Recording Bonds Issued at Face ValueYale Corporation issued to Zap Corporation $36,000, 8% (cash interest payable semiannually on July 1 and January 1) 10-year bonds dated and sold on January 1, 2020. If thebonds were sold at face value, provide the journal entries to be made at each of the following dates. Yale's fiscal year ends on December 31.a. January 1, 2020, for issuance of bonds.b. July 1, 2020,Cashc. December 3InventoryEquipmentDateDr.Cr.Landa. Jan. 1, 2020Deferred RevenueBonds PayableDiscount on Bonds Payableb. Jul. 1, 2020Discount and Debt Issuance CostsPremium on Bonds PayableFair Value Adjustment-Bonds PayableNote PayableDiscount on Note Payableс. Dec. 31, 202Premium on Note PayableFair Value Adjustment-Note PayableInterest PayablePlease answerCommon StockPaid-in Capital in Excess of Par-Common StockPaid-in Capital-Stock WarrantsRetained Earnings-Prior Period AdjustmentDebt Conversion ExpensePreviousNextInterest ExpenseLoss on Redemption of BondsGain on Redemption of BondsUnrealized Gain or Loss-IncomeUnrealized Gain or Loss-OCI Recording Bonds Issued at Face ValueYale Corporation issued to Zap Corporation $36,000, 8% (cash interest payable semiannually on July 1 and January 1) 10-year bonds dated and sold on January 1, 2020. If thebonds were sold at face value, provide the journal entries to be made at each of the following dates. Yale's fiscal year ends on December 31.a. January 1, 2020, for issuance of bonds.b. July 1, 2020, for the interest payment.c. December 31, 2020, for the adjusting entry.DateAccount NameDr.Cr.a. Jan. 1, 2020b. Jul. 1, 2020c. Dec. 31, 2020Please answer all parts of the question.

Working: Semiannual interest = Face value of the bonds x rate of interest x no. of months / 12 =…

Yale Corporation issued to Zap Corporation $36,000, 8% (cash interest payable semiannually on July 1 and January 1) 10-year bonds dated and sold on January 1, 2020. If the bonds were sold at face value, provide the journal entries to be made at each of the following dates. Yale's fiscal year ends on December 31. a. January 1, 2020, for issuance of bonds. b. July 1, 2020, for the interest payment. c. December 31, 2020, for the adjusting entry. Date Account Name Dr. Cr. a. Jan. 1, 2020 수 b. Jul. 1, 2020 수 c. Dec. 31, 2020 수

Yale Corporation issued to Zap Corporation $36,000, 8% (cash interest payable semiannually on July 1 and January 1) 10-year bonds dated and sold on January 1, 2020. If the bonds were sold at face value, provide the journal entries to be made at each of the following dates. Yale's fiscal year ends on December 31. a. January 1, 2020, for issuance of bonds. b. July 1, 2020, for the interest payment. c. December 31, 2020, for the adjusting entry. Date Account Name Dr. Cr. a. Jan. 1, 2020 수 b. Jul. 1, 2020 수 c. Dec. 31, 2020 수

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter13: Long-term Liabilities

Section: Chapter Questions

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

See similar textbooks

Similar questions

Volunteer Inc. issued bonds with a $500,000 face value, 10% interest rate, and a 4-year term on July 1, 2018 and received $540,000. Interest is payable annually. The premium is amortized using the straightline method. Prepare journal entries for the following transactions. A. July 1, 2018: entry to record issuing the bonds B. June 30, 2019: entry to record payment of interest to bondholders C. June 30, 2019: entry to record amortization of premium D. June 30, 2020: entry to record payment of interest to bondholders E. June 30, 2020: entry to record amortization of premium
Aggies Inc. issued bonds with a $500,000 face value, 10% interest rate, and a 4-year term on July 1, 2018, and received $540,000. Interest is payable semi-annually. The premium is amortized using the straight-line method. Prepare journal entries for the following transactions. A. July 1, 2018: entry to record issuing the bonds B. Dec. 31, 2018: entry to record payment of interest to bondholders C. Dec. 31, 2018: entry to record amortization of premium
Wilbury Corporation issued 1 million of 13.5% bonds for 985,071.68. The bonds are dated and issued October 1, 2019, are due September 30, 2020, and pay interest semiannually on March 31 and September 30. Assume an effective yield rate of 14%. Required: 1. Prepare a bond interest expense and discount amortization schedule using the straight-line method. 2. Prepare a bond interest expense and discount amortization schedule using the effective interest method. 3. Prepare adjusting entries for the end of the fiscal year December 31, 2019, using the: a. straight-line method of amortization b. effective interest method of amortization 4. If income before interest and income taxes of 30% in 2020 is 500,000, compute net income under each alternative. 5. Assume the company retired the bonds on June 30, 2020, at 98 plus accrued interest. Prepare the journal entries to record the bond retirement using the: a. straight line method of amortization b. effective interest method of amortization 6. Compute the companys times interest earned (pretax operating income divided by interest expense) for 2020 under each alternative.
Edward Inc. issued bonds with a $500,000 face value, 10% interest rate, and a 4-year term on July 1, 2018 and received $480,000. Interest is payable semiannually. The discount is amortized using the straight-line method. Prepare journal entries for the following transactions. A. July 1, 2018: entry to record issuing the bonds B. Dec. 31, 2018: entry to record payment of interest to bondholders C. Dec. 31, 2018: entry to record amortization of discount
MASTERY PROBLEM 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 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 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 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. Jackson 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.