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scoundrel [369]
3 years ago
14

On January 1, Year 1, Sayers Company issued $280,000 of five-year, 6 percent bonds at 102. Interest is payable semiannually on J

une 30 and December 31. The premium is amortized using the straight-line method. Required Prepare the journal entries to record the bond transactions for Year 1 and Year 2.
Business
1 answer:
mel-nik [20]3 years ago
5 0

Answer:

The cash received from bond issuance is journalized as follows:

Dr Cash                                $285,600

Cr  Bonds payable                                  $280,000

Cr Premium on Bonds payable                   $5,600

The June 30 and 31 December Year 1 interest on the bonds are recorded thus:

30 June

Dr Interest expense(bal fig) $7,840                                          

Dr Premium on bonds           $560

Cr Cash                                         $8400

31 December

Dr Interest expense(bal fig) $7,840                                          

Dr Premium on bonds           $560

Cr Cash                                         $8400

The June 30 and 31 December Year 2 interest on the bonds are recorded thus:

30 June

Dr Interest expense(bal fig) $7,840                                          

Dr Premium on bonds           $560

Cr Cash                                             $8400

31 December

Dr Interest expense(bal fig) $7,840                                          

Dr Premium on bonds           $560

Cr Cash                                            $8400

Explanation:

The amount realized from the bond is calculated thus:

$280,000*102%=$285,600

Premium on  bond=Bonds proceeds-par value

                                =$285,600-$280,000

                                =$5,600

Semi-annual amortization of bond premium=$5,600/5*6/12

                                                                         =$560

Semi-annual interest payment=$280,000*6%*6/12

                                                 =$8,400

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On January 1, Hurley Corporation issues $500,000, 5-year, 12% bonds at 96 with interest payable on January 1. The entry on Janua
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Answer:

b. credit to Cash $60,000.

Explanation:

Given that:

Hurley Corporation issues the principal amount of $500,000

Time = 5 years

Rate = 12%  at 96  with interest payable on January 1

Discount on issue  =500000 × (1 - 0.96) = 20000

Annual discount  amortization= 20000/5 = 4000                  

Interest payable  = 500000× 12% =  60000

From the information given in the question; we can have a journal entry to determine the what the straight-line method will include.

So, let have a look at the table below:

Discount on issue                     20000                                      

Annual discount                        4000

amortization

                                                     Debit                            Credit

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Discount on Bonds payable                                            4000

Interest payable                                                               60000

Now; The January 1 entries will now be as follows:

                                                    Debit                        Credit

Interest payable                           60,000

Cash                                                                                60,000

Thus; The entry on January 1 to record payment of bond interest assuming amortization of bond discount used the straight-line method will include a: <u>Credit to cash  $60,000</u>

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3 years ago
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In the above scenario in the question, if a driver with an insurance policy drives infrequently, it can lower costs.

Therefore, the correct option is B.

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3 years ago
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At January 1, 2020, Windsor Company had plan assets of $303,000 and a projected benefit obligation of the same amount. During 20
Arte-miy333 [17]

Answer:

The answer is well illustrated as below

Explanation:

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Dr Plan Asset $25,700

Cr Actual return $25,700

4. Contributions made increases the Plan Asset because it is an increase in the investment.

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5. The benefits paid to employees are decrease in both pension asset and the pension liability. (We had actually borrowed money from the employees and had invested that money so paying off the benefits actually decreases the pension liability and assets).

So the double entry would be:

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Kindly input the above values in the following worksheet:

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3 years ago
Headland Co. has a held-to-maturity investment in the bonds of Schuyler Corp. with a carrying value of $79,200. Headland determi
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Answer:

The Journal Entry is as follows:

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Debt Investment ($8,400)

Explanation:

Given.

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Decreased Value = $70,800

Differences = $79,200 - $70,800

Differences = $8,400

Since the loss in value is determined, uncollectible.

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The Journal Entry is as follows:

Loss on Impairment $8,400

Debt Investment ($8,400)

7 0
3 years ago
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