Financial Accounting
14th Edition
ISBN: 9781305088436
Author: Carl Warren, Jim Reeve, Jonathan Duchac
Publisher: Cengage Learning
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Chapter 15, Problem 4E
To determine
Journalize the bond investment transactions in the books of Company S.
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The following transactions are taken from the records of the Elton Corporation. Prepare journal entries for the transactions for the following:
a. Bonds payable with a par value of $800,000, carrying a stated interest rate of 9% payable semiannually on March 1 and September 1, were issued on June 1, 2014, at 102.5 plus accrued interest. The bonds are dated March 1, 2014 and mature on March 1, 2024.
b. September 1 interest payment is made. (Bond premium amortization is recorded only at year end.)
c. Year-end (December 31) accrued interest on bonds payable is recorded and the bond premium is amortized using the straight-line method.
d. March 1 interest payment is made.
e. Bonds with a par value of $350,000 are purchased at 101 plus accrued interest on August 1, 2015, and retired. (Bond premium amortization is recorded only at year end.)
f. September 1 interest payment is made.
g. Year-end (December 31) accrued interest on bonds payable is recorded and the bond premium is amortized using…
Analyzing and Reporting Financial Statement Effects of Bond Transactions
On January 1, 2016, Trueman Corp. issued $350,000 of 20-year, 11% bonds for $323,669, yielding a market (yield) rate of 12%. Interest is payable semiannually on June
30 and December 31.
Required
a. Confirm the bond issue price.
b. Prepare journal entries to record the bond issuance, semiannual interest payment and discount amortization on June 30, 2016, and semiannual interest payment
and discount amortization on December 31, 2016. Use the effective interest rate method.
c. Post the journal entries from part b to their respective T-accounts.
d. Trueman elected to report these bonds in its financial statements at fair value. On December 31, 2016, these bonds were listed in the bond market at a price of 101
(or 101% of par value). What entry is required to adjust the reported value of these bonds to fair value?
e. Prepare a table summarizing the effect of these bonds on earnings for 2016.
Confirm Bond Price Journal…
The following bond investment transactions were completed by Starks Company:
Jan. 31
Purchased 42, $1,000 government bonds at 100 plus accrued interest of $210 (1 month). The bonds pay 6% annual interest on July 1 and January 1.
July 1
Received semiannual interest on bond investment.
Aug. 30
Sold 18, $1,000 bonds at 98 plus $180 accrued interest (2 months).
a. Journalize the entries for these transactions. Assume a 360-day year. Do not round interim calculations. Round final answers to nearest dollar. If an amount box does not require an entry, leave it blank.
Jan. 31
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July 1
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b. Journalize the December 31 adjusting entry for semiannual interest earned on…
Chapter 15 Solutions
Financial Accounting
Ch. 15.MJ - Prob. 1DQCh. 15.MJ - What is the difference between classifying an...Ch. 15.MJ - If a functional expense classification is used for...Ch. 15.MJ - Prob. 4DQCh. 15.MJ - What are two main differences in inventory...Ch. 15.MJ - Prob. 6DQCh. 15.MJ - Prob. 7DQCh. 15.MJ - Prob. 8DQCh. 15.MJ - Prob. 9DQCh. 15.MJ - How is treasury stock reported under IFRS? How...
Ch. 15.MJ - IFRS Activity 1
Unilever Group is a global company...Ch. 15.MJ - IFRS Activity 2 The following is a recent...Ch. 15.MJ - Prob. 3IFRSCh. 15 - Why might a business invest cash in temporary...Ch. 15 - What causes a gain or loss on the sale of a bond...Ch. 15 - When is the equity method the appropriate...Ch. 15 - Prob. 4DQCh. 15 - Prob. 5DQCh. 15 - Prob. 6DQCh. 15 - Prob. 7DQCh. 15 - Prob. 8DQCh. 15 - Prob. 9DQCh. 15 - Prob. 10DQCh. 15 - Prob. 1PEACh. 15 - Prob. 1PEBCh. 15 - On February 10, 15,000 shares of Sting Company are...Ch. 15 - Prob. 2PEBCh. 15 - Prob. 3PEACh. 15 - Prob. 3PEBCh. 15 - Prob. 4PEACh. 15 - Prob. 4PEBCh. 15 - Prob. 5PEACh. 15 - On January 1, 2016, Valuation Allowance for...Ch. 15 - Prob. 6PEACh. 15 - Prob. 6PEBCh. 15 - Parilo Company acquired 170,000 of Makofske Co.,...Ch. 15 - Prob. 2ECh. 15 - Prob. 3ECh. 15 - Prob. 4ECh. 15 - Prob. 5ECh. 15 - On March 4, Breen Corporation acquired 7,500...Ch. 15 - Prob. 7ECh. 15 - Prob. 8ECh. 15 - Seamus Industries Inc. buys and sells investments...Ch. 15 - Prob. 10ECh. 15 - Prob. 11ECh. 15 - Prob. 12ECh. 15 - Prob. 13ECh. 15 - JED Capital Inc. makes investments in trading...Ch. 15 - Prob. 15ECh. 15 - Prob. 16ECh. 15 - Prob. 17ECh. 15 - Prob. 18ECh. 15 - Prob. 19ECh. 15 - The investments of Steelers Inc. include a single...Ch. 15 - Prob. 21ECh. 15 - Storm, Inc. purchased the following...Ch. 15 - Prob. 23ECh. 15 - Prob. 24ECh. 15 - Prob. 25ECh. 15 - Prob. 26ECh. 15 - Prob. 27ECh. 15 - Prob. 28ECh. 15 - Prob. 29ECh. 15 - Prob. 1PACh. 15 - Prob. 2PACh. 15 - Prob. 3PACh. 15 - OBrien Industries Inc. is a book publisher. The...Ch. 15 - Prob. 1PBCh. 15 - Prob. 2PBCh. 15 - Prob. 3PBCh. 15 - Prob. 4PBCh. 15 - Selected transactions completed by Equinox...Ch. 15 - On July 16, 1998, Wyatt Corp. purchased 40 acres...Ch. 15 - International Financial Reporting Standard No. 16...Ch. 15 - Prob. 3CPCh. 15 - Berkshire Hathaway, the investment holding company...Ch. 15 - Prob. 5CP
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