15-1
1. True, mortgage bond and sinking fund are debenture bonds.
2. False, convertible bonds allow holder the option to convert bond in equity. Callable bonds gives right to issuer to buy it back. There is no big difference between two. But as convertible bond gives right to holder and callable bond gives obligation to seller, convertible and callable are different.
3. True, rate at which investors demand loaning funds is market rate.
4. True, interest is calculated on face value of the bond.
5. True, Present value is value at which is tradeable in market.
15-2a
JOURNAL ENTRY
Date | Particulars | Debit($) | Credit($) |
Cash a/c | 5,20,000 | ||
To bonds payable a/c | 5,00,000 | ||
To premium on bonds payable a/c | 20,000 | ||
(being bonds issued at premium) |
An excerpt from balance sheet
Particulars | ($) |
Liabilities | |
Non current liabilities | |
Bonds Payable | 5,00,000 |
Premium on bonds payable | 20,000 |
5,20,000 | |
Assets | |
Current assets | |
Cash | 5,20,000 |
5,20,000 |
15-2b
Date | Particulars | Debit($) | Credit($) |
Bonds payable a/c | 3,90,000 | ||
To cash a/c | 3,86,100 | ||
To gain on bonds payable a/c | 3,900 | ||
(being bonds redeemed at discount) |
As carrying value of bond is $390,000, it means $10,000 bonds were redeemed earlier.
Bonds are redeemed at discount of $1. assuming face value $100 for each bond.
15-3
Date | Particulars | Debit($) | Credit($) |
Bank a/c | 7,00,000 | ||
To 6% mortgage note a/c | 7,00,000 | ||
(being 6%, 15-year mortgage note issued ) | |||
Interest on 6% mortgage note a/c | 42000 | ||
To 6% mortgage note a/c | 30074 | ||
To bank a/c | 72074 | ||
(being first installment paid) |
Evaluate statements about bonds. (LO 1) Prepare journal entry for bond issuance and show balance sheet...
QS 14-4 Journalizing bond issuance LO P1 Prepare the journal entry for the issuance of these bonds. Assume the bonds are issued for cash on January 1, 2017 Garcia Company issues 8.50%, 15-year bonds with a par value of $390,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 6.50%, which implies a selling price of 116 1/4 View transaction list View journal entry worksheet Debit Credit No 1 Date Jan 01, 2017...
QS 10-4 Journalizing bond issuance LO P1 Prepare the journal entry for the issuance of these bonds. Assume the bonds are issued for cash on January 1, 2017 Garcia Company issues 11.00%, 15-year bonds with a par value of $440,000 and semiannual interest payments. On the issue date, annual market rate for these bonds is 9.00%, which implies a selling price of 114. View transaction list Journal entry worksheet Record the issue of bonds with a par value of $440,000....
Check my work Prepare the journal entry to record the bonds' issuance. (Round intermediate calculations to the nearest dollar amount.) View transaction list Journal entry worksheet 1 Record the issuance of the bonds for cash. es Note: Enter debits before credits Transaction General Journal Debit Credit 1 View general journal Record entry Clear entry Required 1 Check my work Exercise 14-17A Computing bond interest and price; recording bond issuance LO C2 Citywide Company issues bonds with a par value of...
Prepare the journal entry for the issuance of the bonds. Assume the bonds are issued for cash on January 1, 2017. Enviro Company issues 10%, 10-year bonds with a par value of $300,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 12%, which implies a selling price of 88 1/2. Prepare the journal entry for the issuance of these bonds. Assume the bonds are issued for cash on January 1, 2017. Garcia...
Cullumber Corporation issues $320,000 of bonds for $336,000. Prepare the journal entry to record the issuance of the bonds. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit Show how the bonds would be reported on the balance sheet at the date of issuance. (Enter account name only and do not provide descriptive information.) Cullumber Corporation Balance Sheet (Partial)
Exercise 10-17A Computing bond interest and price; recording bond issuance LO C2 Citywide Company issues bonds with a par value of $81,000. The bonds mature in five years and pay 9% annual interest in semiannual payments. The annual market rate for the bonds is 8%. (Table B.1, Table B.2, Table B.3, and Table B.4) (Use appropriate factor(s) from the tables provided.) 1. Compute the price of the bonds as of their issue date. 2. Prepare the journal entry to record...
Prepare the journal entries to record the following: (a) The issuance of the bonds. (b) The accrual of interest and the premium amortization on December 31, 2020. (c) The payment of interest on January 1, 2021. (d) The redemption of the bonds at maturity, assuming interest for the last interest period has been paid and recorded. Exercise 15-15 a-d (Part Level Submission) Carla Vista Company issued $590,000, 6%, 20-year bonds on January 1, 2020, at 104. Interest is payable annually...
QS 10-6 Journalizing premium bond issuance LO P3 Garcia Company issues 10.0%, 15-year bonds with a par value of $420,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 8.0%, which implies a selling price of 115. Prepare the journal entry for the issuance of these bonds for cash on January 1. View transaction list Journal entry worksheet < 1 > Record the issue of bonds with a par value of $420,000 at...
Monty Corp. issues $350,000 of bonds for $367,500. Prepare the journal entry to record the issuance of the bonds
On January 1, 2019, a company issues a $500,000, 8%, 10-year bond that pays semiannual interest. (a) Prepare the general journal entry to record the issuance of the bonds on January 1,2019 the company uses the effective interest method of amortization of any discount or premium on bonds. Prepare the June 30, 2019 and the second interest payment on December 31, 2019. general journal entry to record the first semiannual interest payment on Credit Debit Date On January 1, 2019,...