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ACCT-202 Final: Chapter 14 Practice Problem Workthrough

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burgundycat681
5 Mar 2020
School
Georgetown University
Department
Accounting
Course
ACCT-202
Professor
Kirsten L. Anderson

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Document Summary

Long-term debt sample problems solutions: on january 1, 2000, bulldog creations, inc. issued ,000,000 of 10-year, 9% bonds with interest payable semi-annually on june 30 and december 31. At the time of issuance, the market interest rate was 7%. (a) prepare bulldog creations" journal entry on january 1, 2000 for the issuance of these bonds. Proceeds = ,000,000 (pv of scf, 3. 5%, 20) + ,000 (pv of oa, 3. 5%, 20) = ,142,124. 1 (b) prepare bulldog creations" journal entry on june 30, 2000 and december 31, 2000 assuming the effective interest method of amortization is used. 2 (c) prepare bulldog creations" journal entry on june 30, 2000 and december 31, 2000 assuming the straight-line method of amortization is used. Premium amortized every 6 months = 142,124 / 20 = ,106. 20. 45,000 (d) on june 30, 2003, bulldog creations called the bonds at 98. Prepare the journal entry to record the early retirement of the bonds.

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Related Questions

Stowers Research issues bonds dated January 1, 2011, that payinterest semiannually on June 30 and December 31. The bonds have a$34,000 par value and an annual contract rate of 8%, and theymature in 10 years.


Required:
Consider each of the following three separate situations. (UseTableB.1, TableB.3)
1. The market rate at the date of issuance is 6%.
(a)

Determine the bonds' issue price on January 1, 2011. (Round "PV Factors" to4 decimal places, intermediate calculations and final answer to thenearest dollar amount. Omit the "$" sign in yourresponse.)
Issue price $
(b)

Prepare the journal entry to record their issuance. (Round "PV Factors" to4 decimal places, intermediate calculations and final answers tothe nearest dollar amount. Omit the "$" sign in yourresponse.)

Date General Journal Debit Credit
Jan. 1 (Click to select)Premium on bonds payableAccountsreceivableCashDiscount on bonds payableBond interest payableBondinterest expenseBonds payableAccounts payable
(Click to select)AccountsreceivablePremium on bonds payableAccounts payableBonds payableBondinterest payableDiscount on bonds payableCashBond interestexpense
(Click to select)Discounton bonds payablePremium on bonds payableAccounts payableBondinterest payableAccounts receivableCashBonds payableBond interestexpense
2. The market rate at the date of issuance is 8%.
(a)

Determine the bonds' issue price on January 1, 2011. (Round "PV Factors" to 4 decimal places, intermediate calculationsand final answer to the nearest dollar amount. Omit the "$" sign inyour response.)
Issue price $
(b)

Prepare the journal entry to record their issuance. (Round "PV Factors" to 4 decimal places, intermediate calculationsand final answers to the nearest dollar amount. Omit the "$" signin your response.)

Date General Journal Debit Credit
Jan. 1 (Click to select)Bond interest expensePremium on bondspayableBonds payableDiscount on bonds payableBond interestpayableAccounts receivableAccounts payableCash
(Click to select)Premiumon bonds payableAccounts receivableDiscount on bonds payableBondinterest payableAccounts payableCashBond interest expenseBondspayable
3. The market rate at the date of issuance is 10%.
(a)

Determine the bonds' issue price on January 1, 2011. (Round "PV Factors" to 4 decimal places, intermediate calculationsand final answer to the nearest dollar amount. Omit the "$" sign inyour response.)
Issue price $
(b)

Prepare the journal entry to record their issuance. (Round "PV Factors" to 4 decimal places, intermediate calculationsand final answers to the nearest dollar amount. Omit the "$" signin your response.)

Date General Journal Debit Credit
Jan. 1 (Click to select)Bonds payableCashDiscount on bondspayablePremium on bonds payableAccounts receivableAccountspayableBond interest payableBond interest expenses
(Click to select)Bonds payableCashPremium on bondspayableAccounts payableDiscount on bonds payableBond interestexpensesAccounts receivableBond interest payable
(Click to select)BondspayableBond interest expenseAccounts receivableCashAccountspayablePremium on bonds payableDiscount on bonds payableBondinterest payable

Stowers Research issues bonds dated January 1, 2011, that payinterest semiannually on June 30 and December 31. The bonds have a$34,000 par value and an annual contract rate of 8%, and theymature in 10 years.


Required:
Consider each of the following three separate situations. (UseTableB.1, TableB.3)

1. The market rate at the date of issuance is 6%.

(a)

Determine the bonds' issue price on January 1, 2011. (Round "PV Factors" to4 decimal places, intermediate calculations and final answer to thenearest dollar amount. Omit the "$" sign in yourresponse.)

Issue price $

(b)

Prepare the journal entry to record their issuance. (Round "PV Factors" to4 decimal places, intermediate calculations and final answers tothe nearest dollar amount. Omit the "$" sign in yourresponse.)


Date General Journal Debit Credit
Jan. 1 (Click to select)CashDiscount on bonds payableAccountsreceivableBond interest payableBond interest expensePremium onbonds payableAccounts payableBonds payable
(Click to select)Premiumon bonds payableBond interest expenseBonds payableCashDiscount onbonds payableAccounts payableAccounts receivableBond interestpayable
(Click to select)Bondinterest payableDiscount on bonds payableAccounts payablePremium onbonds payableBonds payableBond interest expenseAccountsreceivableCash

2. The market rate at the date of issuance is 8%.

(a)

Determine the bonds' issue price on January 1, 2011. (Round "PV Factors" to 4 decimal places, intermediate calculationsand final answer to the nearest dollar amount. Omit the "$" sign inyour response.)

Issue price $

(b)

Prepare the journal entry to record their issuance. (Round "PV Factors" to 4 decimal places, intermediate calculationsand final answers to the nearest dollar amount. Omit the "$" signin your response.)


Date General Journal Debit Credit
Jan. 1 (Click to select)Accounts receivableBond interestexpenseBond interest payableBonds payableCashAccountspayablePremium on bonds payableDiscount on bonds payable
(Click to select)AccountspayableDiscount on bonds payablePremium on bonds payableBondinterest expenseCashAccounts receivableBond interest payableBondspayable

3. The market rate at the date of issuance is 10%.

(a)

Determine the bonds' issue price on January 1, 2011. (Round "PV Factors" to 4 decimal places, intermediate calculationsand final answer to the nearest dollar amount. Omit the "$" sign inyour response.)

Issue price $

(b)

Prepare the journal entry to record their issuance. (Round "PV Factors" to 4 decimal places, intermediate calculationsand final answers to the nearest dollar amount. Omit the "$" signin your response.)


Date General Journal Debit Credit
Jan. 1 (Click to select)Bond interest payableAccountsreceivableBond interest expensesAccounts payableCashDiscount onbonds payablePremium on bonds payableBonds payable
(Click to select)Accounts receivablePremium on bondspayableDiscount on bonds payableBond interest expensesCashBondspayableBond interest payableAccounts payable
(Click to select)Premiumon bonds payableCashDiscount on bonds payableAccountsreceivableBonds payableBond interest expenseAccounts payableBondinterest payable