Mastery Problem Instructions Chart of Accounts General Journal Analysis Instructions Jackson, Inc.’s fiscal year ends December 31. Selected transactions for the period 20-1 through 20-8 involving bonds payable issued by Jackson are as follows: 20-1 Transactions: Oct. 31 Issued $600,000 of 10-year, 7%, callable bonds dated October 31, 20-1, for $612,000. Interest is payable semiannually on October 31 and April 30. The bond indenture provides that Jackson is to pay to the trustee bank $20,000 by May 15 of each year (except the tenth year) as a sinking fund for the retirement of the bonds on call or at maturity. Dec. 31 Made the adjusting entry for interest payable and amortized two months’ premium on the bonds (straight-line method). 20-2 Transactions: Jan. 2 Reversed the adjusting entry for interest payable and bond premium amortization. Apr. 30 Paid the semiannual interest on the bonds and amortized six months’ premium. May 15 Paid the sinking fund trustee $20,000. Oct. 31 Paid the semiannual interest on the bonds and amortized six months’ premium. Dec. 31 Made the adjusting entry for interest payable and amortized two months’ premium on the bonds. 31 Sinking fund earnings for the year were $900. 20-8 Transactions: May 15 Paid the sinking fund trustee $20,000. Oct. 31 Paid the semiannual interest on the bonds and amortized six months’ premium. 31 Redeemed the bonds, which were called at 97. The balance in the bond premium account is $3,600 after the payment of interest and amortization of premium have been entered. The cash balance in the sinking fund is $200,000, which is applied to the redemption. Paid the sinking fund trustee the additional cash needed to pay off the bonds. (Hint: First make the entry for payment to the sinking fund, then make the entry for redemption of the bonds.) Required: 1. Enter the preceding transactions in general journal form. 2. Calculate the carrying value of the bonds as of December 31, 20-2. General Journal 1. Prepare the journal entries to record 20-1 transactions. General Journal Instructions PAGE 1 GENERAL JOURNAL DATE ACCOUNT TITLE POST. REF. DEBIT CREDIT 1 2 3 4 Adjusting Entries 5 6 7 Prepare the journal entries to record 20-2 transactions. PAGE 1 GENERAL JOURNAL DATE ACCOUNT TITLE POST. REF. DEBIT CREDIT 1 Reversing Entries 2 3 4 5 6 7 8 9 10 11 12 13 Adjusting Entries 14 15 16 17 18 Prepare the journal entries to record 20-8 transactions. PAGE 3 GENERAL JOURNAL DATE ACCOUNT TITLE POST. REF. DEBIT CREDIT 1 2 3 4 5 6 7 8 9 10 11 Analysis 2. Calculate the carrying value of the bonds as of December 31, 20-2.

Mastery Problem Instructions Chart of Accounts General Journal Analysis Instructions Jackson, Inc.’s fiscal year ends December 31. Selected transactions for the period 20-1 through 20-8 involving bonds payable issued by Jackson are as follows: 20-1 Transactions: Oct. 31 Issued $600,000 of 10-year, 7%, callable bonds dated October 31, 20-1, for $612,000. Interest is payable semiannually on October 31 and April 30. The bond indenture provides that Jackson is to pay to the trustee bank $20,000 by May 15 of each year (except the tenth year) as a sinking fund for the retirement of the bonds on call or at maturity. Dec. 31 Made the adjusting entry for interest payable and amortized two months’ premium on the bonds (straight-line method). 20-2 Transactions: Jan. 2 Reversed the adjusting entry for interest payable and bond premium amortization. Apr. 30 Paid the semiannual interest on the bonds and amortized six months’ premium. May 15 Paid the sinking fund trustee $20,000. Oct. 31 Paid the semiannual interest on the bonds and amortized six months’ premium. Dec. 31 Made the adjusting entry for interest payable and amortized two months’ premium on the bonds. 31 Sinking fund earnings for the year were $900. 20-8 Transactions: May 15 Paid the sinking fund trustee $20,000. Oct. 31 Paid the semiannual interest on the bonds and amortized six months’ premium. 31 Redeemed the bonds, which were called at 97. The balance in the bond premium account is $3,600 after the payment of interest and amortization of premium have been entered. The cash balance in the sinking fund is $200,000, which is applied to the redemption. Paid the sinking fund trustee the additional cash needed to pay off the bonds. (Hint: First make the entry for payment to the sinking fund, then make the entry for redemption of the bonds.) Required: 1. Enter the preceding transactions in general journal form. 2. Calculate the carrying value of the bonds as of December 31, 20-2. General Journal 1. Prepare the journal entries to record 20-1 transactions. General Journal Instructions PAGE 1 GENERAL JOURNAL DATE ACCOUNT TITLE POST. REF. DEBIT CREDIT 1 2 3 4 Adjusting Entries 5 6 7 Prepare the journal entries to record 20-2 transactions. PAGE 1 GENERAL JOURNAL DATE ACCOUNT TITLE POST. REF. DEBIT CREDIT 1 Reversing Entries 2 3 4 5 6 7 8 9 10 11 12 13 Adjusting Entries 14 15 16 17 18 Prepare the journal entries to record 20-8 transactions. PAGE 3 GENERAL JOURNAL DATE ACCOUNT TITLE POST. REF. DEBIT CREDIT 1 2 3 4 5 6 7 8 9 10 11 Analysis 2. Calculate the carrying value of the bonds as of December 31, 20-2.

College Accounting, Chapters 1-27

23rd Edition

ISBN:9781337794756

Author:HEINTZ, James A.

Publisher:HEINTZ, James A.

Chapter22: Corporations: Bonds

Section: Chapter Questions

Problem 1MP: MASTERY PROBLEM Jackson, Inc.s fiscal year ends December 31. Selected transactions for the period...

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Question

Mastery Problem

Instructions

Chart of Accounts

General Journal

Analysis

Instructions

Jackson, Inc.’s fiscal year ends December 31. Selected transactions for the period 20-1 through 20-8 involving bonds payable issued by Jackson are as follows:

20-1 Transactions:
Oct.	31	Issued $600,000 of 10-year, 7%, callable bonds dated October 31, 20-1, for $612,000. Interest is payable semiannually on October 31 and April 30. The bond indenture provides that Jackson is to pay to the trustee bank $20,000 by May 15 of each year (except the tenth year) as a sinking fund for the retirement of the bonds on call or at maturity.
Dec.	31	Made the adjusting entry for interest payable and amortized two months’ premium on the bonds (straight-line method).

20-2 Transactions:
Jan.	2	Reversed the adjusting entry for interest payable and bond premium amortization.
Apr.	30	Paid the semiannual interest on the bonds and amortized six months’ premium.
May	15	Paid the sinking fund trustee $20,000.
Oct.	31	Paid the semiannual interest on the bonds and amortized six months’ premium.
Dec.	31	Made the adjusting entry for interest payable and amortized two months’ premium on the bonds.
	31	Sinking fund earnings for the year were $900.

20-8 Transactions:
May	15	Paid the sinking fund trustee $20,000.
Oct.	31	Paid the semiannual interest on the bonds and amortized six months’ premium.
	31	Redeemed the bonds, which were called at 97.

The balance in the bond premium account is $3,600 after the payment of interest and amortization of premium have been entered. The cash balance in the sinking fund is $200,000, which is applied to the redemption. Paid the sinking fund trustee the additional cash needed to pay off the bonds. (Hint: First make the entry for payment to the sinking fund, then make the entry for redemption of the bonds.)

Required:

1.	Enter the preceding transactions in general journal form.
2.	Calculate the carrying value of the bonds as of December 31, 20-2.

General Journal

1. Prepare the journal entries to record 20-1 transactions.

General Journal Instructions

PAGE 1

GENERAL JOURNAL

	DATE	ACCOUNT TITLE	POST. REF.	DEBIT	CREDIT
1
2
3
4		Adjusting Entries
5
6
7

Prepare the journal entries to record 20-2 transactions.

PAGE 1

GENERAL JOURNAL

	DATE	ACCOUNT TITLE	POST. REF.	DEBIT	CREDIT
1		Reversing Entries
2
3
4
5
6
7
8
9
10
11
12
13		Adjusting Entries
14
15
16
17
18

Prepare the journal entries to record 20-8 transactions.

PAGE 3

GENERAL JOURNAL

	DATE	ACCOUNT TITLE	POST. REF.	DEBIT	CREDIT
1
2
3
4
5
6
7
8
9
10
11

Analysis

2. Calculate the carrying value of the bonds as of December 31, 20-2.

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