Question

Prepare journal entries to record the following transactions related to long-term bonds of Brooks Inc. (Show Calculations!)
a)   On April 1, 2020, Brooks issued $2,000,000, 9% bonds when the market rate was 9%. Interest is payable semi-annually on October 1 and April 1, and the bonds mature on April 1, 2030.
b)   On October 1, 2020, Brooks Inc. paid the interest due.
c)   On December 31, 2020, Brooks Inc. accrued interest.
d)   On April 1, 2021, Brooks Inc. paid the accrued and paid interest.

Date   Account Title and Description   Debit   Credit
          
          
          
          
          
          
          
          
          
          
          
          
          

Prepare the necessary journal entries to record the following transactions relating to the long-term issuance of bonds of KC Champs Co.: (Show Calculations!)
January 1, 2020
Issued $4,000,000 face value, 8% bonds for $4,360,800. Interest is payable semiannually on December 1 and June 1 with the bonds maturing 10 years from this past December 1. The bonds are callable at 102.
June 1, 2023
The bond has a carrying value of $4,234,520 (Bond Payable is $4,000,000 and Premium on Bond Payable is $234,520) when KC Champs Calls the bonds at a price of 102.

 

Date   Account Title and Description   Debit   Credit
          
          
          
          
          
          
          
          
          

Prepare journal entries to record the following transactions relating to long-term bonds of Hopeful Care Inc. (Show computations.)

(a)   On January 1, 2020, Hopeful Care Inc. issued $8,000,000, 6% convertible bonds for $7,840,000. Interest is payable annually on January 1 with the bonds maturing on January 1, 2030.
(b)   On January 1, 2025, HC Inc. bonds had a carrying value of $7,920,000 (Bond Payable is $8,000,000 and Discount on Bond Payable is $80,000) when all the bondholders decided to convert the bonds into common stock. Each $1,000 bond is convertible into 100 shares of $5 par value common stock.

Date   Account Title and Description   Debit   Credit
          
          
          
          
          
          
          
          
          

Answer 1

Brooks Inc.

Date	Account Title and Description	Debit	Credit
April 1, 2020	Cash	2000000
	Bonds payable		2000000
	(To record issuance of bonds)
October 1, 2020	Interest expense ($2000000 x 9% x 6/12)	90000
	Cash		90000
	(To record the payment of interest)
December 31, 2020	Interest expense ($2000000 x 9% x 3/12)	45000
	Interest payable		45000
	(To record interest accrued on bonds payable)
April 1, 2021	Interest payable	45000
	Interest expense ($2000000 x 9% x 3/12)	45000
	Cash		90000
	(To record the payment of interest)

Per HOMEWORKLIB RULES the first question has been answered. Please post the remaining independent questions separately. Thank you.