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Oksana_A [137]
3 years ago
12

Prepare journal entries to record the issuance of the bonds and the retirement of bonds. (Show computations and round to the n..

.The December 31, 2018 balance sheet of Wolfe Co. included the following items:7.5% bonds payable due December 31, 2026 $3,000,000Unamortized discount on bonds payable 120,000The bonds were issued on December 31, 2016 at 95, with interest payable on June 30 and December 31. (Use straight-line amortization.)On April 1, 2016, Wolfe retired $600,000 of these bonds at 101 plus accrued interest.
Business
1 answer:
Vikentia [17]3 years ago
5 0

Answer:

issuance entry:

cash                   2,850,000 debit

discount on BP     150,000 debit

         bonds payable           3,000,000 credit

--to record issuance--

bonds payable      600,000 debit

loss on redemption 30,000 debit

interest expense     56,250 debit

                 cash                     662,250 credit

                 discount on BP      24,000 credit

--to record redemption ---

Explanation:

proceeds at issuance : $3,000,000 x 95/100 = 2,850,000

the difference will be the discount.

Now, when the bonds are retired we have to check the weight:

3,000,000 --> 120,000

  600,000 --> 120,000/3,000,000 x 600,000 = 24,000

<u><em>cash outlay</em></u> 600,000 x 101/100 = 606,000

loss redemption

we pay 606,000

for bonds which are worth: 600,000 - 24,000 = 576,000

The loss is the difference.

then, we calcualte the accrued interest:

principal x rate x time

3,000,000 x 7.5% x 3/12 = 56,250‬

this will be an interest expense

as well as an additional cash outlay

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Answer:

$3,100

Explanation:

Step 1: Draw up the Accounts Receivable Account

Opening Balance  $600          Allowance for Doubtful debt   $200

Sales                       $3,200       Cash Collected                        $3,100

                                                   Closing Balance                       <u>$500</u>

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To calculate the cash collected from customers

first, add the debit side of the accounts receivable which is a sum of the opening balance and sales= 3,800

Secondly, add the figures in the credit side including allowance for doubtful debt and closing balance= $700

Thirdly, Subtract the lesser side from the greater, $3,800 - $700 = $3,100

$3,100 was cash collected from the customers in 2016

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Billy Bob runs a seafood restaurant. Last year, he earned $70000 in revenue. He had explicit costs of $15000. Billy Bob could ha
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Accounting profit= $55,000

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Giving the following information:

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You are saving for a Porsche Carrera Cabriolet, which currently sells for nearly half a million dollars. Your plan is to deposit
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      Future\text{ }value=Deposit\times \bigg[\dfrac{(1+r)^n-1}{r}\bigg]

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