BuyFindarrow_forward

Financial Accounting

14th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781305088436

Solutions

Chapter
Section
BuyFindarrow_forward

Financial Accounting

14th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781305088436
Chapter 14, Problem 4PEA
Textbook Problem
1 views

Using the bond from Practice Exercise 14-3A, journalize the first interest payment and the amortization of the related bond discount. Round to the nearest dollar.

To determine

Prepare journal entry to record first interest payment and amortization of discount on bonds.

Explanation of Solution

Bonds: Bonds are long-term promissory notes that are issued by a company while borrowing money from investors to raise fund for financing the operations.

Bonds Payable: Bonds payable are referred to long-term debts of the business, issued to various lenders known as bondholders, generally in multiples of $1,000 per bond, to raise fund for financing the operations.

Discount on bonds payable: It occurs when the bonds are issued at a low price than the face value.

Prepare journal entry for first interest payment and amortization of discount on bonds.

DateAccount Title and ExplanationPost RefDebit ($)Credit ($)
Interest Expense (3) 58,633
 Discount on Bonds Payable  (1) 4,633
Cash (2)54,000
    (To record semiannual payment of interest and amortization of discount on bonds)   

Table (1)

  • ■ Interest expense is an expense and it decreases the equity value. So, debit it by $58,633.
  •  Discount on Bonds Payable is an adjunct liability account and it is increased. So, credit it by $4,633.
  • ■ Cash is an asset and it is decreased. So, credit it by $54,000.

Working notes:

(1)

Calculate discount on bonds payable semiannually...

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Chapter 14 Solutions

Financial Accounting
Show all chapter solutions
add
Ch. 14 - Owen Co. is considering the following alternative...Ch. 14 - Brower Co. is considering the following...Ch. 14 - On January 1, the first day of the fiscal year, a...Ch. 14 - On January 1, the first day of the fiscal year, a...Ch. 14 - On the first day of the fiscal year, a company...Ch. 14 - On the first day of the fiscal year, a company...Ch. 14 - Using the bond from Practice Exercise 14-3A,...Ch. 14 - Using the bond from Practice Exercise 14-3B,...Ch. 14 - On the first day of the fiscal year, a company...Ch. 14 - On the first day of the fiscal year, a company...Ch. 14 - Using the bond from Practice Exercise 14-5A,...Ch. 14 - Using the bond from Practice Exercise 14-5B,...Ch. 14 - A 1,500,000 bond issue on which there is an...Ch. 14 - A 500,000 bond issue on which there is an...Ch. 14 - On the first day of the fiscal year, a company...Ch. 14 - On the first day of the fiscal year, a company...Ch. 14 - Berry Company reported the following on the...Ch. 14 - Averill Products Inc. reported the following on...Ch. 14 - Domanico Co., which produces and sells biking...Ch. 14 - Based on the data in Exercise 14-1, what factors...Ch. 14 - The financial statements for Nike, Inc., are...Ch. 14 - United States Steels 7.375% bonds due in 2020 were...Ch. 14 - Gabriel Co. produces and distributes...Ch. 14 - On the first day of its fiscal year, Pretender...Ch. 14 - Lerner Corporation wholesales repair products to...Ch. 14 - Adele Corp., a wholesaler of music equipment,...Ch. 14 - Emil Corp. produces and sells wind-energy-driven...Ch. 14 - On the first day of the fiscal year, Shiller...Ch. 14 - On January 1, 2016, Hebron Company issued a...Ch. 14 - On January 1, 2016, Bryson Company obtained a...Ch. 14 - At the beginning of the current year, two bond...Ch. 14 - The following data were taken from recent annual...Ch. 14 - Loomis, Inc. reported the following on the...Ch. 14 - Iacouva Company reported the following on the...Ch. 14 - Tommy John is going to receive 1,000,000 in three...Ch. 14 - Determine the present value of 200,000 to be...Ch. 14 - On January 1, 2016, you win 50,000,000 in the...Ch. 14 - Assume the same data as in Exercise 1419, except...Ch. 14 - Pinder Co. produces and sells high-quality video...Ch. 14 - Moss Co. issued 42,000,000 of five-year, 11%...Ch. 14 - On the first day of its fiscal year, Ebert Company...Ch. 14 - Shunda Corporation wholesales parts to appliance...Ch. 14 - Ware Co. produces and sells motorcycle parts. On...Ch. 14 - Boyd Co. produces and sells aviation equipment. On...Ch. 14 - Three different plans for financing an 18,000,000...Ch. 14 - On July 1, 2016, Merideth Industries Inc. issued...Ch. 14 - Saverin Inc. produces and sells outdoor equipment....Ch. 14 - The following transactions were completed by...Ch. 14 - On July 1, 2016, Merideth Industries Inc. issued...Ch. 14 - Saverin, Inc. produces and sells outdoor...Ch. 14 - Three different plans for financing an 80,000,000...Ch. 14 - On July 1, 2016, Livingston Corporation, a...Ch. 14 - Rodgers Corporation produces and sells football...Ch. 14 - The following transactions were completed by...Ch. 14 - On July 1, 2016, Livingston Corporation, a...Ch. 14 - Rodgers Corporation produces and sells football...Ch. 14 - General Electric Capital, a division of General...Ch. 14 - Solar Industries develops and produces...Ch. 14 - Alex Kelton recently won the jackpot in the...Ch. 14 - Xentec Inc. has decided to expand its operations...Ch. 14 - You hold a 25% common stock interest in YouOwnIt,...Ch. 14 - The following financial data (in thousands) were...

Additional Business Textbook Solutions

Find more solutions based on key concepts
Show solutions add
What is the purpose of a companys balance sheet?

Intermediate Accounting: Reporting And Analysis

How do flexible benefit plans work?

Foundations of Business (MindTap Course List)

What does the invisible hand of the marketplace do?

Principles of Microeconomics (MindTap Course List)

DuPONT ANALYSIS Doublewide Dealers has an ROA of 10%, a 2% profit margin, and an ROE of 15%. What is its total ...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)

Define the term sales mix, and give an example to support your definition.

Cornerstones of Cost Management (Cornerstones Series)