On January 1, 2018, agricultural credit union (ACU) Issued 9%, 20-year bonds payable with face value...

On January 1, 2018, agricultural credit union (ACU) Issued 9%, 20-year bonds payable with face value of 900,000. These bonds pay interest on June 30 and December 31. The issue price of the bonds is 106. Journalize the following bond transactions.

a. Issuance of the bonds on January 1, 2018.

b. Payment of interest and amortization on June 30, 2018.

c. Payment of interest and amortization on Decemeber 31, 2018.

d. Retirement of the bond at maturity on Decemeber 31, 2037, assuming the last interest payment has already been recorded.

Expert Solution


Par value of Bonds		900000
Stated rate of interest		9%
Cash interest paid		40500
Periods of Interest		40
Issue Price (900000*106%)		954000
Premium on Bonds		54000
Premium amortized (54000/20)		2700

Journal entries:
Date	Accounts title and explanations		Debit $	Credit $
Jan1 2018	Cash Account Dr.		954000
	Bonds payable Account			900000
	Premium on bonds payable			54000

June30 2018	Interest expense Dr.		37800
	Premium on Bonds payable Dr.		2700
	Cash account			40500

Dec31 2018	Interest expense Dr.		37800
	Premium on Bonds payable Dr.		2700
	Cash account			40500

Dec31 2037	Bonds Payable Dr.		900,000
	Cash Account			900,000

ekkarill92 answered 1 year ago

On January 1, 2018, Professor's Credit Union (PCU) issued 6%, 20-year bonds payable with face value...

On January 1, 2018, Professor's Credit Union (PCU) issued 6%, 20-year bonds payable with face value of $700,000. The bonds pay interest on June 30 and December 31. Requirement 1: If the market interest rate is 5% when PCU issues it's bonds, will the bonds be priced at face value at a premium, or at a discount? Explain.The 6% bonds issued when the market interest rate is 5% will be priced at _______. They are _______ in this market, so...

On January 1st, 2016, Professors Credit Union(PCU) issued 6%, 20-year bonds payable with face value of...

On January 1st, 2016, Professors Credit Union(PCU) issued 6%, 20-year bonds payable with face value of 900,000. The bonds pay interest on June 30th and December 31st. The issue price of the bonds is 105. a. Issuance of bonds on January 1st, 2016 b. Payment of interest and amortization on June 30th, 2016 c. Payment of interest and amortization on December 31st, 2016 d. Retirement of bond at maturity on December 31st, 2035

January 1, 2018: Nexxon corporation issued 20 year, 9% bonds with a face value of $2,000,0000....

January 1, 2018: Nexxon corporation issued 20 year, 9% bonds with a face value of $2,000,0000. the bonds were sold to yield 10%. Interest is payable semi-annually on january 1 and July 1. Effective rate amortization is to be used. 1. what is the issue price of the bonds? 2. Using EXCEL, prepare an amortization table for the entire bond term. 3. Record the bond issuance on 1/1/18 4. assume the company prepares financial statements semi-annually on June 30 and...

On January 1, 2018, Ellison Co. issued 9 year bonds with a face value of $250,000,000...

On January 1, 2018, Ellison Co. issued 9 year bonds with a face value of $250,000,000 and a stated interest rate of 7.5%, payable semiannually on July 1 and January 1. The bonds were sold to yield 8%. a. The issue price of the bonds is b. Record the issuance on January 1, 2018. c. Prepare the journal entries for the interest expense and payments for 2018, 2019, 2020, 2021 and 2022.

On January 1, 2018 Ellison Co. issued eight-year bonds with a face value of $100,000,000 payable...

On January 1, 2018 Ellison Co. issued eight-year bonds with a face value of $100,000,000 payable semiannually on June 30 and December 31. The bonds are callable at 101. Coupon rate is 8% Market rate is 6% a) What is the issue price of the bonds b) Prepare an amortization table using the effective interest rate method for the eight years of the bonds. c) Prepare the journal entries for the interest payments on June 30, 2018 and December 31,...

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

Question 3 (20 marks) On 1 January 2018, Aro Limited issued bonds with a face value...

Question 3 On 1 January 2018, Aro Limited issued bonds with a face value of $600,000 for cash. The bond will mature after 5 years with a stated interest rate of 8% per year. Interest is paid annually on 31 December with the first payment on 31 December 2018. Bond investors require an effective interest rate of 9% per year. Aro Limited accounts for the bond using the effective-interest method. Present value of 1 at 8% for 5 years =...

On January 1, 2017, Crawford Corporation issued five-year, 4% bonds payable with a face value of...

On January 1, 2017, Crawford Corporation issued five-year, 4% bonds payable with a face value of $2,600,000. The bonds were issued at 88 and pay interest on January 1 and July 1. Crawford amortizes bond discounts using the straight-line method. On December 31, 2019, Crawford retired the bonds early by purchasing them at a market price of 94. The company's fiscal year ends on December 31. 1. Journalize the issuance of the bonds on January 1, 2017. 2. Record the...

On January 1, 20172017, CameronCameron Corporation issued fivefive-year, 88% bonds payable with a face value of...

On January 1, 20172017, CameronCameron Corporation issued fivefive-year, 88% bonds payable with a face value of $ 2 comma 700 comma 000$2,700,000. The bonds were issued at 9090 and pay interest on January 1 and July 1. CameronCameron amortizes bond discounts using the straight-line method. On December 31, 20192019, CameronCameron retired the bonds early by purchasing them at a market price of 9292. The company's fiscal year ends on December 31.Read the requirements LOADING... . Requirement 1. Journalize the issuance...

On January 1, 2013, Queen Corporation issued 12-year, 6% bonds payable with a face value of...

On January 1, 2013, Queen Corporation issued 12-year, 6% bonds payable with a face value of $10 million. The bonds require semi-annual coupon payments on June 30 and December 31 every year. Fill in the blanks below to show the amounts and timing for contractual future cash flows for these bonds. Lump-sum payment due at maturity (FV) = _________ Amount of each semi-annual coupon payment (pmt) = ________ Number of compounding periods from issue date to maturity = _________ Total...

Question