EBK HORNGREN'S ACCOUNTING
12th Edition
ISBN: 9780134487212
Author: MILLER-NOBLES
Publisher: PEARSON CO
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Textbook Question
Chapter 14, Problem P14.40BPGB
Analyzing, journalizing, and reporting bond transactions
Learning Objectives 2, 3 2. Discount $2,250
Johnny's Hamburgers issued 8%, 10-year bonds payable at 85 on December 31,2018 At December 31,2020, Johnny reported the bonds payable as follows:
Long-term Liabilities:
Bonds Payable
$ 300,000
Less: Discount on Bonds Payable
(36,000) $ 264,000
Johnny pays semiannual interest each June 30 and December 31.
Requirements
- Answer the following questions about Johnny's bonds payable:
- What is the maturity
value of the bonds ? - What is the carrying amount of the bonds at December 31,2020?
- What is the semiannual cash interest payment on the bonds?
- How much interest expense should the company record each year?
- Record the June 30, 2020, semiannual interest payment and amortization of discount.
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(Learning Objectives 1, 3: Account for bonds payable retired prior to maturity) OnJanuary 1, 2017, Ditchey Corporation issued five-year, 6% bonds payable with a face valueof $3,500,000. The bonds were issued at 96 and pay interest on January 1 and July 1. Ditcheyamortizes bond discounts using the straight-line method. On December 31, 2019, Ditcheyretired the bonds early by purchasing them at a market price of 99. The company’s fiscal yearends on December 31.Requirements1. Journalize the issuance of the bonds on January 1, 2017.2. Record the semiannual interest payment and amortization of bond discount on July 1,2017.3. Record the interest accrual and discount amortization on December 31, 2017.4. Calculate the carrying value of the bonds payable on December 31, 2019, prior to theirretirement.5. Calculate the gain or loss on the retirement of the bonds payable on December 31, 2019.Indicate where this gain or loss will appear in the financial statements.
(Learning Objectives 1, 3: Account for bonds payable retired prior to maturity)On January 1, 2017, Kittle Corporation issued five-year, 4% bonds payable with a face valueof $2,500,000. The bonds were issued at 95 and pay interest on January 1 and July 1. Kittleamortizes bond discounts using the straight-line method. On December 31, 2019, Kittle retiredthe bonds early by purchasing them at a market price of 97. The company’s fiscal year ends onDecember 31.Requirements1. Journalize the issuance of the bonds on January 1, 2017.2. Record the semiannual interest payment and amortization of bond discount on July 1,2017.3. Record the interest accrual and discount amortization on December 31, 2017.4. Calculate the carrying value of the bonds payable on December 31, 2019, prior to theirretirement.5. Calculate the gain or loss on the retirement of the bonds payable on December 31, 2019.Indicate where this gain or loss will appear in the financial statements.
(Learning Objective 2: Issue bonds payable at a premium and amortize bonds using theeffective-interest method) Leon Corporation issued $400,000 of 10%, 10-year bonds payableon January 1, 2019. The market interest rate at the date of issuance was 8%, and the bonds payinterest semiannually (on June 30 and December 31). Leon Corporation’s year-end is June 30.1. Using the PV function in Excel, calculate the issue price of the bonds.2. Prepare an effective-interest amortization table for the bonds through the first three interestpayments. Round amounts to the nearest dollar.3. Record Leon Corporation’s issuance of the bonds on January 1, 2019, and payment of thefirst semiannual interest amount and amortization of the bond premium on June 30, 2019.Explanations are not required.
Chapter 14 Solutions
EBK HORNGREN'S ACCOUNTING
Ch. 14 - Prob. 1QCCh. 14 - Daniels's bonds payable carry a stated interest...Ch. 14 - Prob. 3QCCh. 14 - Prob. 4QCCh. 14 - Prob. 5QCCh. 14 - Prob. 6QCCh. 14 - Prob. 7QCCh. 14 - Prob. 8QCCh. 14 - Prob. 9AQCCh. 14 - 10B Hicks Corporation issued S500.000 of 5%,...
Ch. 14 - Prob. 1RQCh. 14 - Prob. 2RQCh. 14 - Prob. 3RQCh. 14 - Prob. 4RQCh. 14 - Prob. 5RQCh. 14 - Prob. 6RQCh. 14 - Prob. 7RQCh. 14 - Prob. 8RQCh. 14 - Prob. 9RQCh. 14 - Prob. 10RQCh. 14 - Prob. 11RQCh. 14 - Prob. 12RQCh. 14 - 13. What type of account is Premium on Bonds...Ch. 14 - Prob. 14RQCh. 14 - Prob. 15RQCh. 14 - Prob. 16RQCh. 14 - What does the debt to equity ratio show, and how...Ch. 14 - Prob. 18ARQCh. 14 - Prob. 19ARQCh. 14 - Prob. 20ARQCh. 14 - Prob. 21BRQCh. 14 - Accounting fora long-term note payable Learning...Ch. 14 - Prob. S14.2SECh. 14 - Prob. S14.3SECh. 14 - Prob. S14.4SECh. 14 - Determining bond amounts Learning Objective 3...Ch. 14 - Journalizing bond transactions Learning Objective...Ch. 14 - Journalizing bond transactions Learning Objective...Ch. 14 - Prob. S14.8SECh. 14 - Prob. S14.9SECh. 14 - Prob. S14.10SECh. 14 - Prob. S14.11SECh. 14 - Prob. S14.12SECh. 14 - Prob. S14A.13SECh. 14 - Prob. S14A.14SECh. 14 - Prob. S14A.15SECh. 14 - Prob. S14B.16SECh. 14 - Prob. S14B.17SECh. 14 - Accounting for long-term notes payable...Ch. 14 - Prob. E14.19ECh. 14 - Prob. E14.20ECh. 14 - Determining bond prices and interest expense...Ch. 14 - Journalizing bond issuance and interest payments...Ch. 14 - Journalizing bond issuance and interest payments...Ch. 14 - Journalizing bond transactions Learning Objective...Ch. 14 - Journalizing bond issuance and interest payments...Ch. 14 - Retiring bonds payable before maturity Learning...Ch. 14 - Prob. E14.27ECh. 14 - Prob. E14.28ECh. 14 - Prob. E14.29ECh. 14 - Prob. E14A.30ECh. 14 - Prob. E14B.31ECh. 14 - Prob. P14.32APGACh. 14 - Analyzing, journalizing, and reporting bond...Ch. 14 - Analyzing and journalizing bond transactions...Ch. 14 - Prob. P14.35APGACh. 14 - Prob. P14.36APGACh. 14 - Prob. P14AB.37APGACh. 14 - Prob. P14AB.38APGACh. 14 - Journalizing liability transactions and reporting...Ch. 14 - Analyzing, journalizing, and reporting bond...Ch. 14 - Prob. P14.41BPGBCh. 14 - Analyzing and journalizing bond transactions...Ch. 14 - Prob. P14.43BPGBCh. 14 - Prob. P14AB.44BPGBCh. 14 - Prob. P14AB.45BPGBCh. 14 - Prob. P14.46CTCh. 14 - Prob. P14.47CPCh. 14 - Prob. 1CPCh. 14 - Prob. 2CPCh. 14 - Prob. 3CPCh. 14 - Prob. 4CPCh. 14 - Prob. 5CPCh. 14 - Prob. 6CPCh. 14 - Prob. 7CPCh. 14 - Prob. 8CPCh. 14 - Prob. 14.1TIATCCh. 14 - Decision Case 14-1 The following questions are not...Ch. 14 - Ethical Issue 14-1 Raffle's Kids, a nonprofit...Ch. 14 - Prob. 14.1FCCh. 14 - Prob. 14.1FSC
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