Cornerstone Exercise 9-32 DEBT ISSUED AT A DISCOUNT (STRAIGHT LINE) On December 31, 2007, Drew Company issued $170,000, five-year bonds for $155,000. The stated rate of interest was 6 percent and interest is paid annually on December 31. Required: Provide the necessary journal entry on December 31, 2009, assuming the straight-line method is followed.

Cornerstone Exercise 9-32 DEBT ISSUED AT A DISCOUNT (STRAIGHT LINE) On December 31, 2007, Drew Company issued $170,000, five-year bonds for $155,000. The stated rate of interest was 6 percent and interest is paid annually on December 31. Required: Provide the necessary journal entry on December 31, 2009, assuming the straight-line method is followed.

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter9: Long-term Liabilities

Section: Chapter Questions

Problem 24CE: Cornerstone Exercise 9-24 Issuance of Long-Term Debt EWO Enterprises issues $4,500,000 of bonds...

See similar textbooks

Similar questions

Cornerstone Exercise 9-24 Issuance of Long-Term Debt EWO Enterprises issues $4,500,000 of bonds payable. Required: Prepare the necessary journal entries to record the issuance of the bonds assuming the bonds were issued (a) at par, (b) at 104.5, and (c) at 99.
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.
Cornerstone Exercise 9-22 Reporting Long-Term Debt on the Balance Sheet Dennis Corp. has the following bonds: $2,000,000 in bonds that have $10,000 of unamortized discount associated with them $500,000 in bonds that have $25,000 of unamortized premium associated with them. Required: Prepare the balance sheet presentation for these two bonds.
Cornerstone Exercise 9-26 Debt Issued at Par On January 1, 2019, Brock & Co. issued S600,000 of bonds payable at par. The bonds have a 9% stated rate, pay interest on March 31, June 30, September 30, and December 31, and mature on December 31, 2019, Required: Prepare the journal entries to record the interest payment on June 30, 2019. Use the following information for Cornerstone Exercises 9-27 and 9-28: On January 1, 2020, Drew Company issued S350,000, 5-year bonds for $320,000. The stated rate of interest was 7% and interest is paid annually on December 31.
Issuing bonds at face amount On January 1, the first day of the fiscal year, Designer Fabric Inc. issues a 5,000,000, 6%, 10-year bond that pays semiannual interest of 150,000 (5,000,000 6% year), receiving cash of 5,000,000. Journalize the entries to record (A) the issuance of the bonds. (B) the first interest payment on June 30, and (C) the payment of the principal on the maturity date.
Bond discount, entries for bonds payable transactions On July 1, Year 1, Livingston Corporation, a wholesaler of manufacturing equipment, issued 46,000,000 of 20-year, 10% bonds at a market (effective) interest rate of 11%, receiving cash of 42,309,236. Interest on the builds 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 on July 1, Year 1. 2. Journalize the entries to record the following: A. The first semiannual interest payment on December 31, Year 1, and the amortization of the bond discount, using the straight-line method. (Round to the nearest dollar.) B. The interest payment on June 30, Year 2, and the amortization of the bond discount, using the straight-line method. (Round to the nearest dollar.) 3. Determine the total interest expense for Year 1. 4. Will the bond proceeds always be less than the face amount of the bonds when the contract rate is less than the market rate of interest? 5. (Appendix 1) Compute the price of 42,309,256 received for the bonds by using the present value tables in Appendix A at the end of the text. (Round to the nearest dollar.)
Bond discount, entries for bonds payable transactions On July 1, Year 1, Danzer Industries Inc. issued 40,000,000 of 10-year, 7% bonds at a market (effective) interest rate of 8%, receiving cash of 37,282,062. 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 on July 1, Year 1. 2. Journalize the entries to record the following: A. The first semiannual interest payment on December 31, Year 1, and the amortization of the bond discount, using the straight-line method. (Round to the nearest dollar.) B. The interest payment on June 30, Year 2, and the amortization of the bond discount, using the straight-line method. (Round to the nearest dollar.) 3. Determine the total interest expense for Year 1. 4. Will the bond proceeds always be less than the face amount of the bonds when the contract rate is less than the market rate of interest? 5. (Appendix 1) Compute the price of 37,282,062 received for the bonds by using the present value tables in Appendix A at the end of the text. (Round to the nearest dollar.)