College Accounting, Chapters 1-27
23rd Edition
ISBN: 9781337794756
Author: HEINTZ, James A.
Publisher: Cengage Learning,
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Chapter 22, Problem 3SEA
(a)
To determine
Journalize the entry for the issuance of bonds in the books of Company BHC.
(b)
To determine
Journalize the entry for the semiannual interest payment and discount amortization in the books of Company M.
(c)
To determine
Journalize the entry for the year-end adjustment in the books of Company BHC.
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Bond premium, entries for bonds payable transactions
Rodgers Gridiron Co. produces and sells football equipment. On July 1, 20Y1, Rodgers issued $75,900,000 of 10-
year, 13% bonds at a market (effective) interest rate of 12%, receiving cash of $80,252,470. Interest on the bonds
is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year.
Required:
For all journal entries, if an amount box does not require an entry, leave it blank.
1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, 20Y1.
20Y1 July 1
2. Journalize the entries to record the following:
a. The first semiannual interest payment on December 31, 20Y1, and the amortization of the bond premium, using
the straight-line method. Round to the nearest dollar.
20Y1 Dec. 31
b. The interest payment on June 30, 20Y2, and the amortization of the bond premium, using the straight-line
method. Round to the nearest dollar.
20Y2 June 30
3.…
The first semiannual interest payment on December 31, Year 1, and the amortization of the bond premium, using the straight-line
method. Round to the nearest dollar.
a.
Bonds Payable
b. The interest payment on June 30, Year 2, and the amortization of the bond premium, using the straight-line method. Round to
the nearest dollar.
3. Determine the total interest expense for Year 1. Round to the nearest dollar.
4. Will the bond proceeds always be greater than the face amount of the bonds when the contract rate is greater than the market rate
of interest?
5. Compute the price of $65,332,160 received for the bonds by using Present value at compound interest, and Present value of an
annuity. Round to the nearest dollar. Your total may vary slightly from the price given due to rounding differences.
Present value of the face amount
Present value of the semiannual interest payments
[The following information applies to the questions displayed below.]
Hillside issues $4,000,000 of 6%, 15-year bonds dated January 1, 2021, that pay interest semiannually on June 30 and
December 31.
The bonds are issued at a price of $3,456,448.
Required:
1. Prepare the January 1 journal entry to record the bonds' issuance.
2(a) For each semiannual period, complete the table below to calculate the cash payment.
2(b) For each semiannual period, complete the table below to calculate the straight-line discount amortization.
2(c) For each semiannual period, complete the table below to calculate the bond interest expense.
3. Complete the below table to calculate the total bond interest expense to be recognized over the bonds' life.
4. Prepare the first two years of a straight-line amortization table.
5. Prepare the journal entries to record the first two interest payments.
Complete this question by entering your answers in the tabs below.
Req 1
Req 2A to 2C
Req 3
Req 4
Req 5
For each…
Chapter 22 Solutions
College Accounting, Chapters 1-27
Ch. 22 - A secured bond is one that is backed by specific...Ch. 22 - Prob. 2TFCh. 22 - When bonds are issued at face value, the debit to...Ch. 22 - Prob. 4TFCh. 22 - Prob. 5TFCh. 22 - Bonds that give the holder the option of...Ch. 22 - Prob. 2MCCh. 22 - Prob. 3MCCh. 22 - Prob. 4MCCh. 22 - Bond sinking fund earnings are (a) subtracted from...
Ch. 22 - Prob. 1CECh. 22 - Prob. 2CECh. 22 - Prob. 3CECh. 22 - Prob. 4CECh. 22 - Prob. 5CECh. 22 - Prob. 1RQCh. 22 - Prob. 2RQCh. 22 - Prob. 3RQCh. 22 - Prob. 4RQCh. 22 - What accounts are affected when bonds are issued...Ch. 22 - Prob. 6RQCh. 22 - Prob. 7RQCh. 22 - Prob. 8RQCh. 22 - Prob. 9RQCh. 22 - When bonds are redeemed before maturity, how is...Ch. 22 - Prob. 11RQCh. 22 - How should sinking fund earnings be reported on...Ch. 22 - Prob. 13RQCh. 22 - Prob. 1SEACh. 22 - Prob. 2SEACh. 22 - Prob. 3SEACh. 22 - REDEMPTION OF BONDS ISSUED AT FACE VALUE Levesque...Ch. 22 - REDEMPTION OF BONDS ISSUED AT A PREMIUM Brighton...Ch. 22 - REDEMPTION OF BONDS ISSUED AT A DISCOUNT...Ch. 22 - BOND SINKING FUNDS M. J. Adams Corporation pays...Ch. 22 - BONDS ISSUED AT FACE VALUE Ito Co. issued the...Ch. 22 - Prob. 9SPACh. 22 - Prob. 10SPACh. 22 - Prob. 11SPACh. 22 - Prob. 12SPACh. 22 - Prob. 13SPACh. 22 - Prob. 1SEBCh. 22 - Prob. 2SEBCh. 22 - Prob. 3SEBCh. 22 - Prob. 4SEBCh. 22 - Prob. 5SEBCh. 22 - REDEMPTION OF BONDS ISSUED AT A DISCOUNT Medina...Ch. 22 - Prob. 7SEBCh. 22 - BONDS ISSUED AT FACE VALUE Ramona Arroyo Co....Ch. 22 - Prob. 9SPBCh. 22 - Prob. 10SPBCh. 22 - Prob. 11SPBCh. 22 - BONDS ISSUED AT A DISCOUNT, REDEEMED AT A GAIN...Ch. 22 - Prob. 13SPBCh. 22 - MANAGING YOUR WRITING The business where you work...Ch. 22 - Prob. 1ECCh. 22 - MASTERY PROBLEM Jackson, Inc.s fiscal year ends...Ch. 22 - CHALLENGE PROBLEM This problem challenges you to...
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- When the interest payment dates of a bond are May 1 and November 1,and a bond issue is sold on June 1, the amount of cash received by theissuer will be: a. increased by accrued interest from June 1 to November 1b. increased by accrued interest from May 1 to June 1c. decreased by accrued interest from June 1 to November 1d. decreased by accrued interest from May 1 to June 1arrow_forwardConcord Hills Ltd. issued five-year bonds with a face value of $180,000 on January 1. The bonds have a coupon interest rate of 5% and interest is paid semi-annually on June 30 and December 31. The market interest rate was 3% when the bonds were issued at a price of 109. Determine the balance in the Bonds Payable account immediately following the first interest payment. Balance in bonds payable accountarrow_forward1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, 20Y1. 2a. Journalize the entry to record the first semiannual interest payment on December 31, 20Y1, and the amortization of the bond premium, using the straight-line method.Compute the price of $42,601,480 received for the bonds by using the present value tablesarrow_forward
- Journalize the entries to record the following: If an amount box does not require an entry, leave it blank. a. The initial acquisition of the bonds on May 1. May 1 b. The semiannual interest received on November 1. Nov. 1 c. The sale of the bonds on November 1. Nov. 1 d. The accrual of $1,360 interest on December 31. Dec. 31arrow_forwardOn January 1, Year 1, Price Company issued $190,000 of five-year, 6 percent bonds at 96 12. Interest is payable annually on December 31. The discount is amortized using the straight-line method. Required Prepare the journal entries to record the bond transactions for Year 1 and Year 2. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet > 1 2 3 Record the entry for issuance of bonds. Note: Enter debits before credits. >arrow_forwardDarien Inc. redeemed $20,000 of its bonds at 102 on January 1. At this date, the unamortized discount was $2,760. Prepare the journal entry on January 1 for the bond redemption. Assume Darien has a December 31 year-end and all adjusting entries were made. Date Account Name Debit Credit Jan. 1   Answer    Answer    Answer    Answer  To record bond redemption.arrow_forward
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