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Hic-Tec Co. produces and distributes fiber-optic cable for use by telecommunications companies. Hic-Tec Co. issued $10,000,000 of 20-year, 9% bonds on April 1 of the current year, with interest payable on April 1 and October 1. The fiscal year of the company is the calendar year. Record the entries for the following selected transactions for the current year: Apr. 1 Issued the bonds for cash at their face amount. Oct. 1 Paid the interest on the bonds. Dec. 31 Recorded accrued interest for three months.

Financial Accounting

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 6PB

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Hic-Tec Co. produces and distributes fiber-optic cable for use by telecommunications companies. Hic-Tec Co. issued $10,000,000 of 20-year, 9% bonds on April 1 of the current year, with interest payable on April 1 and October 1. The fiscal year of the company is the calendar year. Record the entries for the following selected transactions for the current year: Apr. 1 Issued the bonds for cash at their face amount. Oct. 1 Paid the interest on the bonds. Dec. 31 Recorded accrued interest for three months.

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Saverin, Inc. produces and sells outdoor equipment. On July 1, 2016, Saverin, Inc. issued 62,500,000 of 10-year, 9% bonds at a market (effective) interest rate of 8%, receiving cash of 66,747,178. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year. Instructions 1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds. 2. Journalize the entries to record the following: a. The first semiannual interest payment on December 31, 2016, and the amortization of the bond premium, using the interest method. (Round to the nearest dollar.) b. The interest payment on June 30, 2017, and the amortization of the bond premium, using the interest method. (Round to the nearest dollar.) 3. Determine the total interest expense for 2016.
Whirlie Inc. issued $300,000 face value, 10% paid annually, 10-year bonds for $319,251 when the market of interest was 9%. The company uses the effective-interest method of amortization. At the end of the year, the company will record ________. A. a credit to cash for $28,733 B. a debit to interest expense for $31,267 C. a debit to Discount on Bonds Payable for $1,267 D. a debit to Premium on Bonds Payable for $1.267

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