Corporate Financial Accounting
15th Edition
ISBN: 9781337398169
Author: Carl Warren, Jeff Jones
Publisher: Cengage Learning
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Question
Chapter 11, Problem 11.4EX
a.
To determine
To prepare:
b.
To determine
To prepare: Journal entry to record first interest payment and amortization of premium on bonds.
c.
To determine
Bonds: Bonds are long-term promissory notes that are represented by a company while borrowing money from investors to raise fund for financing the operations.
To explain: The reason why the company was able to issue the bonds for $20,811,010 rather than $20,000,000.
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Entries for issuing bonds and amortizing premium by straight-line method Smiley Corporation
wholesales repair products to equipment manufacturers. On April 1, 20Y1, Smiley issued $6, 100,000 of
8-year, 7% bonds at a market (effective) interest rate of 4%, receiving cash of $7, 342, 360. Interest is
payable semiannually on April 1 and October 1. Question Content Area a. Journalize the entry to record
the issuance of bonds on April 1, 20Y1. If an amount box does not require an entry, leave it blank.
blankAccountDebitCredit blank Question Content Area b. Journalize the entry to record the first interest
payment on October 1, 20Y1, and amortization of bond premium for 6 months, using the straight-line
method. Round to the nearest dollar. If an amount box does not require an entry, leave it blank.
blankAccount DebitCredit blank Question Content Area c. Why was the company able to issue the bonds
for $7, 342, 360 rather than for the face amount of $6, 100,000? The market rate of interest is…
Entries for Issuing Bonds and Amortizing Premium by Straight-Line Method
Favreau Corporation wholesales repair products to equipment manufacturers. On April 1, Year 1, Favreau Corporation issued $3,900,000 of 7-year, 12% bonds at a
market (effective) interest rate of 11%, receiving cash of $4,086,999. Interest is payable semiannually on April 1 and October 1.
a. Journalize the entry to record the issuance of bonds on April 1. If an amount box does not require an entry, leave it blank.
Cash
Premium on Bonds Payable
Bonds Payable
b. Journalize the entry to record the first interest payment on October 1 and amortization of bond premium for six months, using the straight-line method. The bond
premium amortization is combined with the semiannual interest payment. Round to the nearest dollar. If an amount box does not require an entry, leave it blank.
Interest Expense
Premium on Bonds Payable
Cash
Entries for Issuing Bonds and Amortizing Premium by Straight-Line Method
Favreau Corporation wholesales repair products to equipment manufacturers. On April 1, Year 1, Favreau Corporation issued $8,000,000 of 5-year, 10% bonds at a
market (effective) interest rate of 9%, receiving cash of $8,316,508. Interest is payable semiannually on April 1 and October 1.
a. Journalize the entry to record the issuance of bonds on April 1. If an amount box does not require an entry, leave it blank.
Cash
Premium on Bonds Payable
Bonds Payable
b. Journalize the entry to record the first interest payment on October 1 and amortization of bond premium for six months, using the straight-line method. The bond
premium amortization is combined with the semiannual interest payment. Round to the nearest dollar. If an amount box does not require an entry, leave it blank.
Interest Expense
Premium on Bonds Payable
Cash
8,316,508
c. Why was the company able to issue the bonds for $8,316,508 rather than for the face…
Chapter 11 Solutions
Corporate Financial Accounting
Ch. 11 - Describe the two distinct obligations incurred by...Ch. 11 - Explain the meaning of each of the following terms...Ch. 11 - If you asked your broker to purchase for you a 11%...Ch. 11 - A corporation issues 26,000,000 of 9% bonds to...Ch. 11 - If bonds issued by a corporation are sold at a...Ch. 11 - Prob. 6DQCh. 11 - Bonds Payable has a balance of 5,000,000 and...Ch. 11 - Prob. 8DQCh. 11 - Prob. 9DQCh. 11 - Issuing bonds at face amount On January 1, the...
Ch. 11 - Issuing bonds at a discount On the first day of...Ch. 11 - Prob. 11.3BECh. 11 - Prob. 11.4BECh. 11 - Prob. 11.5BECh. 11 - Prob. 11.6BECh. 11 - Times interest earned Averill Products Inc....Ch. 11 - Prob. 11.1EXCh. 11 - Entries for issuing bonds Thomson Co. produces and...Ch. 11 - Prob. 11.3EXCh. 11 - Prob. 11.4EXCh. 11 - Prob. 11.5EXCh. 11 - Entries for issuing and calling bonds; gain Mia...Ch. 11 - Prob. 11.7EXCh. 11 - Present value of amounts due Assume that you are...Ch. 11 - Prob. 11.9EXCh. 11 - Present value of an annuity On January 1 you win...Ch. 11 - Prob. 11.11EXCh. 11 - Prob. 11.12EXCh. 11 - Present value of bonds payable; premium Moss Co....Ch. 11 - Amortize discount by interest method On the first...Ch. 11 - Prob. 11.15EXCh. 11 - Prob. 11.16EXCh. 11 - Prob. 11.17EXCh. 11 - Bond discount, entries for bonds payable...Ch. 11 - Prob. 11.2APRCh. 11 - Entries for bonds payable, including bond...Ch. 11 - Bond discount, entries for bonds payable...Ch. 11 - Prob. 11.5APRCh. 11 - Bond discount, entries for bonds payable...Ch. 11 - Bond premium, entries for bonds payable...Ch. 11 - Entries for bonds payable, including bond...Ch. 11 - Bond discount, entries for bonds payable...Ch. 11 - Bond premium, entries for bonds payable...Ch. 11 - Analyze and compare Amazon.com and Wal-Mart...Ch. 11 - Prob. 11.2MADCh. 11 - Prob. 11.3MADCh. 11 - Analyze and compare Hilton and Marriott Hilton...Ch. 11 - Ethics in Action CLG Capital Inc. is a large...Ch. 11 - Prob. 11.3TIFCh. 11 - Present values Alex Kelton recently won the...
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