Question

M y Wa U h ow Business venture into guided trips down the Amazon River in South America. Additionally, the company wants to add an building on their land to offer more services for local customers. (Click the icon to viewing the financing information) Read the tesuirements Requirement 1. Will the bonds issue at face value, a premium, or a discount? Outdoor Adventure's bonds will be issued at because Requirement 2. Record the following transactions Include dates and round to the nearest dollar Omit explanations. (Round your answers to the nearest whole dollar Record debits first, then credits. Exclude explanations from any joumal entries.) a. Cash received from the bond issue. Date Accounts Debit Credit More info 2020 Jan 2 Outdoor Adventure Company plans to raise the capital by issuing $800,000 of 7% ters-year bonds on January 2, 2020. The bands pay interest semiannually on June 30 and December 31. The company receives 5797.600 when the bands are issued The company also issues a mortgage payable for 5975,000 on January 2, 2020. The proceeds from the mortgage will be used to construct the new building. The mortgage requires annual payments of S65 000 plus interest for fifteen years, payable on December 31. The mortgage interest rate is 8 b. Cash received from the mortgage payable Date Accounts Debit | Credit Print Done 2020 Choose from any list or enter any number in the input fields and then continue to the next question. 145 PM Type here to search S ALIENWARE

Answer 1

Answer 1:

Bond's face value = $800,000

Issue price = $797,600

Hence Bond is issued at discount.

Outdoor Adventure's bonds will be issued at discount because it is issued at price lower than face value

Answer 2 (a):

Credit Date 2020 Jan-02 Accounts Cash Discount on Bonds Payable Bonds Payable | Debit $797,600 $2,400 $800,000

Answer 2 (b):

Accounts Date 2020 Jan-02 | Debit $975,000 Credit Cash Mortgage Payable $975,000

Answer 2 (c):

Bond discount is amortized on straight line:

Semiannual amortization = 2400 / 20 = $120

Cash payment on June 30 = 800000 * 7%/ 2 =$28,000

Credit Date 2020 Jun. 30 Debit $28,120 Accounts Interest Expense Discount on Bonds Payable Cash $120 $28,000


Credit Date 2020 Dec. 31 Debit $28,120 Accounts Interest Expense Discount on Bonds Payable Cash $120 $28,000

Answer 2 (d):

Interest on mortgage payable = 975000 * 8% =$78,000

Date Credit 2020 Dec. 31 Accounts Mortgage Payable Interest Expense Cash Debit $65,000 $78,000 $143,000

Answer 3:

Total 2020 Interest Expense Bonds $56,240 Mortgage $78,000 Total $134,240