The following transactions were completed by Winklevoss Inc., whose fiscal year is the calendar year: Year 1 July 1. Issued $8,630,000 of five-year, 10% callable bonds dated July 1, Year 1, at a market (effective) rate of 11%, receiving cash of $8,304,751. Interest is payable semiannually on December 31 and June 30. Oct. 1. Borrowed $310,000 by issuing a 10-year, 7% installment note to Nicks Bank. The note requires annual payments of $44,137, with the first payment occurring on September 30, Year 2. Dec. 31. Accrued $5,425 of interest on the installment note. The interest is payable on the date of the next installment note payment. 31. Paid the semiannual interest on the bonds. The bond discount amortization of $32,525 is combined with the semiannual interest payment. Year 2 June 30. Paid the semiannual interest on the bonds. The bond discount amortization of $32,525 is combined with the semiannual interest payment. Sept. 30. Paid the annual payment on the note, which consisted of interest of $21,700 and principal of $22,437. Dec. 31. Accrued $5,032 of interest on the installment note. The interest is payable on the date of the next installment note payment. 31. Paid the semiannual interest on the bonds. The bond discount amortization of $32,525 is combined with the semiannual interest payment. Year 3 June 30. Recorded the redemption of the bonds, which were called at 98. The balance in the bond discount account is $195,149 after payment of interest and amortization of discount have been recorded. Record the redemption only. Sept. 30. Paid the second annual payment on the note, which consisted of interest of $20,129 and principal of $24,008. Required: Round all amounts to the nearest dollar. 1. Journalize the entries to record the foregoing transactions. If an amount box does not require an entry, leave it blank.

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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The following transactions were completed by Winklevoss Inc., whose fiscal year is the calendar year:

Year 1
July 1.	Issued $8,630,000 of five-year, 10% callable bonds dated July 1, Year 1, at a market (effective) rate of 11%, receiving cash of $8,304,751. Interest is payable semiannually on December 31 and June 30.
Oct. 1.	Borrowed $310,000 by issuing a 10-year, 7% installment note to Nicks Bank. The note requires annual payments of $44,137, with the first payment occurring on September 30, Year 2.
Dec. 31.	Accrued $5,425 of interest on the installment note. The interest is payable on the date of the next installment note payment.
31.	Paid the semiannual interest on the bonds. The bond discount amortization of $32,525 is combined with the semiannual interest payment.
Year 2
June 30.	Paid the semiannual interest on the bonds. The bond discount amortization of $32,525 is combined with the semiannual interest payment.
Sept. 30.	Paid the annual payment on the note, which consisted of interest of $21,700 and principal of $22,437.
Dec. 31.	Accrued $5,032 of interest on the installment note. The interest is payable on the date of the next installment note payment.
31.	Paid the semiannual interest on the bonds. The bond discount amortization of $32,525 is combined with the semiannual interest payment.
Year 3
June 30.	Recorded the redemption of the bonds, which were called at 98. The balance in the bond discount account is $195,149 after payment of interest and amortization of discount have been recorded. Record the redemption only.
Sept. 30.	Paid the second annual payment on the note, which consisted of interest of $20,129 and principal of $24,008.

Required:

Round all amounts to the nearest dollar.

1. Journalize the entries to record the foregoing transactions. If an amount box does not require an entry, leave it blank.

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