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Campbell, Inc. produces and sells outdoor equipment. On July 1, 20Y1, Campbell issued $40,000,000 of 10-year, 10% bonds at a market (effective) interest rate of 9%, receiving cash of $42,601,480. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year. Required: 1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds. 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 interest method. b. The interest payment on June 30, 20Y2, and the amortization of the bond premium, using the interest method. 3. Determine the total interest expense for 20Y1.

Campbell, Inc. produces and sells outdoor equipment. On July 1, 20Y1, Campbell issued $40,000,000 of 10-year, 10% bonds at a market (effective) interest rate of 9%, receiving cash of $42,601,480. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year. Required: 1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds. 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 interest method. b. The interest payment on June 30, 20Y2, and the amortization of the bond premium, using the interest method. 3. Determine the total interest expense for 20Y1.

Financial Accounting
Financial Accounting
14th Edition
ISBN:9781305088436
Author:Carl Warren, Jim Reeve, Jonathan Duchac
Publisher:Carl Warren, Jim Reeve, Jonathan Duchac
Chapter14: Long-term Liabilities: Bonds And Notes
Section: Chapter Questions
Problem 6PA: Saverin, Inc. produces and sells outdoor equipment. On July 1, 2016, Saverin, Inc. issued 62,500,000...
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Campbell, Inc. produces and sells outdoor equipment. On July 1, 20Y1, Campbell issued $40,000,000 of 10-year, 10% bonds at a market (effective) interest rate of 9%, receiving cash of $42,601,480. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year. Required: 1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds. 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 interest method. b. The interest payment on June 30, 20Y2, and the amortization of the bond premium, using the interest method. 3. Determine the total interest expense for 20Y1.
Transcribed Image Text:Campbell, Inc. produces and sells outdoor equipment. On July 1, 20Y1, Campbell issued $40,000,000 of 10-year, 10% bonds at a market (effective) interest rate of 9%, receiving cash of $42,601,480. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year. Required: 1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds. 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 interest method. b. The interest payment on June 30, 20Y2, and the amortization of the bond premium, using the interest method. 3. Determine the total interest expense for 20Y1.
1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds. 2a. Journalize the entry to record the first semiannual interest payment on December 31, 20Y1, and the amortization of the bond premium, using the interest method. General Journal Instructions How does grading work? 1 2 3 4 5 6 DATE 1 Jul. 1 Cash 2 Dec. 31 General Journal Instructions 3 How does grading work? Premium on Bonds Payable Bonds Payable interest Expense Premium on Bonds Payable Cash DATE DESCRIPTION Jun. 30 DESCRIPTION JOURNAL Interest Expense Premium on Bonds Payable Cash POST. REF. 2b. Journalize the entry to record the interest payment on June 30, 20Y2, and the amortization of the bond premium, using the interest method. JOURNAL DEBIT 42,601,480.00 POST. REF. 1,917,067.00 82,933.00 CREDIT DEBIT 17,664,278.00 15,664,277.00 2,601,480.00 40,000,000.00 2,000,000.00 CREDIT 2,000,000.00 ACCOUNTING EQUATION ASSETS ↑ ↓ LIABILITIES ASSETS ↓ ↑ ↑ ↓ PAGE 10 EQUITY ACCOUNTING EQUATION ↓ LIABILITIES ↓ PAGE 10 EQUITY ↓
Transcribed Image Text:1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds. 2a. Journalize the entry to record the first semiannual interest payment on December 31, 20Y1, and the amortization of the bond premium, using the interest method. General Journal Instructions How does grading work? 1 2 3 4 5 6 DATE 1 Jul. 1 Cash 2 Dec. 31 General Journal Instructions 3 How does grading work? Premium on Bonds Payable Bonds Payable interest Expense Premium on Bonds Payable Cash DATE DESCRIPTION Jun. 30 DESCRIPTION JOURNAL Interest Expense Premium on Bonds Payable Cash POST. REF. 2b. Journalize the entry to record the interest payment on June 30, 20Y2, and the amortization of the bond premium, using the interest method. JOURNAL DEBIT 42,601,480.00 POST. REF. 1,917,067.00 82,933.00 CREDIT DEBIT 17,664,278.00 15,664,277.00 2,601,480.00 40,000,000.00 2,000,000.00 CREDIT 2,000,000.00 ACCOUNTING EQUATION ASSETS ↑ ↓ LIABILITIES ASSETS ↓ ↑ ↑ ↓ PAGE 10 EQUITY ACCOUNTING EQUATION ↓ LIABILITIES ↓ PAGE 10 EQUITY ↓
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