Correcting Error in Accounting for Bonds PayableOn June 30, 2020, Williams Inc. issued 8-year, $500,000, 5% bonds, priced at $412,608 to yield 8%, with cash interestpayable semiannually on June 30 and December 31. In 2021, after the financial statements had been issued, Williamsdiscovered that the entry to record interest expense on December 31, 2020, was recorded incorrectly as follows: debit toInterest Expense for $12,500 and a credit to Cash for $12,500.RequiredRecord the correcting entry in 2021, ignoring income taxes. Company policy is to amortize bond discounts or premiumsusing the effective interest method.Note: Round your answers to the nearest whole dollar.DateAccount NameDr.Cr.0.Jan. 1, 2021Check

On June 30, 2020, Williams Inc has issued 8 years bonds with the face value of $ 5,00,000 at 5%…

Answered: Required Record the correcting entry in…

Required Record the correcting entry in 2021, ignoring income taxes. Company policy is to amortize bond discounts or premiums using the effective interest method.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter13: Long-term Liabilities

Section: Chapter Questions

Problem 5PB: Dixon Inc. issued bonds with a $500,000 face value, 10% interest rate, and a 4-year term on July 1,...

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Problem Reporting Long-Term Debt Fridley Manufacturings accounting records reveal the following account balances after adjusting entries are made on December 31, 2020. Required: Prepare the current liabilities and long-term debt portions of Fridleys balance sheet at December 31, 2020. Provide a separate line item for each issue (do not combine separate bonds or notes payable), but some items may need to be split into more than one item. Accounts payable $ 62,500 Bonds payable (9.4%, due in 2027) 800,000 Lease liability* 41,500 Bonds payable (8.7%, due in 2023) 50,000 Deferred tax liability* 133.400 Discount on bonds payable (94%, due in 2027) 12,600 Income taxes payable 26,900 * Long term liability Interest payable $ 38,700 Installment note payable (8%, equal installments due 2021 to 2024) 120,000 Notes payable (7.8%, due in 2025) 400,000 Premium on notes payable (7.8%, due in 2025) 6, [00 Note payable, 4% $50,000 face amount. due in 2026 (net of discount) 31,900
Tamarisk Company in its first year of operations provides the following information related to one of its available-for-sale debt securities at December 31, 2020. Amoortization cost $52,100 Fair Value 44,200 Expected credit losses 12,850 What is the amount of the credit loss that Tamarisk should report on this available-for-sale security at December 31, 2020? Prepare the journal entry to record the credit loss, if any (and any other adjustment needed), at December 31, 2020. Assume that the fair value of the available-for-sale security is $57,200 at December 31, 2020, instead of $44,200. What is the amount of the credit loss that Tamarisk should report at December 31, 2020? Assume the same information as for part (c). Prepare the journal entry to record the credit loss, if necessary (and any other adjustment needed), at December 31, 2020.
On January 2, 2020, $100,000 of 11%, 10-year bonds were issued for $97,000. The $3,000 discount was charged to Interest Expense. The bookkeeper, Mark Landis, records interest only on the interest payment dates of January 1 and July 1. What is the effect on reported net income for 2020 of this error, assuming straight-line amortization of the discount? What entry is necessary to correct for this error, assuming that the books are not closed for 2020?
Correcting Error in Accounting for Bonds Payable On June 30, 2020, Williams Inc. issued 8-year, $100,000, 5% bonds, priced at $82,522 to yield 8%, with cash interest payable semiannually on June 30 and December 31. In 2021, after the financial statements had been issued, Williams discovered that the entry to record interest expense on December 31, 2020, was recorded incorrectly as follows: debit to Interest Expense for $2,500 and a credit to Cash for $2,500. Required Record the correcting entry in 2021, ignoring income taxes. Company policy is to amortize bond discounts or premiums using the effective interest method. Note: Round your answers to the nearest whole dollar. Date Account Name Dr. Cr. Jan.1, 2021 Answer Answer Answer Answer Answer Answer
On January 1, 2020, Larkspur Corporation redeemed $620,000 of bonds at 97. At the time of redemption, the unamortized premium was $18,600. Prepare the corporation’s journal entry to record the reacquisition of the bonds. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. Round intermediate calculations to 6 decimal places, e.g. 1.251247 and final answer to 0 decimal places, e.g. 38,548.)
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At the end of 2015, Majors Furniture Company failed to accrue $61,000 of interest expense that accrued during the last five months of 2015 on bonds payable. The bonds mature in 2029. The discount on the bonds is amortized by the straight-line method. The following entry was recorded on February 1, 2016, when the semiannual interest was paid: Interest expense ...................................................................................................... 73,200 Discount on bonds payable ................................................................................. 1,200 Cash ..................................................................................................................... 72,000 Required: Prepare any journal entry necessary to correct the errors as of February 2, 2016 when the errors were discovered. Also, prepare any adjusting entry at December 31, 2016, related to the situation described. (Ignore income taxes.)
Bramble Company issued $ 708,000 of 9%, 20-year bonds on January 1, 2020, at 101. Interest is payable semiannually on July 1 and January 1. Bramble Company uses the straight-line method of amortization for bond premium or discount.Prepare the journal entries to record the following. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) (a) The issuance of the bonds. (b) The payment of interest and the related amortization on July 1, 2020. (c) The accrual of interest and the related amortization on December 31, 2020.
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