Instructions Smiley Corporation wholesales repair products to equipment manufacturers. On April Year 1, Smiley Corporation issued $21,300,000 of five-year, 4% bonds at a market (effective) interest rate of 3%, receiving cash of $22,282,220. Interest is payable semiannually on April 1 and October 1. Required: A. Journalize the entries to record the following Refer to the Chart of Accounts for exact wording of account titles. 1. Issuance of bonds on April 1. 2. First interest payment on October 1 and amortization of bond premium for six months, using the straight-line method. The bond premium amortization is combined with the semiannual interest payment (Round to the nearest dollar) B. Explain why the company was able to issue the bonds for $22,282,220 rather than for the face amount of $21,300,000

Instructions Smiley Corporation wholesales repair products to equipment manufacturers. On April Year 1, Smiley Corporation issued $21,300,000 of five-year, 4% bonds at a market (effective) interest rate of 3%, receiving cash of $22,282,220. Interest is payable semiannually on April 1 and October 1. Required: A. Journalize the entries to record the following Refer to the Chart of Accounts for exact wording of account titles. 1. Issuance of bonds on April 1. 2. First interest payment on October 1 and amortization of bond premium for six months, using the straight-line method. The bond premium amortization is combined with the semiannual interest payment (Round to the nearest dollar) B. Explain why the company was able to issue the bonds for $22,282,220 rather than for the face amount of $21,300,000

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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Whirlie Inc. issued $300,000 face value, 10% paid annually, 10-year bonds for $319,251 when the market of interest was 9%. The company uses the effective-interest method of amortization. At the end of the year, the company will record ________. A. a credit to cash for $28,733 B. a debit to interest expense for $31,267 C. a debit to Discount on Bonds Payable for $1,267 D. a debit to Premium on Bonds Payable for $1.267
Saverin, Inc. produces and sells outdoor equipment. On July 1, 2016, Saverin, Inc. issued 62,500,000 of 10-year, 9% bonds at a market (effective) interest rate of 8%, receiving cash of 66,747,178. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year. Instructions 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, 2016, and the amortization of the bond premium, using the interest method. (Round to the nearest dollar.) b. The interest payment on June 30, 2017, and the amortization of the bond premium, using the interest method. (Round to the nearest dollar.) 3. Determine the total interest expense for 2016.
Medhurst Corporation issued $90,000 in bonds for $87,000. The bonds had a stated rate of 8% and pay interest quarterly. What is the journal entry to record the first interest payment?
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On Jan. 1, Year 1, Foxcroft Inc. issued 100 bonds with a face value of $1,000 for $104,000. The bonds had a stated rate of 6% and paid interest semi-annually. What is the journal entry to record the first payment to the bondholders?
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