Question

On January 1, 2021, Julee Enterprises borrows $32,000 to purchase a new Toyota Highlander by agreeing to a 6%, 4-year note with the bank. Payments of $751.52 are due at the end of each month with the first installment due on January 31, 2021.

Record the issuance of the note payable and the first two monthly payments. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field. Do not round intermediate calculations. Round your answers to 2 decimal places.)

1.

• Record the issuance of the note payable on Jan 01, 2021.
• Record the first payment on Jan 31, 2021.
• Record the second payment on Feb 28, 2021.

2.

Presented below is a partial amortization schedule for Discount Foods:

				Interest			Increase in			Carrying
Period	Cash Paid			Expense			Carrying Value			Value
Issue Date										$	74,600
1	$	2,600		$	2,984		$	384			74,984
2		2,600			2,999			399			75,383

Required:
1. & 2. Record the bond issue assuming the face value of bonds payable is $85,000 and first interest payment. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)

Record the bond issue.

• Record the first interest payment.

3.

Presented below is a partial amortization schedule for Premium Foods:

				Interest			Increase in			Carrying
Period	Cash Paid			Expense			Carrying Value			Value
Issue Date										$	85,940
1	$	4,100		$	3,438		$	662			85,278
2		4,100			3,411			689			84,589

Required:
1. & 2. Record the bond issue assuming the face value of bonds payable is $78,000 and first interest payment. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)

• Record the bond issue.
  
• Record the first interest payment.

4.

Sun City issues $56 million of bonds on January 1, 2021 that pay interest semiannually on June 30 and December 31. A portion of the bond amortization schedule appears below: Cash Paid Interest Expense Decrease in Carrying Value Date 01/01/2021 06/30/2021 12/31/2021 Carrying Value $67,958, 841 67,817,400 67,671,009 $2,520,000 2,520,000 $2,378,559 2,373,609 $141,441 146,391 Required: 1. Were the bonds issued at face amount, a discount, or a premium? Discount O Premium Face amount 2. What is the original issue price of the bonds? Original price

Answer 1

Answerto Question 1: Face Value of Note = $32,000 Monthly Payment = $751.52 AnnualInterest Rate = 6.00% Monthly Interest Rate = 0.50% Credit Date Jan. 01, 2021 Debit 32,000.00 32,000.00 Jan. 31, 2021 General Journal Cash Notes Payable Notes Payable Interest Expense ($32,000 * 0.50%) Cash Notes Payable Interest Expense ($31,408.48* 0.50%) Cash 591.52 160.00 751.52 Feb. 28, 2021 594.48 157.04 751.52 Answerto Question 2: Transaction Credit Debit 74,600 10,400 General Journal Cash Discount on Bonds Payable Bonds Payable Interest Expense Discount on Bonds Payable Cash 85,000 2,984 384 2,600