Financial And Managerial Accounting
15th Edition
ISBN: 9781337902663
Author: WARREN, Carl S.
Publisher: Cengage Learning,
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Question
Chapter 11, Problem 4E
a.
To determine
Prepare
b.
To determine
Prepare journal entry to record first interest payment and amortization of premium on bonds.
c.
To determine
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
Financial And Managerial 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 12%...Ch. 11 - Prob. 4DQCh. 11 - Prob. 5DQCh. 11 - Prob. 6DQCh. 11 - Prob. 7DQCh. 11 - Fleeson Company needs additional funds to purchase...Ch. 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. 3BECh. 11 - Prob. 4BECh. 11 - Prob. 5BECh. 11 - Prob. 6BECh. 11 - Times interest earned Averill Products Inc....Ch. 11 - Prob. 1ECh. 11 - Entries for issuing bonds Thomson Co. produces and...Ch. 11 - Prob. 3ECh. 11 - Prob. 4ECh. 11 - Prob. 5ECh. 11 - Entries for issuing and calling bonds; gain Mia...Ch. 11 - Prob. 7ECh. 11 - Present value of amounts due Assume that you are...Ch. 11 - Prob. 9ECh. 11 - Present value of an annuity On January 1, you win...Ch. 11 - Prob. 11ECh. 11 - Prob. 12ECh. 11 - Prob. 13ECh. 11 - Prob. 14ECh. 11 - Appendix 2 Amortize premium by interest method...Ch. 11 - Prob. 16ECh. 11 - Prob. 17ECh. 11 - Bond discount, entries for bonds payable...Ch. 11 - Prob. 2PACh. 11 - Entries for bonds payable, including bond...Ch. 11 - Appendix 1 and Appendix 2 Bond discount, entries...Ch. 11 - Prob. 5PACh. 11 - Bond discount, entries for bonds payable...Ch. 11 - Prob. 2PBCh. 11 - Entries for bonds payable, including bond...Ch. 11 - Prob. 4PBCh. 11 - Prob. 5PBCh. 11 - Analyze and compare Amazon.com and Wal-Mart...Ch. 11 - Analyze and compare Clorox and Procter Gamble The...Ch. 11 - Prob. 3MADCh. 11 - Analyze and compare Hilton and Marriott Hilton...Ch. 11 - Prob. 1TIFCh. 11 - Prob. 3TIFCh. 11 - Prob. 4TIF
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