Question

In: Accounting

A company issues 800,000 of 10% bonds dated 6/1/16 which are due 6/1/26. interest is paid...

A company issues 800,000 of 10% bonds dated 6/1/16 which are due 6/1/26. interest is paid annually at 6/1. the market rate for the bond is 9.75%

on 5/1/19 the company retired all of these bonds for 802,000 plus accrued interest.

prepare journal entries from 2016 to 2019

Solutions

Expert Solution

Date Account tittle Debit $ Credit $
2016
6/1/2016 Cash               800,000
Bond payable                     800,000
( 10%, bond issued at face value and cash collected )
12/31/2016 Interest expenses ( $ 800,000 x 10% x 6/12 )                 40,000
Interest Payable                       40,000
( Interest accrued for the period of six months )
2019
5/1/2019 Bond payable               800,000
Interest expenses ( $ 800,000 x 10% x 5/12 )                 33,333
Interest payable ( $ 800,000 x 10% x 6/12 )                 40,000
Amount paid in excess of facevalue ( $ 802,000 - $ 800,000)                   2,000
Cash ( $ 802,000 + $ 73,333)                     875,333
( Retirement of bond for $ 802,000 plus interest for the period from 6/1/18 till 5/1/19- 11 months )

Related Solutions

A company issues 800,000 of 10% bonds (the market rate for the bond is 9.75%) dated...
A company issues 800,000 of 10% bonds (the market rate for the bond is 9.75%) dated 6/1/16 which are due 6/1/26. interest is paid annually at 6/1. on 5/1/19 the company retired all of these bonds for 802,000 plus accrued interest. prepare journal entries from 2016 to 2019
On January 1, 2018, Vandenplas issues $800,000 of 8% bonds, due in ten years, with interest...
On January 1, 2018, Vandenplas issues $800,000 of 8% bonds, due in ten years, with interest payable semiannually on June 30 and December 31 each year. Assuming the market interest rate on the issue date is 9%, the bonds will issue at $747,968. Record the bond issue on January 1, 2018, and the first four semi-annual interest payments on June 30, 2018, December 31, 2018, June 30, 2019, and December 31, 2019.
A company issues $4,000,000 of 6%, 15-year bonds dated January 1, 201, that pay interest semiannually...
A company issues $4,000,000 of 6%, 15-year bonds dated January 1, 201, that pay interest semiannually on June 30 and December 31. The bonds are issued at a price of $3,456,448. 1. Prepare the January 1, 2017, journal entry to record the bonds' issuance. 2. For each semiannual period, compute the (a) cash payment, (b) the straight line amortization, and (c) bond interest expense. 3. Determine the total bond interest expense to be recognized over the bonds life. 4. Prepare...
Christmas Anytime issues $800,000 of 7% bonds, due in 15 years, with interest payable semiannually on...
Christmas Anytime issues $800,000 of 7% bonds, due in 15 years, with interest payable semiannually on June 30 and December 31 each year. Calculate the issue price of a bond and complete the first three rows of an amortization schedule when: 1. The market interest rate is 7% and the bonds issue at face amount 2. The market interest rate is 8% and the bonds issue at a discount. 3.. The market interest rate is 6% and the bonds issue...
A company issues $680,000 of 5% bonds, due in 10 years, with interest payable semiannually on...
A company issues $680,000 of 5% bonds, due in 10 years, with interest payable semiannually on June 30 and December 31 each year. Calculate the issue price of a bond and complete the first three rows of an amortization schedule when: 1. The market interest rate is 5% and the bonds issue at face amount. 2. The market interest rate is 4% and the bonds issue at a premium 3. The market interest rate is 6% and the bonds issue...
Coney Island Entertainment issues $1,200,000 of 6% bonds, due in 10 years, with interest payable semiannually...
Coney Island Entertainment issues $1,200,000 of 6% bonds, due in 10 years, with interest payable semiannually on June 30 and December 31 each year.   The market interest rate is 7% and the bonds issue at a discount. (FV of $1, PV of $1, FVA of $1, and PVA of $1 Issued price? Date Cash Paid Interest Expense Increase in Carrying Value Carrying Value 01/01/18 06/30/18 $36,000 12/31/18 36,000 3. The market interest rate is 5% and the bonds issue at...
Coney Island Entertainment issues $1,500,000 of 6% bonds, due in 10 years, with interest payable semiannually...
Coney Island Entertainment issues $1,500,000 of 6% bonds, due in 10 years, with interest payable semiannually on June 30 and December 31 each year.     Calculate the issue price of a bond and complete the first three rows of an amortization schedule when: Required: 1. The market interest rate is 6% and the bonds issue at face amount. (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use appropriate factor(s) from the tables provided. Do not...
A company issues $5,000,000, 6%, 10-year bonds to yield 8% on January 1, 2017. Interest is...
A company issues $5,000,000, 6%, 10-year bonds to yield 8% on January 1, 2017. Interest is paid on June 30 and December 31. The proceeds from the bonds are $4,320,500. Using straight-line amortization, what will: a) The carrying value of the bonds be on the December 31, 2018 balance sheet? b) How much interest expense will be recognized in 2018? Using effective interest amortization, what will: c) The carrying value of the bonds be on the December 31, 2017 balance...
Brief Exercise 6-15 Bridgeport Inc. issues $2,119,100 of 11% bonds due in 10 years with interest...
Brief Exercise 6-15 Bridgeport Inc. issues $2,119,100 of 11% bonds due in 10 years with interest payable at year-end. The current market rate of interest for bonds of similar risk is 12%. Click here to view factor tables What amount will Bridgeport receive when it issues the bonds? (Round factor values to 5 decimal places, e.g. 1.25124 and final answers to 0 decimal places, e.g. 458,581.) Amount received by Bridgeport when bonds were issued
Hillside issues $4,000,000, 6%, 15-year bonds dated January 1, 2017. The bonds pay interest semi-annually on...
Hillside issues $4,000,000, 6%, 15-year bonds dated January 1, 2017. The bonds pay interest semi-annually on June 30 and December 31. The bonds were issued at $3,456,448. 1. Record the journal entry to issue the bonds on January 1, 2017. 2. a. Record the journal entry to pay the semi-annual interest payment and amortize the discount on June 30, 2017. b. Record the journal entry to pay the semi-annual interest payment and amortize the discount on Dec. 31, 2017. 3....
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT