ACCOUNTING

5. Prepare the journal entries to record the first two interest payments. (Round your intermediate calculations and final answers to the nearest dollar amount. Omit the “$” sign in your response.)

 

Date General Journal Debit Credit
June 30   image193.wmf

(Click to select)

image194.wmf

 

 
         image195.wmf   image196.wmf

 

         image197.wmf   image198.wmf

 

       
Dec. 31   image199.wmf

(Click to select)

image200.wmf

 

 
         image201.wmf   image202.wmf

 

         image203.wmf   image204.wmf

 

check my work HYPERLINK “javascript:doEbook(‘13252698683739947′,%20E_13252698683739947,’http://connect.mcgraw-hill.com/connect/novellaEbook.do?location=/sites/0077318277/student_view0/ebook/chapter10/chbody1/bond_issuances.htm” \l “p2’);” \o “eBook Links” eBook Links (2) HYPERLINK “http://ezto.mhecloud.mcgraw-hill.com/” \o “Reference Information” references

Problem 10-3A Straight-line amortization of bond premium L.O. P1, P3

Heathrow issues $1,900,000 of 5%, 15-year bonds dated January 1, 2011, that pay interest semiannually on June 30 and December 31. The bonds are issued at a price of $2,325,594.

 

Required:
1. Prepare the January 1, 2011, journal entry to record the bonds’ issuance. (Omit the “$” sign in your response.)

 

Date General Journal Debit Credit
Jan. 1   image205.wmf

(Click to select)

image206.wmf

 

 
         image207.wmf   image208.wmf

 

         image209.wmf   image210.wmf

 

 

2(a) For each semiannual period, compute the cash payment. (Omit the “$” sign in your response.)

 

  Cash payment image211.wmf

 

 

2(b) For each semiannual period, compute the the straight-line premium amortization. (Round your answer to the nearest dollar amount. Omit the “$” sign in your response.)

 

  Amount of premium amortized image212.wmf

 

 

2(c) For each semiannual period, compute the the bond interest expense. (Omit the “$” sign in your response.)

 

  Bond interest expense image213.wmf

 

 

3. Determine the total bond interest expense to be recognized over the bonds’ life. (Omit the “$” sign in your response.)

 

  Total bond interest expense image214.wmf

 

 

4. Prepare the first two years of an amortization table using the straight-line method. (Omit the “$” sign in your response.)

 

Semiannual Period-End Unamortized Premium Carrying Value
1/01/2011 image215.wmf

 

image216.wmf

 

6/30/2011 image217.wmf

 

image218.wmf

 

12/31/2011 image219.wmf

 

image220.wmf

 

6/30/2012 image221.wmf

 

image222.wmf

 

12/31/2012 image223.wmf

 

image224.wmf

 

 

5. Prepare the journal entries to record the first two interest payments. (Omit the “$” sign in your response.)

 

Date General Journal Debit Credit
June 30   image225.wmf image226.wmf

 

 
    image227.wmf image228.wmf

 

 
         image229.wmf

(Click to select)

  image230.wmf

 

       
Dec. 31   image231.wmf image232.wmf

 

 
    image233.wmf

 

image234.wmf

 

 
         image235.wmf

(Click to select)

  image236.wmf

 

check my work HYPERLINK “javascript:doEbook(‘13252698683588549′,%20E_13252698683588549,’http://connect.mcgraw-hill.com/connect/novellaEbook.do?location=/sites/0077318277/student_view0/ebook/chapter10/chbody1/bond_issuances.htm” \l “p3’);” \o “eBook Links” eBook Links (2) HYPERLINK “http://ezto.mhecloud.mcgraw-hill.com/” \o “Reference Information” references

Problem 10-6A Straight-line amortization of bond discount L.O. P1, P2

[The following information applies to the questions displayed below.]

Patton issues $590,000 of 7.5%, four-year bonds dated January 1, 2011, that pay interest semiannually on June 30 and December 31. They are issued at $542,310 and their market rate is 10% at the issue date.

references

10.

value: 10.00 points

 

 

Problem 10-6A Part 1

1. Prepare the January 1, 2011, journal entry to record the bonds’ issuance. (Omit the “$” sign in your response.)
Date General Journal Debit Credit
Jan. 1   image237.wmf image238.wmf

 

 
    image239.wmf image240.wmf

 

 
         image241.wmf

(Click to select)

  image242.wmf

 

check my work HYPERLINK “javascript:doEbook(‘13252698692088815′,%20E_13252698692088815,’http://connect.mcgraw-hill.com/connect/novellaEbook.do?location=/sites/0077318277/student_view0/ebook/chapter10/chbody1/bond_issuances.htm” \l “p2’);” \o “eBook Links” eBook Links (2) HYPERLINK “http://ezto.mhecloud.mcgraw-hill.com/” \o “Reference Information” references

 

11.

value: 10.00 points

 

 

Problem 10-6A Part 2

2. Determine the total bond interest expense to be recognized over the bonds’ life. (Omit the “$” sign in your response.)
  Total bond interest expense image243.wmf

 

check my work HYPERLINK “javascript:doEbook(‘13252698692088819′,%20E_13252698692088819,’http://connect.mcgraw-hill.com/connect/novellaEbook.do?location=/sites/0077318277/student_view0/ebook/chapter10/chbody1/bond_issuances.htm” \l “p2’);” \o “eBook Links” eBook Links (2) HYPERLINK “http://ezto.mhecloud.mcgraw-hill.com/” \o “Reference Information” references

 

12.

value: 10.00 points

 

 

Problem 10-6A Part 3

3. Prepare a straight-line amortization table for the bonds’ first two years. (Make sure that the unamortized discount is adjusted to “0” and the carrying value equals to face value of the bond in the last period. Round your intermediate calculations and final answers to the nearest dollar amount. Omit the “$” sign in your response.)
Semiannual Interest Period-End Unamortized Discount Carrying Value
1/01/2011 image244.wmf

 

image245.wmf

 

6/30/2011 image246.wmf

 

image247.wmf

 

12/31/2011 image248.wmf

 

image249.wmf

 

6/30/2012 image250.wmf

 

image251.wmf

 

12/31/2012 image252.wmf

 

image253.wmf

 

check my work HYPERLINK “javascript:doEbook(‘13252698692088823′,%20E_13252698692088823,’http://connect.mcgraw-hill.com/connect/novellaEbook.do?location=/sites/0077318277/student_view0/ebook/chapter10/chbody1/bond_issuances.htm” \l “p2’);” \o “eBook Links” eBook Links (2) HYPERLINK “http://ezto.mhecloud.mcgraw-hill.com/” \o “Reference Information” references

 

13.

value: 10.00 points

 

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