Bond Premium, Entries for Bonds Payable Transactions Rodgers Corporation produces and sells football equipment. On July 1, 20Y1, Rodgers issued $65,000,000 of 10-year, 12% bonds at a market (effective) interest rate of 10%, receiving cash of $73,100,469. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year. Required: For all journal entries, if an amount box does not require an entry, leave it blank.  Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, 20Y1. 1. Bonds Payable Cash Discount on Bonds Payable Interest Expense Interest Payable Premium on Bonds Payable 2. Accounts Payable Cash Discount on Bonds Payable Interest Expense Interest Payable Premium on Bonds Payable 3. Accounts Payable Bonds Payable Cash Discount on Bonds Payable Interest Expense Interest Payable  Journalize the entries to record the following:  The first semiannual interest payment on December 31, 20Y1, and the amortization of the bond premium, using the straight-line method. Round to the nearest dollar. 20Y1 Dec. 31

Principles of Accounting Volume 1
19th Edition
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Author:OpenStax
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Chapter13: Long-term Liabilities
Section: Chapter Questions
Problem 6PA: Aggies Inc. issued bonds with a $500,000 face value, 10% interest rate, and a 4-year term on July 1,...
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Bond Premium, Entries for Bonds Payable Transactions

Rodgers Corporation produces and sells football equipment. On July 1, 20Y1, Rodgers issued $65,000,000 of 10-year, 12% bonds at a market (effective) interest rate of 10%, receiving cash of $73,100,469. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year.

Required:

For all journal entries, if an amount box does not require an entry, leave it blank.

  1.  Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, 20Y1.

1.

  • Bonds Payable
  • Cash
  • Discount on Bonds Payable
  • Interest Expense
  • Interest Payable
  • Premium on Bonds Payable

2.

  • Accounts Payable
  • Cash
  • Discount on Bonds Payable
  • Interest Expense
  • Interest Payable
  • Premium on Bonds Payable

3.

  • Accounts Payable
  • Bonds Payable
  • Cash
  • Discount on Bonds Payable
  • Interest Expense
  • Interest Payable
  1.  Journalize the entries to record the following:
  2.  The first semiannual interest payment on December 31, 20Y1, and the amortization of the bond premium, using the straight-line method. Round to the nearest dollar.

20Y1 Dec. 31

1.

  • Bonds Payable
  • Cash
  • Discount on Bonds Payable
  • Interest Expense
  • Interest Payable
  • Interest Receivable

2.

  • Bonds Payable
  • Cash
  • Discount on Bonds Payable
  • Interest Expense
  • Interest Payable
  • Interest Receivable

3.

  • Bonds Payable
  • Cash
  • Discount on Bonds Payable
  • Interest Expense
  • Interest Payable
  • Premium on Bonds Payable
  •  The interest payment on June 30, 20Y2, and the amortization of the bond premium, using the straight-line method. Round to the nearest dollar.

20Y2 June 30

1.

  • Bonds Payable
  • Cash
  • Discount on Bonds Payable
  • Interest Expense
  • Interest Payable
  • Interest Receivable

2.

  • Accounts Payable
  • Bonds Payable
  • Cash
  • Discount on Bonds Payable
  • Interest Payable
  • Premium on Bonds Payable

3.

  • Bonds Payable
  • Cash
  • Discount on Bonds Payable
  • Interest Expense
  • Interest Payable
  • Premium on Bonds Payable
  •  Determine the total interest expense for 20Y1. Round to the nearest dollar.
  •  Will the bond proceeds always be greater than the face amount of the bonds when the contract rateis greater than the market rate of interest? Yes or No?
  •  Compute the price of $73,100,469 received for the bonds by using the present value tables in Appendix A. Round your PV values to 5 decimal places and the final answers to the nearest dollar.

Present value of the face amount

 

Present value of the semi-annual interest payments

 

Price received for the bonds

 
Bond Premium, Entries for Bonds Payable Transactions
Rodgers Corporation produces and sells football equipment. On July 1, 20Y1, Rodgers issued $65,000,000 of 10-year, 12% bonds at a market (effective) interest rate of 10%, receiving cash of $73,100,469. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year.
Required:
For all journal entries, if an amount box does not require an entry, leave it blank.
1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, 20Y1.
20Y1 July 1
2. Journalize the entries to record the following:
a. The first semiannual interest payment on December 31, 20Y1, and the amortization of the bond premium, using the straight-line method. Round to the nearest dollar.
20Y1 Dec. 31
b. The interest payment on June 30, 20Y2, and the amortization of the bond premium, using the straight-line method. Round to the nearest dollar.
20Y2 June 30
3. Determine the total interest expense for 20Y1. Round to the nearest dollar.
4. Will the bond proceeds always be greater than the face amount of the bonds when the contract rate is greater than the market rate of interest?
5. Compute the price of $73,100,469 received for the bonds by using the present value tables in Appendix A. Round your PV values to 5 decimal places and the final answers to the nearest dollar.
Present value of the face amount
Present value of the semi-annual interest payments
Price received for the bonds
Transcribed Image Text:Bond Premium, Entries for Bonds Payable Transactions Rodgers Corporation produces and sells football equipment. On July 1, 20Y1, Rodgers issued $65,000,000 of 10-year, 12% bonds at a market (effective) interest rate of 10%, receiving cash of $73,100,469. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year. Required: For all journal entries, if an amount box does not require an entry, leave it blank. 1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, 20Y1. 20Y1 July 1 2. Journalize the entries to record the following: a. The first semiannual interest payment on December 31, 20Y1, and the amortization of the bond premium, using the straight-line method. Round to the nearest dollar. 20Y1 Dec. 31 b. The interest payment on June 30, 20Y2, and the amortization of the bond premium, using the straight-line method. Round to the nearest dollar. 20Y2 June 30 3. Determine the total interest expense for 20Y1. Round to the nearest dollar. 4. Will the bond proceeds always be greater than the face amount of the bonds when the contract rate is greater than the market rate of interest? 5. Compute the price of $73,100,469 received for the bonds by using the present value tables in Appendix A. Round your PV values to 5 decimal places and the final answers to the nearest dollar. Present value of the face amount Present value of the semi-annual interest payments Price received for the bonds
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