1)
Date | Accounts titles and explanation | Debit | Credit |
2018 | |||
Jan 1 | Cash | $40000 | |
Bonds payable | $40000 | ||
(To record bonds issued at face value) | |||
Jul 1 | Interest expense (40000*9%*6/12) | $1800 | |
Cash | $1800 | ||
(To record interest expense) | |||
2)
Date | Accounts titles and explanation | Debit | Credit |
2018 | |||
Jan 1 | Cash (40000/100*91) | $36400 | |
Discount on bonds payable (40000-36400) | $3600 | ||
Bonds payable | $40000 | ||
(To record bonds issued at discount) | |||
Jul 1 | Interest expense | $1980 | |
Discount on bonds payable | $180 | ||
Cash (40000*9%*6/12) | $1800 | ||
(To record interest expense) | |||
Amortization of discount on bonds payable= $3600/20
10 years and semiannual payments= 10*2= 20
3)
Date | Accounts titles and explanation | Debit | Credit |
2018 | |||
Jan 1 | Cash (40000/100*106) | $42400 | |
Premium on bonds payable (42400-40000) | $2400 | ||
Bonds payable | $40000 | ||
(To record bonds issued at premium) | |||
Jul 1 | Interest expense (1800-120) | $1680 | |
Premium on bonds payable | $120 | ||
Cash (40000*9%*6/12) | $1800 | ||
(To record interest expense) | |||
Amortization of premium on bonds payable= $2400/20= $120
4) From the above calculation we can say that, when the bonds are issued at discount that means when the bonds are issued at $91 bonds price results in the most interest expense for Adam company. As the discount of bonds is amortized over the life of bonds i.e., 10 years and it will be added to the interest by which the interest expense will became greater than the actually interest paid.
Adam Company issued $40,000 of 10-year, 9% bonds payable on January 1, 2018. Adam Company pays...
Columbus Company issued $90,000 of 10-year, 9% bonds payable on January 1, 2018. Columbus Company pays interest each January 1 and July 1 and amortizes discount or premium by the straight-line amortization method. The company can issue its bonds payable under various conditions. Read the requirements. Requirement 1. Journalize Columbus Company's issuance of the bonds and first semiannual interest payment assuming the bonds were issued at face value. Explanations are not required. (Record debits first, then credits. Exclude explanations from...
Lincoln Company issued $40,000 of 10-year, 6% bonds payable on January 1, 2018. Lincoln Company pays interest each January 1 and July 1 and amortizes discount or premium by the straight-line amortization method. The company can issue its bonds payable under various conditions. Read the requirements Requirement 1. Journalize Lincoln Company's issuance of the bonds and first semiannual interest payment assuming the bonds were issued at face value. Explanations are not required. (Record debits first, then credits. Exclude explanations from...
Lincoln Company issued $50,000 of 10-year, 8% bonds payable on January 1, 2018. Lincoln Company pays interest each January 1 and July 1 and amortizes discount or premium by the straight-line amortization method. The company can issue its bonds payable under various conditions. Read the requirements. Requirement 1. Journalize Lincoln Company's issuance of the bonds and first semiannual interest payment assuming the bonds were issued at face value. Explanations are not required. (Record debits first, then credits. Exc i Requirements...
Company issued $80,000 of 10-year, 8% bonds payable on January 1, 2018. Lincoln Company pays interest each January 1 and July 1 and amortizes discount or premium by the straight-line amortization method. The company can issue its bonds payable under various conditions. 1. Journalize Lincoln Company's issuance of the bonds and first semiannual interest payment assuming the bonds were issued at face value. Explanations are not required. 2. Journalize Lincoln Company's issuance of the bonds and first semiannual interest payment...
Please answer all parts!
Keel Company purchased a building and land with a fair market value of $650,000 (building, $500,000 and land, $150,000) on January 1, 2018. Keel signed a 20-year, 8% mortgage payable. Keel will make monthly payments of $5,436.86. Round to two decimal places. Explanations are not required for journal entries. Read the requirements. Requirement 1. Journalize the mortgage payable issuance on January 1, 2018. (Record debits first, then credits. Exclude explanations from any journal entries.) Date Accounts...
Alexander Company issued $260,000, 4%, 10-year bonds payable at 94 on January 1, 2018. 6. Journalize the issuance of the bonds payable on January 1, 2018. 7. Jounalize the payment of semiannual interest and amortization of the bond discount or premium (using the straight-line amortization method) on July 1, 2018 8. Assume the bonds payable was instead issued at 108. Journalize the issuance of the bonds payable and the payment of the first semiannual interest and amortization of the bond...
Alexander Company issued $160,000, 12%, 10-year bonds payable at 96 on January 1, 2018. 6. Journalize the issuance of the bonds payable on January 1, 2018. 7. Journalize the payment of semiannual interest and amortization of the bond discount or premium (using the straight-line amortization method) on July 1, 2018. 8. Assume the bonds payable was instead issued at 110. Journalize the issuance of the bonds payable and the payment of the first semiannual interest and amortization of the bond...
Alexander Company issued $100,000, 8%, 10-year bonds payable at 96 on January 1, 2018. 6. Journalize the issuance of the bonds payable on January 1, 2018. 7. Journalize the payment of semiannual interest and amortization of the bond discount or premium (using the straight-line amortization method) on July 1, 2018. 8. Assume the bonds payable was instead issued at 108. Journalize the issuance of the bonds payable and the payment of the first semiannual interest and amortization of the bond...
Bryant Company issued $80,000, 2%, 10-year bonds payable at 90 on January 1, 2018. 6. Journalize the issuance of the bonds payable on January 1, 2018. 7. Journalize the payment of semiannual interest and amortization of the bond discount or premium (using the straight-line amortization method) on July 1, 2018. 8. Assume the bonds payable was instead issued at 112. Journalize the issuance of the bonds payable and the payment of the first semiannual interest and amortization of the bond...