ear ends on June 30. Journalize the following transactions for Sunset Industries, including an e of the bonds on January 1, 2020. of interest expense and amortization of bonds on June 30, 2020. (Use the straight-line amor nt of the first semi-annual interest amount on July 1, 2020.

ear ends on June 30. Journalize the following transactions for Sunset Industries, including an e of the bonds on January 1, 2020. of interest expense and amortization of bonds on June 30, 2020. (Use the straight-line amor nt of the first semi-annual interest amount on July 1, 2020.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable

Section: Chapter Questions

Problem 16E

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Concept explainers

Market Efficiency

Market efficiency refers to the market's ability to provide investors with all available information about investment options for buying and selling securities. Market efficiency reflects the true value of securities without undervaluing or overvaluing them. When the quality and quantity of information increase, the market becomes more efficient, allowing it to reduce arbitrage and obtain higher market returns from investment. In a well-functioning market, everyone receives all information completely and immediately at no cost. It opens up a plethora of opportunities for investors to access various investment options.

Question

Sunset Industries Ltd. borrowed money by issuing a $50,000 6.3%, 10-year bond. Assume that Sunset Industries issued the bond on January 1, 2020, at a price of 91. Also assume that Sunset Industries's
accounting year ends on June 30. Journalize the following transactions for Sunset Industries, including an explanation for each entry:
a. Issuance of the bonds on January 1, 2020.
b. Accrual of interest expense and amortization of bonds on June 30, 2020. (Use the straight-line amortization method, and round amounts to the nearest dollar.)
c. Payment of the first semi-annual interest amount on July 1, 2020.
a. Journalize the issuance of the bonds on January 1, 2020. (Record debits first, then credits. Enter explanations on the last line.)
Accounts and Explanation
Debit
Date
January 1, 2020
Cash
Bonds Payable
...
To issue bonds at face value.
91
Credit
91
Cloar all
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