On September 30, 2012, Cullumber Company issued 10% bonds with a par value of $460,000 due in 20 years. They were issued at 98and were callable at 105 at any date after September 30, 2017. Because Cullumber Company was able to obtain financing at lowerrates, it decided to call the entire issue on September 30, 2018, and to issue new bonds. New 9% bonds were sold in the amount of$780,000 at 102; they mature in 20 years. Cullumber Company uses straight-line amortization. Interest payment dates are March 31and September 30. (b)Prepare the entry required on December 31, 2018, to accrue interest and amortize the premium on the bonds. (Credit accounttitles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for theaccount titles and enter O for the amounts. Round answers to O decimal places, e.g. 5,275.)Account Titles and ExplanationeTextbook and MediaList of AccountsDebitCredit

Journal entry is the first stage of the accounting process.Journal entries are used to record…

Prepare the entry required on December 31, 2018, to accrue interest and amortize the premium on the bonds. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the nttities and ante fer

Prepare the entry required on December 31, 2018, to accrue interest and amortize the premium on the bonds. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the nttities and ante fer

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter13: Long-term Liabilities

Section: Chapter Questions

Problem 4EA: On January 1, 2018, Wawatosa Inc. issued 5-year bonds with a face value of $200,000 and a stated...

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On January 1, 2018, Wawatosa Inc. issued 5-year bonds with a face value of $200,000 and a stated interest rate of 12% payable semi-annually on July 1 and January 1. The bonds were sold to yield 10%. Assuming the bonds were sold at 107.732, what is the selling price of the bonds? Were they issued at a discount or a premium?
On September 30, 2012, Sheridan Company issued 10% bonds with a par value of $520,000 due in 20 years. They were issued at 98 and were callable at 105 at any date after September 30, 2017. Because Sheridan Company was able to obtain financing at lower rates, it decided to call the entire issue on September 30, 2018, and to issue new bonds. New 8% bonds were sold in the amount of $880,000 at 103; they mature in 20 years. Sheridan Company uses straight-line amortization. Interest payment dates are March 31 and September 30. (b) Your answer is partially correct. Prepare the entry required on December 31, 2018, to accrue interest and amortize the premium on the bonds. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Round answers to O decimal places, e.g. 5,275.) Account Titles and Explanation Interest Expense Premium on Bonds Payable Cash…
On September 30, 2012, Wildhorse Company issued 9% bonds with a par value of $580,000 due in 20 years. They were issued at 97 and were callable at 103 at any date after September 30, 2017. Because Wildhorse Company was able to obtain financing at lower rates, it decided to call the entire issue on September 30, 2018, and to issue new bonds. New 7% bonds were sold in the amount of $700,000 at 104; they mature in 20 years. Wildhorse Company uses straight-line amortization. Interest payment dates are March 31 and September 30. a. Prepare journal entries to record the redemption of the old issue and the sale of the new issue on September 30, 2018. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) b. Prepare the entry required on December 31, 2018, to accrue interest and amortize the premium on the bonds. (Credit account titles are automatically…
On September 30, 2012, Sheridan Company issued 10% bonds with a par value of $520,000 due in 20 years. They were issued at 98 and were callable at 105 at any date after September 30, 2017. Because Sheridan Company was able to obtain financing at lower rates, it decided to call the entire issue on September 30, 2018, and to issue new bonds, New 8% bonds were sold in the amount of $880,000 at 103; they mature in 20 years. Sheridan Company uses straight-line amortization. Interest payment dates are March 31 and September 30. Your answer is correct. Prepare journal entries to record the redemption of the old issue and the sale of the new issue on September 30, 2018. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts) Account Titles and Explanation Debit Credit F
On June 30, 2016, Flint Limited issued 13.75% bonds with a par value of $802,000 due in 20 years. They were issued at 99 and were callable at 102 at any date after June 30, 2023. Because of lower interest rates and a significant change in the company's credit rating, it was decided to call the entire issue on June 30, 2023, and to issue new bonds. New 10% bonds were sold in the amount of $1 million at 104; they mature in 20 years. The company follows ASPE and uses straight-line amortization. The interest payment dates are December 31 and June 30 of each year. Prepare the entry required on December 31, 2023, to record the payment of the first six months of interest and the amortization of the bond premium. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.) Date Account Titles and Explanation Dec.…
On June 30, 2013, Riverbed Limited issued 11.75% bonds with a par value of $761,000 due in 20 years. They were issued at 98 and were callable at 104 at any date after June 30, 2020. Because of lower interest rates and a significant change in the company's credit rating, it was decided to call the entire issue on June 30, 2020, and to issue new bonds. New 10% bonds were sold in the amount of $1 million at 102; they mature in 20 years. The company follows ASPE and uses straight-line amortization. The interest payment dates are December 31 and June 30 of each year. Prepare journal entries to record the retirement of the old issue and the sale of the new issue on June 30, 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts) Debit Credit Date Account Titles and Explanation June 30, 2020 (To record redemption of bonds payable) June 30, 2020…
On June 30, 2016. Cheyenne Limited issued 12.75% bonds with a par value of $790,000 due in 20 years. They were issued at 97 and were callable at 106 at any date after June 30, 2023. Because of lower interest rates and a significant change in the company's credit rating, it was decided to call the entire issue on June 30, 2023, and to issue new bonds. New 10% bonds were sold in the amount of $1 million at 101; they mature in 20 years. The company follows ASPE and uses straight-line amortization. The interest payment dates are December 31 and June 30 of each year. Prepare journal entries to record the retirement of the old issue and the sale of the new issue on June 30, 2023. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.) Date Account Titles and Explanation June 30, 2023 June 30, 2023 Bonds…
On June 30, 2012, Crane Company issued 12% bonds with a par value of $770,000 due in 20 years. They were issued at 98 and were callable at 103 at any date after June 30, 2020. Because of lower interest rates and a significant change in the company’s credit rating, it was decided to call the entire issue on June 30, 2021, and to issue new bonds. New 10% bonds were sold in the amount of $1,000,000 at 102; they mature in 20 years. Crane Company uses straight-line amortization. Interest payment dates are December 31 and June 30. (a) Prepare journal entries to record the redemption of the old issue and the sale of the new issue on June 30, 2021. (b) Prepare the entry required on December 31, 2021, to record the payment of the first 6 months’ interest and the amortization of premium on the bonds.
On June 30, 2017, Oriole Corp. issued 10% bonds with a face value of $800,000 due in 20 years. They were issued at 98 and were callable at 104 at any date after June 30, 2025. Because of lower interest rates and a significant change in the company's credit rating, it was decided to call the entire issuance on June 30, 2026, after interest has been paid and to issue new bonds. New 10% bonds with a face value of $1,040,000 were sold at 102; they mature in 20 years. Oriole Corp. uses straight-line amortization. Interest payment dates are December 31 and June 30. (a) Prepare journal entries to record the retirement of the old issuance and the sale of the new issuance on June 30, 2026. (b) Prepare the entry required on December 31, 2026, to record the payment of the first 6 months' interest and the amortization of premium on the bonds. (If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when the…
On June 30, 2012, Marigold Company issued 12% bonds with a par value of $840,000 due in 20 years. They were issued at 98 and were callable at 103 at any date after June 30, 2020. Because of lower interest rates and a significant change in the company’s credit rating, it was decided to call the entire issue on June 30, 2021, and to issue new bonds. New 8% bonds were sold in the amount of $1,060,000 at 103; they mature in 20 years. Marigold Company uses straight-line amortization. Interest payment dates are December 31 and June 30. (a) Prepare journal entries to record the redemption of the old issue and the sale of the new issue on June 30, 2021. (b) Prepare the entry required on December 31, 2021, to record the payment of the first 6 months’ interest and the amortization of premium on the bonds.
On June 30, 2012, Cheyenne Company issued 12% bonds with a par value of $770,000 due in 20 years. They were issued at 98 and were callable at 103 at any date after June 30, 2020. Because of lower interest rates and a significant change in the company's credit rating, it was decided to call the entire issue on June 30, 2021, and to issue new bonds. New 10% bonds were sold in the amount of $1,000,000 at 102; they mature in 20 years. Cheyenne Company uses straight-line amortization. Interest payment dates are December 31 and June 30. (a) (b) (Round answers to O decimal places, e.g. 38,548. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Prepare journal entries to record the redemption of the old issue and the sale of the new issue on June 30, 2021. Prepare the entry required on December 31, 2021, to record the…
(b) On June 30, 2017. Cheyenne Company issued 12% bonds with a par value of $720,000 due in 20 years. They were issued at 97 and were callable at 104 at any date after June 30, 2025. Because of lower interest rates and a significant change in the company's credit rating, it was decided to call the entire issue on June 30, 2026, and to issue new bonds. New 10% bonds were sold in the amount of $940,000 at 102; they mature in 20 years. Cheyenne Company uses straight-line amortization. Interest payment dates are December 31 and June 30. (a) (b) Prepare journal entries to record the redemption of the old issue and the sale of the new issue on June 30, 2026. Prepare the entry required on December 31, 2026, to record the payment of the first 6 months' interest and the amortization of premium on the bonds. (If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent…