ZuoTi.Pro
Question

VWXY Corporation on January 1, 2016 borrowed $10,000,000 by issuing a10 year long-term note that paid...

VWXY Corporation on January 1, 2016 borrowed $10,000,000 by issuing a10 year long-term note that paid interest semiannually. The interest on the note was 12 percent each year. Because market interest rates were somewhat higher than 12 percent at the data of the note issuance, the actual proceeds (i.e. amount of cash received) was $9,500,000.

A) What entry did VWXY Company make on January 1 to record the note issuance?

B) What entry did VWXY Corporation make on July 1 the date that the first semi-annual interest payment was made?

business   accounting   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Journal entry :

No Date Account & explanation debit credit
a Jan 1 Cash 9500000
Discount on notes payable 500000
Notes payable 10000000
(To record note issuance)
b July 1 Interest expense 575000
Discount on notes payable (500000/20) 25000
Cash (10000000*12%*6/12) 600000
(To record interest payment)
0 0
Add a comment
Know the answer?
Add Answer to:
VWXY Corporation on January 1, 2016 borrowed $10,000,000 by issuing a10 year long-term note that paid...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • Oscar, Inc. issued a $500,000, 5.5%, 10-year bond on January 1, 2016. The market rate of...

    Oscar, Inc. issued a $500,000, 5.5%, 10-year bond on January 1, 2016. The market rate of interest at issuance was 6%. The bonds make semi-annual interest payments on July 1st and January 1st. The corporation’s fiscal year ends on December 31. The corporation accounts for the bonds using the effective-interest method a) Calculate the price of the bond at issuance on January 1, 2016 b) Prepare any journal entry the company records on December 31, 2016

  • Jane's Donut Co. borrowed $200,000 on January 1, 2016, and signed a one-year note bearing interest...

    Jane's Donut Co. borrowed $200,000 on January 1, 2016, and signed a one-year note bearing interest at 12% in payable in full at maturity on october 31, 2017. write journal entry for the following dates: Nov 1, 2016 (borrowed), December 31, 2016 (accured interest), and october 21. 2017 ( due date)?

  • On January 1, 2020, Bulgur Corporation issues 12-year bonds with a face value of $10,000,000 and...

    On January 1, 2020, Bulgur Corporation issues 12-year bonds with a face value of $10,000,000 and a stated annual interest rate of 6%. The bonds pay interest annually on December 31. The market rate of interest is 5%, and the company receives cash proceeds of $10,886,325 when the bonds are issued. What is the journal entry that Bulgur will make to record the second bond interest payment on December 31, 2021?

  • Dedmon Co. , whose fiscal year ends December 31, borrowed $20,400 on September 1, 2016, issuing...

    Dedmon Co. , whose fiscal year ends December 31, borrowed $20,400 on September 1, 2016, issuing a 10%, ten-month note payable with interest due at maturity. When the note matures on June 30, 2017, Dedmon will write a journal entry that includes a debit to interest payable of $___________

  • Dodge City Products borrowed $100,000 cash by issuing a 36-month, $120,880 zero coupon note on January...

    Dodge City Products borrowed $100,000 cash by issuing a 36-month, $120,880 zero coupon note on January 1, 2021. The note matures on December 31, 2023. Required: 1. Prepare the entry to recognize the issuance of the note. 2021 Jan. 1 Cash Discount on Notes Payable Notes Payable Record issuance of note at discount 2. Prepare the adjustments to recognize 2021 and 2022 interest. 2021 Dec. 31 Interest Expense Discount on Notes Payable Record interest expense 2022 Dec. 31 Interest Expense...

  • On January 26, Nova Co. borrowed cash from Conrad Bank by issuing a 90-day note with a face amount of $50,400

    Proceeds from Notes Payable On January 26, Nova Co. borrowed cash from Conrad Bank by issuing a 90-day note with a face amount of $50,400. Assume a 360-day year. a. Determine the proceeds of the note, assuming the note carries an interest rate of 7% b. Determine the proceeds of the note, assuming the note is discounted at 7%.

  • On January 1, Brothers Corporation issues $10,000,000 of 6%, 15 year bonds, with interest paid semi-annually....

    On January 1, Brothers Corporation issues $10,000,000 of 6%, 15 year bonds, with interest paid semi-annually. The market rate of interest is 8%. What is the face amount of the bond offering? 10,000,000 * ((1)/(1+.04)^30)) = $3,083,186.68 What will the actual semi-annual interest payment be? (1-(1+.04)^-30)/(.04) = 17.29 * = What interest rate is used to compute the present value? Face interest rate or market rate? How many interest periods will there be in this bond offering? Based upon the...

  • On January 1, a company borrowed cash by Issuing a $360,000,4%, Installment note to be paid...

    On January 1, a company borrowed cash by Issuing a $360,000,4%, Installment note to be paid in three equal payments at the end of each year beginning December 31 (FV of $1. PV of $1. FVA of $1. PVA of $1. FVAD of $1 and PVAD of $1 (Use appropriate factors) from the tables provided.) What would be the amount of each installment? Prepare an amortization table for the installment note. Prepare the journal entry for the second Installment payment....

  • 3. Hoover Company has a long-term note payable for $300,000 on January 1, 2012. Each month the company is required to pa...

    3. Hoover Company has a long-term note payable for $300,000 on January 1, 2012. Each month the company is required to pay $75,000 on the note. How will this note be reported on January 31, 2012? 4. Under the effective-interest method of amortizing bond premium, the interest expense recorded for each semiannual interest payment: will equal the amount of cash paid for each semiannual interest payment. is equal to the carrying value of the bond times the contract rate of...

  • .A Corporation sold 5000 issue of 20-year bonds, having a total face value of 10,000,000 for...

    .A Corporation sold 5000 issue of 20-year bonds, having a total face value of 10,000,000 for 9,500,000. The bonds bear interest at 16%, payable semiannually. The company wishes to establish a sinking fund for retiring the bond issue and will make semiannual deposit that will earn 12%, compounded semiannually. Compute the annual cost for interest and redemption of these bonds. If an investor wishes to dispose of his 100 shares of his bonds at the end of the tenth year,...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT