Joseph Company issued $800,000, 11%, 10-year bonds on ...
Joseph Company issued $800,000, 11%, 10-year bonds on December 31, 2007, for $730,000. Interest is payable semiannually on June 30 and December 31. Joseph Company uses the straight-line method to amortize bond premium or discount.
Instructions Prepare the journal entries to record the following. The issuance of the bonds. (For multiple debit/credit entries, list amounts from largest to smallest eg 10, 5, 3, 2.) The payment of interest and the discount amortization on June 30, 2008. (For multiple debit/credit entries, list amounts from largest to smallest eg 10, 5, 3,
2.) The payment of interest and the discount amortization on December 31, 2008. (For multiple debit/credit entries, list amounts from largest to smallest eg 10, 5, 3,
2.) The redemption of the bonds at maturity, assuming interest for the last interest period has been paid and recorded.
(a) 2007
Dec. 31 Cash 730,000
Discount on Bonds Payable 70,000
Bonds Payable 800,000
(b) 2008
June 30 Bond Interest Expense 47,500
Cash ($800,000 X 11% X 1/2) 44,000
Discount on Bonds Payable 3,500
($70,000 ÷ 20)
(c) 2008
Dec. 31 Bond Interest Expense 47,500
Cash ($800,000 X 11% X 1/2) 44,000
Discount on Bonds Payable 3,500
(d) 2017
Dec. 31 Bonds Payable 800,000
Cash 800,000
On May 1, 2008, Newby Corp. issued $600,000, 9%, 5-year bonds at face value. The bonds were dated May 1, 2008, and pay interest semiannually on May 1 and November 1. Financial statements are prepared annually on December 31. Prepare the journal entry to record the issuance of the bonds. Prepare the adjusting entry to record the accrual of interest on December 31, 2008. Show the balance sheet presentation on December 31, 2008. current liabiliteis, long term liablitities Prepare the journal entry to record payment of interest on May 1, 2009, assuming no accrual of interest from January 1, 2009, to May 1, 2009. (For multiple debit/credit entries, list amounts from largest to smallest eg 10, 5, 3, 2.) Prepare the journal entry to record payment of interest on November 1, 2009. Assume that on November 1, 2009, Newby calls the bonds at 102. Record the redemption of the bonds. (For multiple debit/credit entries, list amounts from largest to smallest eg 10, 5, 3, 2.)
(a) 2008
May 1 Cash 600,000
Bonds Payable 600,000
(b) Dec. 31 Bond Interest Expense 9,000
Bond Interest Payable 9,000
($600,000 X 9% X 2/12)
(c) Current Liabilities
Bond Interest Payable $ 9,000
Long-term Liabilities
Bonds Payable, due 2013 $600,000
(d) 2009
May 1 Bond Interest Expense 18,000
($600,000 X 9% X 4/12)
Bond Interest Payable 9,000
Cash 27,000
(e) Nov. 1 Bond Interest Expense 27,000
Cash ($600,000 X 9% X 1/2) 27,000
(f) Nov. 1 Bonds Payable 600,000
Loss on Bond Redemption 12,000
Cash ($600,000 X 1.02) 612,000
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