Question

Weiskopf Corporation has $8,000,000 of 9 12 percent, twenty-five-year bonds dated February 28, with interest payable on August 31 and February 28. The company's fiscal year ends on November 30. It uses the straight-line method to amortize bond premiums or discounts. Assume the bonds are issued at 103.5 on February 28. Prepare general journal entries for February 28, August 31, and November 30. Assume the bonds are issued at 96.5 on February 28. Prepare general journal entries for February 28, August 31, and November 30.

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Answer 1

Debit Credit Calculation Weiskopf Corporation Journal entries Date Accounts Req 1 Assume bonds issued at 103.5 28-Feb Cash Premium on Bonds Payable Bonds Payable 8,280,000 =8,000,000*103.5% 280,000 8,000,000 31-Aug Interest expense Premium on Bonds Payable Cash 374,400 5,600 =280,000/(25 years*2) =8,000,000*9.5%*6/12 380,000 30-Nov Interest expense Premium on Bonds Payable Interest Payable 187,200 2,800 =5,600/6*3 months =8,000,000*9.5%*3/12 190,000 =8,000,000*96.5% Req 2 Assume bonds issued at 96.5 28-Feb Cash Discount on Bonds Payable Bonds Payable 7,720,000 280,000 8,000,000 385,600 31-Aug Interest expense Discount on Bonds Payable Cash 5,600 380,000 =280,000/(25 years*2) =8,000,000*9.5%*6/12 192,800 30-Nov Interest expense Discount on Bonds Payable Interest Payable 2,800 =5,600/6*3 months 190,000 =8,000,000*9.5%*3/12

Credit Debit 408,000 Calculation -400,000*102% Samuels Company Journal entries Date Accounts 31-Jan Cash Premium on Bonds Payable Bonds Payable Reqb 31-Jul Interest expense Cash 8,000 400,000 18,000 -400,000*9%*6/12 18,000 800 =8,000/(5 years*2) 800 31-Jul Premium on Bonds Payable Interest expense Reqc 31-Dec Interest expense Interest Payable 15,000 -400,000*9%*5/12 15,000 667 =800/6*5 months 667 31-Dec Premium on Bonds Payable Interest expense Reqd 31-Jan Interest Payable Interest expense Cash 15,000 3,000 -400,000*9%*5/12 -400,000*9%*1/12 18,000 133 =800/6*1 months 31-Jan Premium on Bonds Payable Interest expense 133