esto Corporation has authorized to issue$4,500,000 of its 9%, 5-year bonds On January 1, 2019, when the effective interest rate 6%. The bonds interest is semiannually on July 1, and January 1. On march 31, 2021 purchased 1,500,000 $ of its issued bonds on the open market at $1,640,000 for interest and bonds and cancelled them. Resto uses the effective interest rate method for amortization of bond premiums and discounts.Required:1- Journalize the bonds issued?
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Resto Corporation has authorized to issue$4,500,000 of its 9%, 5-year bonds On January 1, 2019, when the effective interest rate 6%. The bonds interest is semiannually on July 1, and January 1. On march 31, 2021 purchased 1,500,000 $ of its issued bonds on the open market at $1,640,000 for interest and bonds and cancelled them. Resto uses the effective interest rate method for amortization of bond premiums and discounts.
Required:
1- Journalize the bonds issued?
2- Journalize all interest entries during 2019?
4-
Step by step
Solved in 3 steps
- Mitchell Inc. issued 64, 10%, $1,000 bonds on January 1, 2020, for $70,006. The bonds pay cash interest semiannually each June 30, and December 31, and were issued to yield 8%. The bonds mature December 31, 2025, and the company uses the effective interest method to amortize bond discounts or premiums. On January 1, 2020, Mitchell Inc. elects to account for the bonds using the fair value option. At December 31, 2020, the market rate on the bonds is 9%. Required: 1. The carrying value of the bonds on December 31, 2020 is $ 2. The fair value of the bonds on December 31, 2020 is $ 3. The amount of unrealized holding gain or loss is $ (Fill in the last blank with "gain" if there is an unrealized holding gain or "loss" if there is an unrealized holding loss) Note: Don't round until the final answer. Round the final answer to the nearest dollar.On the July 1, 2021, Trials Corporation issued $17,500,000 of five-year, 12% bonds to finance its operations. The bonds were issued at a market (effective) interest rate of 10%, resulting in Trials Corporation receiving cash of $18,851,252. Interest is payable semiannualy on 12/31 and 6/30. The company uses the straight-line method to amortize the bond discount. REQUIRED: Journalize the entries to record the following: 07/01/21-issuance of the bonds 12/31/21- the first semiannual interest payment, including amortization of the bond discount. Round to the nearest dollar. 06/30/22- the second semiannual interest payment, including amortization of the bond discount. Round to the nearest dollar. Date Account Name Journal Entries Debi CreditOn January 1, 2019, Gates Corporation issued $200,000 of 5-year bonds due December 31, 2023, for $207,779.30 minus bond issue costs of $3,000. The bonds carry a stated rate of interest of 10% payable annually on December 31 and were issued to yield 9%. The company uses the effective interest method of amortization to amortize any discounts or premiums and the straight-line method to amortize the debt issuance costs. Required: Prepare the journal entries to record the issuance of the bonds, all the interest payments, premium amortizations, debt issuance cost amortizations, and the repayment of the bonds. In addition, prepare a bond interest expense and premium amortization schedule for the bonds.
- Mitchell Inc. received $568,547 from the issuance of 600, 6%, $1,000 bonds on January 1, 2020. The bonds pay cash interest semiannually each July 1, and January 1, and were issued to yield & The bonds mature January 1, 2023, and the company uses the effective interest method to amortize bond discounts or premiums The journal entry on July 1, 2020 to record the interest payment includes OA credit to Cash account by $22,742. A debit to Premium on Bonds Payable account by $4,742. A credit to Cash account by $18,000. OA credit to Interest Revenue account by $22,742.Madison Corporation is authorized to issue $570,000 of 5-year bonds dated June 30, 2019, with a stated rate of interest of 11%. Interest on the bonds is payable semiannually, and the bonds are sold on June 30, 2019. Required: Determine the proceeds that the company will receive if it sells the following: (Click here to access the tables to use with this exercise and round your answers to two decimal places, if necessary.) 1. The bonds to yield 12% $fill in the blank 1 2. The bonds to yield 10% $fill in the blank 2Supersonic Company was authorized to issue P7, 000,000 face values, 12%, 10-years bonds on April 1, 2019. Interest on the bonds is payable semiannually on April I and October I of each year. The bonds were sold to underwriters on April 1, 2019 at 106. The entity amortizes discount or premium only at the end of the fiscal year, using the straight line method. Required: 1. Prepare the jourmal entries for 2019 and 2020 including adjustment at the end of each year. Use memorandum approach. 2. Present the bonds payable in the statement of financial position on December 31, 2020.
- On January 1, 2019, Gates Corporation issued $100,000 of 5-year bonds due December 31, 2023, for $103,604.79 minus debt issuance costs of $3,000. The bonds carry a stated rate of interest of 13% payable annually on December 31 and were issued to yield 12%. The company uses the effective interest method of amortization to amortize any discounts or premiums and the straight-line method to amortize the debt issuance costs. Required: Prepare the journal entries to record the issuance of the bonds, all the interest payments, premium amortizations, debt issuance cost amortizations, and the repayment of the bonds. In addition, prepare a bond interest expense and premium amortization schedule for the bonds. CHART OF ACCOUNTS Gates CorporationGeneral Ledger ASSETS 111 Cash 121 Accounts Receivable 141 Inventory 152 Prepaid Insurance 181 Equipment 195 Deferred Debt Issuance Costs 198 Accumulated Depreciation LIABILITIES 211 Accounts Payable 231…On January 1, 2019, Gates Corporation issued $100,000 of 5-year bonds due December 31, 2023, for $103,604.79 minus debt issuance costs of $3,000. The bonds carry a stated rate of interest of 13% payable annually on December 31 and were issued to yield 12%. The company uses the effective interest method of amortization to amortize any discounts or premiums and the straight-line method to amortize the debt issuance costs. Required: Prepare the journal entries to record the issuance of the bonds, all the interest payments, premium amortizations, debt issuance cost amortizations, and the repayment of the bonds. In addition, prepare a bond interest expense and premium amortization schedule for the bonds. CHART OF ACCOUNTS Gates Corporation General Ledger ASSETS 111 Cash 121 Accounts Receivable 141 Inventory 152 Prepaid Insurance 181 Equipment 195 Deferred Debt Issuance Costs 198 Accumulated Depreciation LIABILITIES 211 Accounts Payable…On January 1, 2019, Gates Corporation issued $100,000 of 5-year bonds due December 31, 2023, for $103,604.79 minus debt issuance costs of $3,000. The bonds carry a stated rate of interest of 13% payable annually on December 31 and were issued to yield 12%. The company uses the effective interest method of amortization to amortize any discounts or premiums and the straight-line method to amortize the debt issuance costs. Required: Prepare the journal entries to record the issuance of the bonds, all the interest payments, premium amortizations, debt issuance cost amortizations, and the repayment of the bonds. In addition, prepare a bond interest expense and premium amortization schedule for the bonds. Journal 2019 has 10 lines Journal 2020 has 5 lines Journal 2021 has 5 lines Journal 2022 has 5 line Journal 2023 has 7 lines . Prepare a bond interest expense and premium amortization schedule for the bonds. Amortization Schedule Instructions GATES CORPORATION Bond…
- McNeil Corporation issued $750,000 of 6%, 10-year bonds payable on January 1, 2019. The market interest rate at the date of issuance was 4%, and the bonds pay interest semiannually (on June 30 and December 31). McNeil Corporation's year-end is June 30. McNeil prepared an effective-interest amortization table for the bonds through the first three interest payments asfollows:Madison Corporation is authorized to issue $600,000 of 7-year bonds dated June 30, 2019, with a stated rate of interest of 11%. Interest on the bonds is payable semiannually, and the bonds are sold on June 30, 2019. Required: Determine the proceeds that the company will receive if it sells the following: (Click here to access the tables to use with this exercise and round your answers to two decimal places, if necessary.) 1. The bonds to yield 12% 2. The bonds to yield 10%On October 1, 2019, Jenkins Corporation bought bonds with a face value of $200,000 for $199,175, which included accrued interest. The bonds are due December 31, 2021, and carry a face rate of interest of 10.5%. Interest on the bonds is payable semiannually on June 30 and December 31. Jenkins uses the straight-line method to amortize the discount. Required: 1. Prepare journal entries to record the purchase of the bonds, each interest receipt, and the retirement of the issue on December 31, 2021. 2. Next Level If Jenkins failed to separately record the interest at acquisition, explain the errors that would occur in the company’s financial statements (no calculations are required).