1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Firlakuza [10]
2 years ago
12

upola Fan Corporation issued 10%, $400,000, 10-year bonds for $385,000 on June 30, 2021. Debt issue costs were $1,500. Interest

is paid semiannually on December 31 and June 30. One year from the issue date (July 1, 2022), the corporation exercised its call privilege and retired the bonds for $395,000. The corporation uses the straight-line method both to determine interest expense and to amortize debt issue costs. Required:
Business
1 answer:
maks197457 [2]2 years ago
5 0

Answer:

See the journal entries below.

Explanation:

Note: This question is not complete. The complete question is therefore provided before answering the question as follows:

Cupola Fan Corporation issued 10%, $400,000, 10-year bonds for $385,000 on June 30, 2021. Debt issue costs were $1,500. Interest is paid semiannually on December 31 and June 30. One year from the issue date (July 1, 2022), the corporation exercised its call privilege and retired the bonds for $395,000. The corporation uses the straight-line method both to determine interest expense and to amortize debt issue costs.

Required: Prepare the journal entries to record the (a) issuance of the bonds, (b)the payment of interest and (c) amortization of debt issue costs on December 31, 2021 & June 30, 2022, and the (d) call of the bonds. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

The explanation of the answer in now given as follows:

(a) issuance of the bonds

The journal entries will look as follows:

<u>Date               Accounts Title $ Explan.       Debit ($)       Credit ($)       </u>

30 Jun. ’21     Cash (w.1)                              383,500

                          Bonds Payable                                          383,500

<u><em>                        (To record the issuance of Bonds.)                                    </em></u>

(b)the payment of interest

The journal entries will look as follows:

<u>Date               Accounts Title $ Explan.       Debit ($)       Credit ($)       </u>

31 Dec. ’21     Interest Expense                      20,825

                        Bonds Payable (w.5)                                         825

                        Cash (w.2)                                                    20,000

<em><u>                       (To record the Interest Expense.)                                      </u></em>

30 Jun. ’22     Interest Expense 20,825

                          Bonds Payable (w.5)                                      825

                          Cash (w.2)                                                 20,000

<u><em>                         (To record the Interest Expense.)                                     </em></u>

(d) call of the bonds

The journal entries will look as follows:

<u>Date               Accounts Title $ Explan.       Debit ($)        Credit ($)       </u>

01 Jul. ’22       Bonds Payable (w.1)                385,150  

                       Loss on Bonds retired (w.7)       9,850

                         Cash                                                            $395,000

<u><em>                        (To record the bonds retired early.)                                   </em></u>

<u>Workings:</u>

w.1: Cash received = Bonds Payable = Amount the bond is issued - Debt issue costs = $385,000 - $1,500 = $383,500

w.2: Interest Expense= Bond face value * Bond rate * (Number of months in semiannual / Number of months in a year) = $400,000 * 10% * (6/12) = $20,000

w.3: Total cost on Bonds Payable issued = (Bond face value - Amount the bond is issued) + Debt issue costs = ($400,000 - $385,000) + $1,500 = $15,000 + $1,500 = $16,500

W.4: Annual cost amortization = Total cost on Bonds Payable issued * Bond rate =$16,500 * 10% = $1,650

w.5: Semiannual cost amortization = Annual cost amortization * (Number of months in semiannual / Number of months in a year) = $1,650 * (6/12) = $825

w.6: Total amount Payable on Bonds = Cash received from w.1 + Semiannual cost amortization on 31 December 2021 + + Semiannual cost amortization on 30 June 2022 = $383,500 + $825 + $825 = $385,150

w.7: Loss on retirement of Bonds = Amount the bond is retired - Total Amount Payable on Bonds = $395,000 - $385,150 = $9,850

You might be interested in
A student would like to buy a cross-over SUV from a local dealer, but she thinks the payments will be too high. Marketing does n
professor190 [17]

Answer: one of the involved parties does not have the ability to satisfy its needs

Explanation:

The options to the question are:

becauseA. two or more parties have unsatisfied needs.B. there is no desire on the part of either party to satisfy its needs.C. one of the involved parties does not have the ability to satisfy its needs.D. there is no way for each party to communicate with one another.E.there has been no assessment of consumer wants and needs.

Marketing simply has to with the buying and selling of a certain product or service.

In the question, we are informed that a student would like to buy a cross-over SUV from a local dealer, but she thinks the payments will be too high.

In this situation, marketing does not occur in this situation because one of the involved parties does not have the ability to satisfy its needs. It càn be seen that the girl cannot afford it.

8 0
3 years ago
On January 1, 2017, Swen paid $184,000 for $200,000 of the 8%, 20-year bonds of Penn Corporation, issued on January 1, 2013, at
zimovet [89]

The determination of the gain and the character of the gain if the Penn Corporation bonds are sold by Swen on January 1, 2019, for the proceeds of each sale is as follows:

                                        (a)                          (b)                      (c)

Sales proceeds          $191,000             $185,750          $183,000

Carrying value           $185,600            $185,600          $185,600

Capital gain (loss)       $5,400                    $150            ($2,600)

<h3>What is the carrying value of bonds?</h3>

The carrying value of a bond is the net amount between the bond's face value plus (minus) any unamortized premiums or discounts.

The carrying value is the book value of the bond.

When a bond receivable is sold, capital gain or loss is realized from the sale, which gives rise to capital gain tax.

<h3>Data and Calculations:</h3>

Bond's price = $184,000

Face value of bonds receivable = $200,000

Premium received = $16,000 ($200,000 - $184,000)

Interest rate = 8%

Maturity period = 20 years

Payment date = January 1, 2017

Straight-line amortization of premium = $800 ($16,000/20)

Carrying value after two years, January 1, 2019, = $185,600 ($184,000 + $1,600)

                                           (a)                          (b)                      (c)

Sales proceeds             $191,000             $185,750          $183,000

Carrying value              $185,600            $185,600          $185,600

Capital gain (loss)          $5,400                    $150            ($2,600)

Carrying value:

Face value                  $200,000

Unamortized premium  $14,400 ($16,000 - $1,600)

Carrying value            $185,600

Learn more about capital gain from bond sales at brainly.com/question/19422959

8 0
2 years ago
Alison's dress shop buys dresses from McGuire Manufacturing. Alison purchased dresses from McGuire on July 17 and received an in
kramer

Answer:

Allison should record the purchase at $5880

Explanation:

The net method for recording purchases implies that the purchases is recorded net of the envisaged cash discount on the transaction since the purchaser believes they would settle their account before the cash discount period expires.

Based on the above, the purchases would be recorded as shown below:

cost of purchase=original purchase value*(100%-discount rate)

original purchase price is $6,000

discount rate is 2%

cost of purchase=$6000*(100%-2%)

                           =$6000*98%

                            =$5880

4 0
3 years ago
During the initial Forming stage, where new team members are excited yet concerned that the project work might be difficult, the
Snezhnost [94]

Answer:

The answer is a. True.

Explanation:

During the initial stages, the members might be concerned that the project work might be difficult and this can act as a demotivating factor in the long run.

Because of this, if the manager can start the initial stages of planning of the operating methods, thus will be helpful to ease the tension and the doubts among the members.

8 0
3 years ago
Copperhead Trust has the following classes of​ stock: LOADING...​(Click the icon to view the​ data.) Read the requirementsLOADIN
sergeinik [125]

Answer:

Find attached complete question:

common stock dividends is $38,960

preferred stock dividends is $5,040

Explanation:

Going by the complete question,preferred stock dividends is computed thus:

preferred stock dividends=number of shares*par value*dividend rate

number of shares is 7000 (issued and outstanding)

par value of share is $12

dividend rate is 6%

preferred stock dividend=7000*$12*6%=$5040

The preferred stockholders would receive $5040 dividends while the remainder of dividends goes to common stockholders as shown below

Total dividends                              $44,000

preferred stock dividends             ($5040)

common stock dividends              $38,960

Download xlsx
6 0
3 years ago
Other questions:
  • Sharon fell while making an inspection of a machine at work and in the fall, she broke her arm. can she collect workers' compens
    10·1 answer
  • United Van Lines purchased a truck with a list price of $250,000 subject to a 6% discount if paid within 30 days. United Van Lin
    11·1 answer
  • The basic principles that govern behavior and help people determine right from wrong are __________.
    13·1 answer
  • A new purchasing system for just-in-time production requirements has been proposed. Users want access to current master file inf
    9·1 answer
  • Maria wants to be a teacher when she graduates from college and hopes to marry another teacher so they can get their summers off
    9·2 answers
  • When identifying a problem, leaders actively seek to identify its _______________, not merely the symptoms on the surface as sym
    14·1 answer
  • Which of the following is not an example of state spending ?
    11·1 answer
  • The organizational-management process consists of seven steps: (1) doing research, (2) establishing the mission and vision, (3)
    5·1 answer
  • URGENT- FINANCIAL MATH.One of the variable expenses that Roxy knows she’ll need to include in her budget is utilities. She decid
    10·1 answer
  • Which best describes a tsunami?
    5·2 answers
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!