To Interest Payable 235200 (Cr)
(Being interest accrued for the year 2017)
Profit and Loss Dr 238560
To Discount on Bonds (33600*12/120) 3360 (Cr)
To Interest Expense 235200 (Cr)
(Being discount on bonds written off and interest expense
transferred to profit and loss)
(c) Redemption on bonds
7% Bond Dr
560000
Premium on redemption (560000*2/100) Dr 11200
To Bond holder 571200
Bond Holder Dr 571200
To Cash 571200
Profit and Loss Dr 11200
To Premium on redemption 11200
(d) Journal entry as on Dec 31, 2018
Interest Expense (3360000-560000)*7% Dr 196000
To Interest Payable 196000
Profit and Loss Dr 203840
To Interest Expense 196000
To Discount on bonds (refer Note below) 7840
Note-
Face Value of Bond redeemed- 560000
Discount on bond balance as on Dec 31, 2017- 33600-3360=
30240
% of Bond redeemed- 560000/3360000= 1/6th
Discount on bond to be written off immediately on redemption-
30240*1/6= 5040
Balance Discount to be left after redemption- 30240-5040=
25200
Discount written off on balance bond= 25200*12/108=
2800
Hence, Total Discount on bonds written off during the year 2018= 5040+2800= 7840
ekkarill92 answered 1 year agoRelated Solutions
The following is taken from Spacecraft Corp.’s balance sheet at December 31, 2016. Current liabilities Interest...
The following is taken from Spacecraft Corp.’s balance sheet at
December 31, 2016.
Current liabilities
Interest payable
$ 92,500
Long-term liabilities
Bonds payable (7%, due January 1,
2027)
$4,200,000
Less: Discount on bonds payable
42,000
4,158,000
Interest is payable annually on January 1. The bonds are callable
on any annual interest date. Spacecraft uses straight-line
amortization for any bond premium or discount. From December 31,
2016, the bonds will be outstanding for an additional 10 years (120
months).
So far,...
Riggs Corporation has the following balance sheet information at December 31, 2016. Current liabilities $ 800,000...
Riggs Corporation has the following balance sheet information at
December 31, 2016.
Current
liabilities
$
800,000
Convertible bonds ($1,000 par,
5%)
2,000,000
Common stock ($1 par, 300,000
shares issued
300,000
Additional paid-in capital
2,100,000
Retained earnings
3,230,000
Treasury stock (43,000
shares)
(1,161,000
)
Total liabilities and
shareholders’ equity
$
7,269,000
The convertible bonds were issued at par in 2014 and are
convertible into Riggs’s common stock at a ratio of 15 shares of
stock to 1 bond. In its December...
Riggs Corporation has the following balance sheet information at December 31, 2016. Current liabilities $ 800,000...
Riggs Corporation has the following balance sheet information at
December 31, 2016.
Current liabilities
$
800,000
Convertible bonds ($1,000 par, 5%)
2,000,000
Common stock ($1 par, 300,000 shares issued
300,000
Additional paid-in capital
2,100,000
Retained earnings
3,230,000
Treasury stock (43,000 shares)
(1,161,000
)
Total liabilities and shareholders’ equity
$
7,269,000
The convertible bonds were issued at par in 2014 and are
convertible into Riggs’s common stock at a ratio of 15 shares of
stock to 1 bond. In its December...
The current sections of Grouper Corp.’s balance sheets at December 31, 2021 and 2022, are presented...
The current sections of Grouper Corp.’s balance sheets at
December 31, 2021 and 2022, are presented here. Grouper Corp.’s net
income for 2022 was $260,100. Depreciation expense was
$45,900.
2022
2021
Current assets
Cash
$178,500
$ 168,300
Accounts receivable
136,000
151,300
Inventory
285,600
292,400
Prepaid expenses
45,900
37,400
Total current assets
$646,000
$649,400
Current liabilities
Accrued expenses payable
$ 25,500
$ 8,500
Accounts payable
144,500
156,400
Total current liabilities
$170,000
$ 164,900
Prepare the net cash provided (used) by operating...
The following are Sheridan Corp.’s comparative balance sheet accounts at December 31, 2017 and 2016, with...
The following are Sheridan Corp.’s comparative balance sheet
accounts at December 31, 2017 and 2016, with a column showing the
increase (decrease) from 2016 to 2017.
COMPARATIVE BALANCE SHEETS
2017
2016
Increase
(Decrease)
Cash
$814,600
$706,000
$108,600
Accounts receivable
1,129,100
1,176,600
(47,500
)
Inventory
1,861,900
1,719,500
142,400
Property, plant, and equipment
3,335,800
2,940,300
395,500
Accumulated depreciation
(1,159,600
)
(1,046,100
)
(113,500
)
Investment in Myers Co.
313,100
277,300
35,800
Loan receivable
249,200
—
249,200
Total assets
$6,544,100
$5,773,600
$770,500
Accounts...
The following are Ayayai Corp.’s comparative balance sheet accounts at December 31, 2017 and 2016, with...
The following are Ayayai Corp.’s comparative balance sheet
accounts at December 31, 2017 and 2016, with a column showing the
increase (decrease) from 2016 to 2017.
COMPARATIVE BALANCE SHEETS
2017
2016
Increase
(Decrease)
Cash
$821,300
$694,000
$127,300
Accounts receivable
1,124,400
1,158,200
(33,800
)
Inventory
1,852,600
1,702,600
150,000
Property, plant, and equipment
3,300,400
2,951,400
349,000
Accumulated depreciation
(1,174,500
)
(1,048,100
)
(126,400
)
Investment in Myers Co.
312,300
273,800
38,500
Loan receivable
250,100
—
250,100
Total assets
$6,486,600
$5,731,900
$754,700
Accounts...
The following are Wildhorse Corp.’s comparative balance sheet accounts at December 31, 2017 and 2016, with...
The following are Wildhorse Corp.’s comparative balance sheet
accounts at December 31, 2017 and 2016, with a column showing the
increase (decrease) from 2016 to 2017.
COMPARATIVE BALANCE SHEETS
2017
2016
Increase
(Decrease)
Cash
$811,100
$702,700
$108,400
Accounts receivable
1,139,100
1,176,000
(36,900
)
Inventory
1,847,000
1,704,500
142,500
Property, plant, and equipment
3,317,700
2,945,400
372,300
Accumulated depreciation
(1,158,000
)
(1,048,400
)
(109,600
)
Investment in Myers Co.
312,200
274,000
38,200
Loan receivable
250,000
—
250,000
Total assets
$6,519,100
$5,754,200
$764,900
Accounts...
Question 5 Monty Corp.’s balance sheet at December 31, 2016, is presented below. MONTY CORP. Balance...
Question 5
Monty Corp.’s balance sheet at December 31, 2016, is presented
below.
MONTY CORP.
Balance Sheet
December 31, 2016
Cash
$33,500
Accounts payable
$13,800
Inventory
30,050
Interest payable
2,425
Prepaid insurance
5,600
Bonds payable
48,500
Equipment
39,000
Common stock
25,400
Retained earnings
$18,025
$108,150 $108,150
During 2017, the following transactions occurred. Monty uses a
perpetual inventory system.
1. Monty paid $2,425 interest on the bonds on January 1,
2017.
2. Monty purchased $244,300 of inventory on account.
3. Monty...
On 31 December 2018 the following extract was taken from the balance sheet of BBD. Non-Current...
On 31 December 2018 the following extract was taken from the
balance sheet of BBD.
Non-Current Assets
Cost
Accumulated depreciation
NBV
K
K
K
Equipment
60 000
24 000
36 000
Office Computers
8 000
5 600
2 400
Total
68 000
29 600
38 400
The following transactions took place during the year ended 31
December 2019:
On 31 May 2019, equipment purchased on 1 August 2016, at a cost
of K28 000, was sold for K10 000. Payment...
The current sections of Ayayai Corp.’s balance sheets at December 31, 2016 and 2017, are presented...
The current sections of Ayayai Corp.’s balance sheets at
December 31, 2016 and 2017, are presented here. Ayayai Corp.’s net
income for 2017 was $168,453. Depreciation expense was
$29,727.
2017
2016
Current assets
Cash
$115,605
$ 108,999
Accounts receivable
88,080
97,989
Inventory
184,968
189,372
Prepaid expenses
29,727
24,222
Total current assets
$418,380
$420,582
Current liabilities
Accrued expenses payable
$ 16,515
$ 5,505
Accounts payable
93,585
101,292
Total current liabilities
$110,100
$ 106,797
Prepare the net cash provided (used) by operating...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- 1. Consider the following nuclides: &
- In general, teams can be described three ways. Name and define each.
- JAVASCRIPT: Please create an array of student names and another array of student grades. - Create...
- Topic - Construction: Structural, loads, tension 1.) Explain why pure tension members are the most efficient...
- Procter and Gamble (PG) paid an annual dividend of $ 1.62$1.62 in 2009. You expect PG...
- locate a recent case of online child pornography. Write a summary of the incident and describe...
- #Python 5. Write function called evaluate() that evaluates the following Python expressions or assignments as specified:...
ADVERTISEMENT