Enviro Company issues 8%, 10-year bonds with a par value of $310,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 10%, which implies a selling price of 87 1/2. Prepare the journal entry for the issuance of the bonds for cash on January 1.

Enviro Company issues 8%, 10-year bonds with a par value of $310,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 10%, which implies a selling price of 87 1/2. Prepare the journal entry for the issuance of the bonds for cash on January 1.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: Wookie Company issues 9% , five-year bonds, on January 1 of this year, with a par value of $109,000…

A: Bonds payable refers to a type of long-term debt that a company or organization issues to borrow…

Q: Tano Company issues bonds with a par value of $90,000 on January 1, 2021. The bonds' annual contract…

A: Par value of bonds$90,000Less: Proceed received$85,431Discount ($90,000 - $85,431)$4,569

Q: Issuer Co. issued bonds with a face value of $200,000 and a stated rate of 3% on January 1, Year 1.…

A: The bonds are the financial instruments for the business that are used to raise money from the…

Q: Brussels Enterprises issues bonds at par dated January 1, 2019, that have a $3,400,000 par value,…

A: When the bonds are issued at par, then there shall be no premium or discount on bonds payable.

Q: January 1, a company issues bonds dated January 1 with a par value of $390,000. The bonds mature in…

A: The bonds are issued at premium when market rate is lower than the contract rate of bonds.

Q: On January of the current year, Banek Inc issued $350,000 of 8% nine year bonds for $309,086, which…

A: Bonds payable is one of the liability being incurred in business. It can be short term bonds or long…

Q: Garcia Company issues 11.0%, 15-year bonds with a par value of $440,00o0 and semiannual interest…

A: Journal entry: It is the duty of the accountant to keep the record and summarize the business…

Q: Quatro Company issues bonds dated January 1, 2021, with a par value of $760,000. The bonds' annual…

A: A premium bond is a bond whose current price is more than its face value. It will always have a…

Q: of 6% were sold at par value. The bonds were dated January 1, 20x6. Interest will be paid twice a…

A: The company issues bonds for the expansion of capital investment. The bonds were for a long period.…

Q: Paulson Company issues 6%, four-year bonds, on January 1 of this year, with a par value of $200,000…

A: Unamortized discount is the amount of discount on bonds payable which is not yet amorized as the…

Q: Quatro Company issues bonds dated January 1, 2021, with a par value of $900,000. The bonds' annual…

A: The bonds payable are treated as long term liabilities. The bonds are issued to raise money from the…

Q: Metlock, Inc. issued $282,000, 7%, 15-year bonds on December 31, 2021, for $253,800. Interest is…

A: Total discount on bonds = Face value of bonds - issue value of bonds = 282000-253800 = $28,200

Q: Paulson Company issues 7%, four-year bonds, on January 1 of this year, with a par value of $109,000…

A: Journal entry is the primary step to record the transaction in the books of accounts. Interest…

Q: Enviro Company issues 8%, 10-year bonds with a par value of $250,000 and semiannual interest…

A: Given: Company’s issues = 8% Life of bond = 10 years Par value = $ 250,000 Annual market rate = 5 %…

Q: Quatro Company issues bonds dated January 1, 2021, with a par value of $740,000. The bonds' annual…

A: Issue Price$758,222Less: Par Value$740,000Premium ($758,222 - $740,000)$18,222

Q: On January 1, Twilight Manufacturing issued $325,000 of 6%, 3-year bonds when the market rate of…

A: In a table known as a bond amortization schedule, the sum of interest paid, interest accrued, and…

Q: Garcia Company issues 12.0%, 15-year bonds with a par value of $460,000 and semiannual interest…

A: A bond is a loan taken by a company on which a specific percentage of interest has to be paid over a…

Q: Hillside issues $4,000,000 of 6%, 15-year bonds dated January 1, 2019, that pay interest…

A: The question is based on the concept of the issue of securities. As per Bartleby guidelines we are…

Q: Quatro Company issues bonds dated January 1, 2021, with a par value of $810,000. The bonds’ annual…

A: The bonds are issued at premium means the cash received form the issue of bonds is more than its…

Q: Hartford Research issues bonds dated January 1 that pay interest semiannually on June 30 and…

A: Present value: It refers to the current value of the sum of money or the series of cash flows that…

Q: Quatro Company issues bonds dated January 1, 2021, with a par value of $780,000. The bonds' annual…

A: The bonds are reported as the long-term liabilities in the balance sheet. The bonds are issued to…

Q: On January 1, Parson Freight Company issues 7.0%, 10-year bonds with a par value of $3,000,000. The…

A: Bonds payable are one of the sources of finance and are shown as liability. If the interest rate…

Q: Romania, Inc., issues 6%, 10-year bonds with a face amount of $60,000 for $55,736 on January 1,…

A: 1. Record the bond issue. Date Accounts & Explanation Debit Credit Jan 1, 2012 Cash $…

Q: On January 1, Parson Freight Company issues 9.0 %, 10-year bonds with a par value of $3,900,000. The…

A: Bonds payable are one of the sources of finance and are shown as liability. If the interest rate is…

Q: Brussels Enterprises issues bonds at par dated January 1, 2021, that have a $2,500,000 par value,…

A: Bonds are the securities issued by the entity for the purpose of raising funds from the market.…

Q: On January 1, a co. issues bonds dated Jan 1 with a par value of 330,000. the bond mature in 5…

A: The bonds are issued at premium when market rate is lower than the contract rate of bonds.

Q: Quatro Company issues bonds dated January 1, 2021, with a par value of $900,000. The bonds' annual…

A: When a corporation sells bonds to earn cash, bonds payable are recognized. The corporation is a…

Q: On January 1 Tab Company issued $1 million of ten-year 8% bonds at 95% of face amount. The bond…

A: Market interest rate refers to the rate of interest which is charged on the bond amount by the…

Q: Quatro issues bonds dated January 1, 2021, with a par value of $900,000. The bonds' annual contract…

A: Bonds payable refers to a type of long-term debt that a company or organization issues to borrow…

Q: Brussels Enterprises issues bonds at par dated January 1, 2021, that have a $2,600,000 par value,…

A: A bond payable is an instrument to raise finance from the market or from existing stockholders in…

Q: Tano Company issues bonds with a par value of $87,000 on January 1, 2021. The bonds' annual contract…

A: Introduction: Bonds are issued to finance ongoing maintenance as well as infrastructure upgrades.…

Q: On the first day of the fiscal year, a company issues a $1,450,000, 5%, five-year bond that pays…

A: Discount on Bonds Payable = Face value of the bonds - Issue value of the bonds = $1,450,000 -…

Q: Hillside issues $1,900,000 of 5%, 15-year bonds dated January 1, 2019, that pay interest…

A: Face value of bond = $ 1,900,000 Issue price of bond = $ 1,641,812…

Q: Quatro Company issues bonds dated January 1, 2021, with a par value of $700,000. The bonds' annual…

A: Issue Price$717,237Less: Par Value$700,000Premium ($717,237 - $700,000)$17,237

Q: For each of the following three examples, provide the journal entry that the company would make on…

A: Issue price of the bonds = Present value of principal + Present value of interest payments = (Face…

Q: Garcia Company issues 10%, 15-year bonds with a par value of $240,000 and semiannual interest…

A: The bonds are recorded as long term liabilities in the books. The bonds are issued at premium when…

Q: On January 1, Parson Freight Company issues 8.5%, 10-year bonds with a par value of $4,300,000. The…

A: Bonds payable is one of the liability being incurred in business. There can be long term bonds or…

Q: Enviro Company issues 8%, 10-year bonds with a par value of $170,000 and semiannual interest…

A: Bonds payable is the liability which contains the amount that is payable to the bond holders. The…

Q: Enviro Company issues 10%, 10-year bonds with a par value of $240,000 and semiannual interest…

A: Introduction: When company needs funds for its business, it borrows money by issuing bonds. Company…

Q: Enviro Company issues 8%, 10-year bonds with a par value of $200,000 and semiannual interest…

A: It's a kind of security that gives investors face value at the end of the maturity period together…

Q: Ellis Company issues 6.5%, five-year bonds dated January 1, 2021, with a $250,000 par value. The…

A: Bond is a borrowing security issued by the company to raise funds from the market by making an…

Question

Enviro Company issues 8%, 10-year bonds with a par value of $310,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 10%, which implies a selling price of 87 1/2.

Prepare the journal entry for the issuance of the bonds for cash on January 1.

Definition Definition Method of recording financial transactions in the book of original entry by debiting and crediting the accounts affected by a transaction using the golden rules of accrual accounting.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Introduction:

VIEW

Journal Entry:

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Company E issues $300,000 worth of 7.5% bonds on January 1, 20x2, which will mature on December 31, 20x3. The market rate on the date of issuance is 6%. Interest will be paid semiannually on June 30 and December 31. Calculate the purchase price of the bonds. Does the price make sense? Explain. How will the bond value appear in the newspaper? Record all journal entries necessary from the date of issue until the maturity date. Be sure to show all calculations.
National Orthopedics Co. issued 9% bonds, dated January 1, with a face amount of $500,000 on January 1, 2018.The bonds mature on December 31, 2021 (4 years). For bonds of similar risk and maturity the market yield was10%. Interest is paid semiannually on June 30 and December 31.Required:1. Determine the price of the bonds at January 1, 2018.2. Prepare the journal entry to record their issuance by National on January 1, 2018.3. Prepare an amortization schedule that determines interest at the effective rate each period.4. Prepare the journal entry to record interest on June 30, 2018.5. Prepare the appropriate journal entries at maturity on December 31, 2021.
Quatro Company issues bonds dated January 1, 2021, with a par value of $760,000. The bonds' annual contract rate is 10%, and interest is paid semiannually on June 30 and December 31. The bonds mature in three years. The annual market rate at the date of issuance is 8 %, and the bonds are sold for $799, 828. What is the amount of the premium on these bonds at issuance? How much total bond interest expense will be recognized over the life of these bonds? Prepare an effective interest amortization table for these bonds
On May 1, Holiday Company issued $200,000, 9%, 10-year bonds for $213,591 when the market rate was 8%. Prepare the general journal entry for the first semiannual interest payment and bond premium amortization on November 1, using the effective interest method. Round all amounts to the nearest dollar.
Quatro Company issues bonds dated January 1, 2021, with a par value of $880,000. The bonds' annual contract rate is 13%, and interest is paid semiannually on June 30 and December 31. The bonds mature in three years. The annual market rate at the date of issuance is 12%, and the bonds are sold for $901,670. What is the amount of the premium on these bonds at issuance? How much total bond interest expense will be recognized over the life of these bonds? Prepare a straight-line amortization table for these bonds.
Enviro Company issues 10%, 10-year bonds with a par value of $300,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 12%, which implies a selling price of 88 1/2. Prepare the journal entry for the issuance of the bonds for cash on January 1. View transaction list Journal entry worksheet
Garcia Company issues 10%, 15-year bonds with a par value of $310,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 8%, which implies a selling price of 117 %. The effective interest method is used to allocate interest expense. 1. What are the issuer's cash proceeds from issuance of these bonds? 2. What total amount of bond interest expense will be recognized over the life of these bonds? 3. What amount of bond interest expense is recorded on the first interest payment date? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 What amount of bond interest expense is recorded on the first interest payment date? Bond interest expense
Snap Company issues 10%, five-year bonds, on January 1 of this year, with a par value of $100,000 andsemiannual interest payments. Use the following bond amortization table and prepare journal entries torecord (a) the issuance of bonds on January 1, (b) the first interest payment on June 30, and (c) the secondinterest payment on December 31.Semiannual Period-End Unamortized Discount Carrying Value(0) January 1, issuance . $7,360 $92,640(1) June 30, first payment . . . . . . . . . . . . 6,624 93,376(2) December 31, second payment 5,888 94,112
On January 1, Innovative Solutions, Inc., issued $200,000 in bonds at face value. The bonds havea stated interest rate of 6 percent. The bonds mature in 10 years and pay interest once per year onDecember 31.Required:1. Prepare the journal entry to record the bond issuance.2. Prepare the journal entry to record the first interest payment on December 31. Assume nointerest has been accrued earlier in the year.3. Assume the bonds were retired immediately after the first interest payment at a quoted priceof 101. Prepare the journal entry to record the early retirement of the bonds.
Garcia Company issues 13.5%, 15-year bonds with a par value of $490,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 11.5%, which implies a selling price of 112 1/4. Prepare the journal entry for the issuance of these bonds for cash on January 1. View transaction list Journal entry worksheet 1 Record the issue of bonds with a par value of $490,000 at a selling price of 112 1/4. Note: Enter debits before credits. Date January 01 Record entry General Journal Clear entry Debit Credit View general journal
On January 1, Topeka Outfitters issued $175,000 of 6%, 3-year bonds when the market rate of interest was 10%. The bonds pay interest semiannually on June 30 and December 31. How much are the proceeds that Topeka Outfitters? will receive on the issue date of the bonds?
On January 1, Year 1, a company issues $570,000 of 7% bonds, due in 10 years, with interest payable semiannually on June 30 and December 31 each year. Assuming the market interest rate on the issue date is 8%, the bonds will issue at $531,269. Record the bond issue on January 1, Year 1, and the first two semiannual interest payments on June 30, Year 1, and December 31, Year 1. DATE GENERAL JOURNAL DEBIT CREDIT Jan 1 June 30 Dec 31