ZuoTi.Pro
Question

Foster Incorporated sold $500,000 of 10% bonds on January 1, 2019 for a price that yields...

Foster Incorporated sold $500,000 of 10% bonds on January 1, 2019 for a price that yields a 12% interest rate. The bonds pay interest semi-annually on June 30 and December 31. The bonds are due December 31, 2023. Foster uses the effective interest method.

Instructions:

1. Determine the selling price of the bonds on January 1, 2019.

2. Prepare an amortization schedule using the effective interest method.

3. Prepare the journal entries for 2019.

4. Assume the company reacquired the bonds on July 1, 2022, at 104 and prepare journal entry to record the retirement of the bonds

5. Assume Foster Incorporated used the straight-line method to amortize the premium or discount. Prepare the journal for June 30, 2019 to record interest expense.

***Please show all supporting calculations***

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

Homework Answers

Answer #1

0 0
Add a comment
Know the answer?
Add Answer to:
Foster Incorporated sold $500,000 of 10% bonds on January 1, 2019 for a price that yields...
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

  • Walker Incorporated sold $500,000 of 10% bonds on January 1, 2020 for a price that yields...

    Walker Incorporated sold $500,000 of 10% bonds on January 1, 2020 for a price that yields a 12% interest rate. The bonds pay interest semi-annually on June 30 and December 31. The bonds are due December 31, 2024. Walker uses the effective interest method. Instructions: 1. Determine the selling price of the bonds on January 1, 2020. 2. Prepare an amortization schedule using the effective interest method. 3. Prepare the journal entries for 2020. 4. Assume the company reacquired the...

  • problem 14-6. Before maturity, Foster incorporated sold $500,000 of 12% bonds on january 1, 2019, for...

    problem 14-6. Before maturity, Foster incorporated sold $500,000 of 12% bonds on january 1, 2019, for $470,143.47 a price that yields a 14% interest rate. the bonds pay interest semiannually on June 30 and december 31 and are due December 31, 2022. foster uses the effective interest method. prepare an interest expense and discount ammortization schedule. assume the company reacquired the bonds on July 1, 2021 at 104. prepare journal entries to record the bond retirement. 40 Chapter 14 Financing...

  • On January 1, 2019, Bishop Company issued 8% bonds dated January 1, 2019, with a face...

    On January 1, 2019, Bishop Company issued 8% bonds dated January 1, 2019, with a face amount of $20 million. The bonds mature in 2028 (10 years). For bonds of similar risk and maturity, the market yield is 10%. Interest is paid semiannually on June 30 and December 31. Determine the price of the bonds at January 1, 2019. Show computations Prepare the journal entry to record the bond issuance by Bishop on January 1, 2019. Prepare the journal entry...

  • On January 1, 2015, Randy Incorporated purchased of $500,000 of 20 year, 10% bonds when the...

    On January 1, 2015, Randy Incorporated purchased of $500,000 of 20 year, 10% bonds when the market rate of interest was 8% Interest is to be paid on June 30 and December 31 of each year. 1.Prepare the journal entry to record the purchase of the debt security classified as held to maturity. 2. Prepare the journal entry to record the receipt of the first two interest payments, assuming that Randy accounts for the debt security as held to maturity...

  • 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 co...

    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,...

  • On January 1, 2019, Rodgers Company purchased $400,000 face value, 10%, 3-year bonds for $390,009.00, a...

    On January 1, 2019, Rodgers Company purchased $400,000 face value, 10%, 3-year bonds for $390,009.00, a price that yields a 11% effective annual interest rate. The bonds pay interest semiannually on June 30 and December 31. Required: 1. Record the purchase of the bonds. 2. Prepare an investment interest income and discount amortization schedule using the effective interest method. 3. Record the receipts of interest on June 30, 2019, and June 30, 2021.

  • On January 1, 2019, Gatrong Corporation purchased 12%, 5-year Fleming Corporation bonds with a face value...

    On January 1, 2019, Gatrong Corporation purchased 12%, 5-year Fleming Corporation bonds with a face value of $200,000. It expects to hold these bonds until maturity. The bonds pay interest semiannually on June 30 and December 31. Gatrong paid $215,443, a price that yields a 10% effective annual interest rate. Required: Prepare the journal entry on June 30 for Gatrong to record the first interest receipt, using the effective interest method. 3 journal entries

  • Held-to-Maturity Securities and Amortization of a Discount On January 1, 2019, Kelly Corporation acquired bonds with...

    Held-to-Maturity Securities and Amortization of a Discount On January 1, 2019, Kelly Corporation acquired bonds with a face value of $500,000 for $483,841.79, a price that yields a 10% effective annual interest rate. The bonds carry a 9% stated rate of interest, pay interest semiannually on June 30 and December 31, are due December 31, 2022, and are being held to maturity. Required: Prepare journal entries to record the purchase of the bonds and the first two interest receipts using...

  • On January 1, 2021, JUNE Enterprises issued 10% bonds dated January 1, 2021, with a face...

    On January 1, 2021, JUNE Enterprises issued 10% bonds dated January 1, 2021, with a face amount of $19.0 million. The bonds mature in 2030 (10 years). For bonds of similar risk and maturity, the market yield is 8%. Interest is paid semiannually on June 30 and December 31. Required: 1. Determine the price of the bonds at January 1, 2021. 2. Prepare the journal entry to record the bond issuance by Mania on January 1, 2021. 3. Prepare the...

  • On January 1, 2017, Shay issues $280,000 of 12%, 12-year bonds at a price of 97.25....

    On January 1, 2017, Shay issues $280,000 of 12%, 12-year bonds at a price of 97.25. Six years later on January 1, 2023, Shay retires 30% of these bonds by buying them on the open market at 104.75. All interest is accounted for and paid through December 31, 2022, the day before the purchase. The straight-line method is used to amortize any bond discount.   1) How much does the company receive when it issues the bonds on January 1, 2017?...

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