Horngren's Accounting (12th Edition)
12th Edition
ISBN: 9780134486444
Author: Tracie L. Miller-Nobles, Brenda L. Mattison, Ella Mae Matsumura
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Textbook Question
Chapter 14, Problem P14.40BPGB
Analyzing, journalizing, and reporting bond transactions
Learning Objectives 2, 3 2. Discount $2,250
Johnny's Hamburgers issued 8%, 10-year bonds payable at 85 on December 31,2018 At December 31,2020, Johnny reported the bonds payable as follows:
Long-term Liabilities:
Bonds Payable
$ 300,000
Less: Discount on Bonds Payable
(36,000) $ 264,000
Johnny pays semiannual interest each June 30 and December 31.
Requirements
- Answer the following questions about Johnny's bonds payable:
- What is the maturity
value of the bonds ? - What is the carrying amount of the bonds at December 31,2020?
- What is the semiannual cash interest payment on the bonds?
- How much interest expense should the company record each year?
- Record the June 30, 2020, semiannual interest payment and amortization of discount.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Please assist with 7,8,9,10
Problem #1
Hillside issues $4,000,000, 6%, 15-year bonds dated January 1, 2023. The bonds pay interest semi-annually on June 30 and December 31. The bonds were issued at $3,456,400.
Record the journal entry to issue the bonds on January 1, 2023.
a. Record the journal entry to pay the semi-annual interest payment and amortize the discount on June 30, 2023.
Record the journal entry to pay the semi-annual interest payment and amortize the discount on Dec. 31, 2023.
On March 31, 2029, Hillside calls the bonds at 101. Record the journal entry to call the bonds.
What is the total interest expense for the bonds for:
One full year?
The entire 15-year life of the bond? (if the bond had been held until maturity)
What is the carrying value of the bonds on:
December 31, 2023?
December 31, 2024?
Please assist with questions 7,8,9,10
Problem #2
Ellis issues $250,000, 6.5%, 5-year bonds dated January 1, 2023. The bonds pay interest semi-annually on June 30 and December 31. The bonds were issued at $255,330.
Record the journal entry to issue the bonds on January 1, 2023.
a. Record the journal entry to pay the semi-annual interest payment and amortize the premium on June 30, 2023.
Record the journal entry to pay the semi-annual interest payment and amortize the premium on Dec. 31, 2023.
On September 1, 2026, Ellis calls the bonds at 99. Record the journal entry to call the bonds.
What is the total interest expense for the bonds for:
One full year?
The entire 5-year life of the bond? (if the bond had been held until maturity)
What is the carrying value of the bonds on:
December 31, 2023?
December 31, 2024?
Problem #1
Hillside issues $4,000,000, 6%, 15-year bonds dated January 1, 2023. The bonds pay interest semi-annually on June 30 and December 31. The bonds were issued at $3,456,400.
Record the journal entry to issue the bonds on January 1, 2023.
a. Record the journal entry to pay the semi-annual interest payment and amortize the discount on June 30, 2023.
Record the journal entry to pay the semi-annual interest payment and amortize the discount on Dec. 31, 2023.
On March 31, 2029, Hillside calls the bonds at 101. Record the journal entry to call the bonds.
What is the total interest expense for the bonds for:
One full year?
The entire 15-year life of the bond? (if the bond had been held until maturity)
What is the carrying value of the bonds on:
December 31, 2023?
December 31, 2024?
Chapter 14 Solutions
Horngren's Accounting (12th Edition)
Ch. 14 - Prob. 1QCCh. 14 - Daniels's bonds payable carry a stated interest...Ch. 14 - Prob. 3QCCh. 14 - Prob. 4QCCh. 14 - Prob. 5QCCh. 14 - Prob. 6QCCh. 14 - Prob. 7QCCh. 14 - Prob. 8QCCh. 14 - Prob. 9AQCCh. 14 - 10B Hicks Corporation issued S500.000 of 5%,...
Ch. 14 - Prob. 1RQCh. 14 - Prob. 2RQCh. 14 - Prob. 3RQCh. 14 - Prob. 4RQCh. 14 - Prob. 5RQCh. 14 - Prob. 6RQCh. 14 - Prob. 7RQCh. 14 - Prob. 8RQCh. 14 - Prob. 9RQCh. 14 - Prob. 10RQCh. 14 - Prob. 11RQCh. 14 - Prob. 12RQCh. 14 - 13. What type of account is Premium on Bonds...Ch. 14 - Prob. 14RQCh. 14 - Prob. 15RQCh. 14 - Prob. 16RQCh. 14 - What does the debt to equity ratio show, and how...Ch. 14 - Prob. 18ARQCh. 14 - Prob. 19ARQCh. 14 - Prob. 20ARQCh. 14 - Prob. 21BRQCh. 14 - Accounting fora long-term note payable Learning...Ch. 14 - Prob. S14.2SECh. 14 - Prob. S14.3SECh. 14 - Prob. S14.4SECh. 14 - Determining bond amounts Learning Objective 3...Ch. 14 - Journalizing bond transactions Learning Objective...Ch. 14 - Journalizing bond transactions Learning Objective...Ch. 14 - Prob. S14.8SECh. 14 - Prob. S14.9SECh. 14 - Prob. S14.10SECh. 14 - Prob. S14.11SECh. 14 - Prob. S14.12SECh. 14 - Prob. S14A.13SECh. 14 - Prob. S14A.14SECh. 14 - Prob. S14A.15SECh. 14 - Prob. S14B.16SECh. 14 - Prob. S14B.17SECh. 14 - Accounting for long-term notes payable...Ch. 14 - Prob. E14.19ECh. 14 - Prob. E14.20ECh. 14 - Determining bond prices and interest expense...Ch. 14 - Journalizing bond issuance and interest payments...Ch. 14 - Journalizing bond issuance and interest payments...Ch. 14 - Journalizing bond transactions Learning Objective...Ch. 14 - Journalizing bond issuance and interest payments...Ch. 14 - Retiring bonds payable before maturity Learning...Ch. 14 - Prob. E14.27ECh. 14 - Prob. E14.28ECh. 14 - Prob. E14.29ECh. 14 - Prob. E14A.30ECh. 14 - Prob. E14B.31ECh. 14 - Prob. P14.32APGACh. 14 - Analyzing, journalizing, and reporting bond...Ch. 14 - Analyzing and journalizing bond transactions...Ch. 14 - Prob. P14.35APGACh. 14 - Prob. P14.36APGACh. 14 - Prob. P14AB.37APGACh. 14 - Prob. P14AB.38APGACh. 14 - Journalizing liability transactions and reporting...Ch. 14 - Analyzing, journalizing, and reporting bond...Ch. 14 - Prob. P14.41BPGBCh. 14 - Analyzing and journalizing bond transactions...Ch. 14 - Prob. P14.43BPGBCh. 14 - Prob. P14AB.44BPGBCh. 14 - Prob. P14AB.45BPGBCh. 14 - Prob. P14.46CTCh. 14 - Prob. P14.47CPCh. 14 - Prob. 1CPCh. 14 - Prob. 2CPCh. 14 - Prob. 3CPCh. 14 - Prob. 4CPCh. 14 - Prob. 5CPCh. 14 - Prob. 6CPCh. 14 - Prob. 7CPCh. 14 - Prob. 8CPCh. 14 - Prob. 14.1TIATCCh. 14 - Decision Case 14-1 The following questions are not...Ch. 14 - Ethical Issue 14-1 Raffle's Kids, a nonprofit...Ch. 14 - Prob. 14.1FCCh. 14 - Prob. 14.1FSC
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
- Edward Inc. issued bonds with a $500,000 face value, 10% interest rate, and a 4-year term on July 1, 2018 and received $480,000. Interest is payable semiannually. The discount is amortized using the straight-line method. Prepare journal entries for the following transactions. A. July 1, 2018: entry to record issuing the bonds B. Dec. 31, 2018: entry to record payment of interest to bondholders C. Dec. 31, 2018: entry to record amortization of discountarrow_forwardVolunteer Inc. issued bonds with a $500,000 face value, 10% interest rate, and a 4-year term on July 1, 2018 and received $540,000. Interest is payable annually. The premium is amortized using the straightline method. Prepare journal entries for the following transactions. A. July 1, 2018: entry to record issuing the bonds B. June 30, 2019: entry to record payment of interest to bondholders C. June 30, 2019: entry to record amortization of premium D. June 30, 2020: entry to record payment of interest to bondholders E. June 30, 2020: entry to record amortization of premiumarrow_forwardKnowledge Check Shop It issued $38,500,6-year, 3% bonds on January 1,2025 , for $40,810. Interest is payable on January 1 of each year. Shop it uses the straight-line method to amortize bond premium. Determine (a) annual interest expense for 2025 , and (b) total cost of borrowing. (a) Annual interest expense for 2025$ (b) Total cost of borrowing $ Attempts: 0 of 3 usedarrow_forward
- Problem #2 Ellis issues $250,000, 6.5%, 5-year bonds dated January 1, 2023. The bonds pay interest semi-annually on June 30 and December 31. The bonds were issued at $255,330. Record the journal entry to issue the bonds on January 1, 2023. a. Record the journal entry to pay the semi-annual interest payment and amortize the premium on June 30, 2023. Record the journal entry to pay the semi-annual interest payment and amortize the premium on Dec. 31, 2023. On September 1, 2026, Ellis calls the bonds at 99. Record the journal entry to call the bonds. What is the total interest expense for the bonds for: One full year? The entire 5-year life of the bond? (if the bond had been held until maturity) What is the carrying value of the bonds on: December 31, 2023? December 31, 2024?arrow_forwardLearning Objective 3:Question 1: Straight-line MethodWired Inc. sold 10-year bonds with a total face amount of $1,500,000 and a stated rate of 10%. The bonds sold for $1,400,000 on January 1, 2020, and pay interest semiannually on June 30 and December 31.Required:1. Prepare the entry to recognize the sale of the bonds. 2. Determine the amount of the semiannual interest payment required by the bonds. 3. Prepare the journal entry made by Wired at June 30, 2020, to recognize the interest expense and an interest payment.Record the first interest payment. 4. Determine the amount of interest expense for 2020.arrow_forwarde: Practice! Issuing Bonds at a Discount 10 Issuing Bonds at a Discount On the first day of the fiscal year, a company issues a $4,700,000, 6%, 4-year bond that pays semiannual interest of $141,000 ($4,700,000 x 6% x 2), receiving cash of $4,538,462. Journalize the entry to record the issuance of the bonds. If an anmount box does not require an entry, leave it blank. Submit Answer Try Another Version Save and Exit Subrt Assigroentforarrow_forward
- journal entry jan 1, 2024 june 30, 2024 dec 31, 2024 On January 1, 2024, Splash City issues $420,000 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 $391,462. Exercise 9-11 (Algo) Part 2 2. Record the bond issue on January 1, 2024, and the first two semiannual Interest payments on June 30, 2024, and December 31, 2024. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field. Round your Intermediate and final answers to the nearest whole dollar.) View transaction list Journal entry worksheetarrow_forwardBrief Exercise 10-09 Oriole Company issues $325,000, 20-year, 7% bonds at 103. Prepare the journal entry to record the sale of these bonds on June 1, 2022. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit Enter an account title enter a debit amount enter a credit amount Enter an account title enter a debit amount enter a credit amount Enter an account title enter a debit amount enter a credit amountarrow_forwardLegacy issues $660,000 of 5.5%, four-year bonds dated January 1, 2019, that pay interest semiannually on June 30 and December 31. They are issued at $648,412 when the market rate is 6%. Problem 14-4A Part 4 4. Prepare the journal entries to record the first two interest payments. Record the interest payment and amortization on June 30. Record the interest payment and amortization on December 31.arrow_forward
- Learning Objectives 2, 3, 6: Issue convertible bonds at a discount; amortize usingthe effective interest method; convert bonds; report bonds payable on the balance sheet) OnDecember 31, 2018, Herndon Corporation issues 6%, 10-year convertible bonds payable witha face value of $1,000,000. The semiannual interest dates are June 30 and December 31. Themarket interest rate is 7%. Herndon amortizes bond discounts using the effective-interestmethod.Requirements1. Use the PV function in Excel to calculate the issue price of the bonds.2. Prepare an effective-interest method amortization table for the term of the bonds usingExcel.3. Journalize the following transactions:a. Issuance of the bonds on December 31, 2018. Credit Convertible Bonds Payable.b. Payment of interest and amortization of the bond discount on June 30, 2019.c. Payment of interest and amortization of the bond discount on December 31, 2019.d. Conversion by the bondholders on July 1, 2020, of bonds with a total face value…arrow_forwardLegacy issues $660,000 of 5.5%, four-year bonds dated January 1, 2019, that pay interest semiannually on June 30 and December 31. They are issued at $648,412 when the market rate is 6%. Problem 14-4A Part 2 2. Determine the total bond interest expense to be recognized over the bonds' life. Total bond interest expense over life of bonds: Amount repaid: payments of Par value at maturity Total repaid 0 Less amount borrowed Total bond interest expense $0arrow_forwardLearning Objective 2: Issue bonds payable (discount); record interest payments andthe related bond amortization using the effective-interest method) Energy Ltd. is authorizedto issue $3,000,000 of 1%, 10-year bonds payable. On December 31, 2018, when the marketinterest rate is 8%, the company issues $2,400,000 of the bonds. Energy amortizes bond discountusing the effective-interest method. The semiannual interest dates are June 30 and December 31.Requirements1. Use the PV function in Excel to calculate the issue price of the bonds.2. Prepare a bond amortization table for the term of the bonds using Excel.3. Record the issuance of the bonds payable on December 31, 2018; the first semiannualinterest payment on June 30, 2019; and the second payment on December 31, 2019.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax CollegeCornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College
Cornerstones of Financial Accounting
Accounting
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Cengage Learning
Financial Accounting - Long-term Liabilities - Bonds; Author: Finance & Accounting Videos by Prof Coram;https://www.youtube.com/watch?v=_1fwsJIGMos;License: Standard Youtube License