College Accounting, Chapters 1-27
23rd Edition
ISBN: 9781337794756
Author: HEINTZ, James A.
Publisher: Cengage Learning,
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Chapter 22, Problem 13SPA
(a)
To determine
Journalize the entry for the issuance of bonds in the books of M Manufacturing.
(b)
To determine
Record the journal entry for the initial deposit to the bond sinking fund.
(c)
To determine
Journalize the entry for the semiannual interest payment in the books of M Manufacturing.
(d)
To determine
Record the journal entry for the first year’s sinking fund earnings.
(e)
To determine
Journalize the entry for the year-end adjustment in the books of M Manufacturing.
(f)
To determine
Journalize the entry to reverse the year-end adjustment in the books of M Manufacturing.
(g)
To determine
Journalize the entry for the semiannual interest payment in the books of M Manufacturing.
(h)
To determine
Record the journal entry for the deposit to bond sinking fund.
(i)
To determine
Record the journal entry for the redemption of the bonds.
(j)
To determine
Record the journal entry for the return of excess cash in the sinking fund to the corporation.
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On January 1, 2024, Tennessee Harvester Corporation issued debenture bonds that pay interest semiannually on June 30 and December 31. Portions of the bond amortization schedule appear below:
Payment Cash Payment Effective Interest Increase in Balance Outstanding Balance
6,221,759
1 356,000 373,306 17,306 6,239,065
2 356,000 374,344 18,344 6,257,409
3 356,000 375,445 19,445 6,276,854
4 356,000 376,611 20,611 6,297,465
5 356,000 377,848 21,848 6,319,313
6 356,000 379,159 23,159 6,342,472
~ ~ ~ ~ ~
~ ~ ~ ~ ~
~ ~ ~ ~ ~
38 356,000 505,452 149,452 8,573,656
39 356,000 514,419 158,419 8,732,075
40 356,000 523,925 167,925 8,900,000
Required:
What is the face amount of the bonds?
What is the initial selling price of the bonds?
What is the term to maturity in years?
Interest is determined by what approach?
What is the stated annual interest rate?
What is the effective annual interest rate?
What is the total cash interest paid over the term to maturity?
What is the total effective…
On January 1, 2024, Tennessee Harvester Corporation issued debenture bonds that pay interest semiannually on June 30 and December 31. Portions of the bond amortization schedule appear below:
Payment
Cash Payment
Effective Interest
Increase in Balance
Outstanding Balance
6,286,574
1
370,000
377,194
7,194
6,293,768
2
370,000
377,626
7,626
6,301,394
3
370,000
378,084
8,084
6,309,478
4
370,000
378,569
8,569
6,318,047
5
370,000
379,083
9,083
6,327,130
6
370,000
379,628
9,628
6,336,758
~
~
~
~
~
~
~
~
~
~
~
~
~
~
~
38
370,000
432,132
62,132
7,264,327
39
370,000
435,860
65,860
7,330,187
40
370,000
439,813
69,813
7,400,000
Required:
What is the face amount of the bonds?
What is the initial selling price of the bonds? answer = $6,286,574
What is the term to maturity in years? answer = 20 years
Interest is determined by what approach? answer = Effective interest rate
What is the stated annual interest rate?
What is the effective annual interest…
1. 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 tables
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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- BONDS ISSUED AT FACE VALUE WITH SINKING FUND Martin Manufacturing issued the following bonds: REQUIRED Prepare journal entries for: (a) Issuance of the bonds. (b) Deposit to sinking fund on June 1. (c) Interest payment on the bonds on September 30, 20-1. (d) Earnings of 2,400 on the sinking fund in 20-1. (e) Year-end adjustment on the bonds for 20-1. (f) Reversing entry for the beginning of 20-2. (g) Interest payment on the bonds on March 31, 20-2. (h) Deposit to sinking fund on June 1, 20-2. (i) Redemption at maturity from the sinking fund. (j) Return of excess cash of 1,050 from the sinking fund to the corporation.arrow_forwardBONDS ISSUED AT FACE VALUE WITH SINKING FUND Creswell Entertainment issued the following bonds: REQUIRED Prepare journal entries for: (a) Issuance of the bonds. (b) Deposit to sinking fund on June 1. (c) Interest payment on the bonds on September 30, 20-1. (d) Earnings of 3,000 on the sinking fund in 20-1. (e) Year-end adjustment on the bonds for 20-1. (f) Reversing entry for the beginning of 20-2. (g) Interest payments on the bonds on March 31, 20-2. (h) Deposit to sinking fund on June 1, 20-2. (i) Redemption at maturity from the sinking fund. (j) Return of excess cash of 1,900 from the sinking fund to the corporation.arrow_forwardOn January 1, 2021, Tennessee Harvester Corporation issued debenture bonds that pay interest semiannually on June 30 and December 31. Portions of the bond amortization schedule appear below: Payment CashPayment EffectiveInterest Increase inBalance OutstandingBalance 6,047,387 1 292,000 302,369 10,369 6,057,756 2 292,000 302,888 10,888 6,068,644 3 292,000 303,432 11,432 6,080,076 4 292,000 304,004 12,004 6,092,080 5 292,000 304,604 12,604 6,104,684 6 292,000 305,234 13,234 6,117,918 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 38 292,000 355,060 63,060 7,164,267 39 292,000 358,213 66,213 7,230,480 40 292,000 361,520 69,520 7,300,000 Required:1. What is the face amount of the bonds?2. What is the initial selling price of the bonds?3. What is the term to maturity in years?4. Interest is determined by what approach?5.…arrow_forward
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