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BONDS ISSUED AT FACE VALUE Ramona Arroyo Co. issued the following bonds: REQUIRED Prepare journal entries for: (a) Issuance of the bonds. (b) Interest payment on the bonds on September 30, 20-1. (c) Year-end adjustment on the bonds for 20-1. (d) Reversing entry for the beginning of 20-2. (e) Interest payments on the bonds for 20-2 (March 31 and September 30). (f) Redemption at maturity.

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College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
Publisher: Cengage Learning,
ISBN: 9781337794756

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Chapter
Section
BuyFindarrow_forward

College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
Publisher: Cengage Learning,
ISBN: 9781337794756
Chapter 22, Problem 8SPB
Textbook Problem
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BONDS ISSUED AT FACE VALUE Ramona Arroyo Co. issued the following bonds:

Chapter 22, Problem 8SPB, BONDS ISSUED AT FACE VALUE Ramona Arroyo Co. issued the following bonds: REQUIRED Prepare journal

REQUIRED

Prepare journal entries for:

(a) Issuance of the bonds.

(b) Interest payment on the bonds on September 30, 20-1.

(c) Year-end adjustment on the bonds for 20-1.

(d) Reversing entry for the beginning of 20-2.

(e) Interest payments on the bonds for 20-2 (March 31 and September 30).

(f) Redemption at maturity.

(a)

To determine

Journalize the entry for the issuance of bonds in the books of Corporation RA.

Explanation of Solution

Bonds: Bonds are the financial debt instruments issued by the corporations to raise capital for the purposes of purchasing assets, or paying debts. Bonds are bought by individual investors, or corporations, or mutual funds, and receive a fixed interest revenue.

Journal entry: Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically.

Debit and credit rules:

  • Debit an increase in asset account, increase in expense account, decrease in liability account, and decrease in stockholders’ equity accounts.
  • Credit decrease in asset account, increase in revenue account, increase in liability account, and increase in stockholders’ equity accounts.

Journalize the entry for the issuance of bonds in the books of Corporation RA.

DateAccount Titles and ExplanationPost Ref...

(b)

To determine

Journalize the entry for the semiannual interest payment in the books of Corporation RA.

(c)

To determine

Journalize the entry for the year-end adjustment in the books of Corporation RA.

(d)

To determine

Journalize the entry to reverse the year-end adjustment in the books of Corporation RA.

(e)

To determine

Journalize the entry for the semiannual interest payment in the books of Corporation RA.

(f)

To determine

Journalize the redemption of $250,000 bonds at maturity.

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Chapter 22 Solutions

College Accounting, Chapters 1-27
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