Question

On June 1, 2015, Perry Corp. issued $4,000,000, 9%, 5-year bonds at face value. The bonds...

On June 1, 2015, Perry Corp. issued $4,000,000, 9%, 5-year bonds at face value. The bonds were dated June 1, 2015, and pay interest semiannually on June 1 and December 1. Financial statements are prepared annually on December 31. Instructions (a) Prepare the journal entry to record the issuance of the bonds. (b) Prepare the adjusting entry to record the accrual of interest on 12/31/15. (c) Show the balance sheet presentation of all bond related accounts (bonds and interest) on 12/31/15. (d) Prepare the journal entry to record payment of interest on June 1, 2016, assuming no accrual of interest from 1/1/16 to 6/1/16. (e) Prepare the journal entry to record payment of interest on 12/1/16. (f) Assume that on 12/1/16, after making the interest payment, Perry calls the bonds at 102. Record the redemption of the bonds.

Homework Answers

Answer #1
Date General Journal Debit Credit
(a) 6/1/15 Cash 4000000
Bonds payable 4000000
(To record issue of bonds)
(b) 12/31/15 Interest expense (9% x $4000000 x 1/12) 30000
Interest payable 30000
(To record accrual of interest on bonds)

(c)

Perry Corp.
Balance Sheet (Partial)
December 31, 2015
Current Liabilities:
Interest payable 30000
Long-term Liabilities:
Bonds payable 4000000
Date General Journal Debit Credit
(d) 6/1/16 Interest expense 180000
Cash (9% x $4000000 x 1/2) 180000
(To record payment of interest)
(e) 12/1/16 Interest expense 180000
Cash (9% x $4000000 x 1/2) 180000
(To record payment of interest)
(f) 12/1/16 Bonds payable 4000000
Loss on retirement of bonds payable 80000
Cash ($4000000 x 102/100) 4080000
(To record redemption of bonds payable)
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Lorance Corporation issued $845,000, 9%, 10-year bonds on January 1, 2015, for $792,347. This price resulted...
Lorance Corporation issued $845,000, 9%, 10-year bonds on January 1, 2015, for $792,347. This price resulted in an effective-interest rate of 10% on the bonds. Interest is payable semiannually on July 1 and January 1. Lorance uses the effective-interest method to amortize bond premium or discount. 1)Prepare the journal entry to record the issuance of the bonds. 2)Prepare the journal entry to record the payment of interest and the discount amortization on July 1, 2015, assuming that interest was not...
1. On March 1, 2015, Bowan Corporation issued 6% bonds dated February 1, 2015, the face...
1. On March 1, 2015, Bowan Corporation issued 6% bonds dated February 1, 2015, the face amount of $700,000. The bonds were sold for the present value of the bonds on March1, 2015 plus one-month accrued interest. The bonds mature on January 31, 2018. Interest is paid semiannually on July 31 and January 31. Bowan's fiscal year ends on December 31 each year. The effective interest rate is 8%.                                     Required:    a. Determine the present value the bonds...
International Foods issued 10% bonds, dated January 1, with a face amount of $140 million on...
International Foods issued 10% bonds, dated January 1, with a face amount of $140 million on January 1, year 1. The bonds mature on December 31, after 15 years. The market rate of interest for similar issues was 12%. Interest is paid semiannually on June 30 and December 31. International uses the straight-line method. Required: 1. Determine the price of the bonds at January 1, year 1. 2. Prepare the journal entry to record their issuance by International Foods on...
On January 1, 2019, Rufus Company issued $4,000,000 par value, 4%, bonds that mature on December...
On January 1, 2019, Rufus Company issued $4,000,000 par value, 4%, bonds that mature on December 31, 2029. The bonds were issued at 102 to yield a return of 3% to investors. Interest on the bonds is paid annually on December 31 each year. Please prepare the entry to record the issuance of the bonds on January 1, 2019. Prepare the entry to record the payment of interest on the bonds on December 31, 2019. (SHOW ALL WORK)
On January 1, a corporation issued $210,000 in bonds at face value. The bonds have a...
On January 1, a corporation issued $210,000 in bonds at face value. The bonds have a stated interest rate of 7 percent. The bonds mature in 10 years and pay interest once per year on December 31. Required: 1, 2 & 3. Prepare the required journal entries to record the bond issuance, interest payment on December 31, early retirement of the bonds. Assume the bonds were retired immediately after the first interest payment at a quoted price of 102. (If...
On January 1, 2017, Tamarisk Inc. issued $490,000 of 6%, 5-year bonds at par. Interest is...
On January 1, 2017, Tamarisk Inc. issued $490,000 of 6%, 5-year bonds at par. Interest is payable semiannually on July 1 and January 1. Prepare journal entries to record the following. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Record journal entries in the order presented in the problem.) (a) The issuance of the bonds....
(b) Brookfield Inc. issued $600,000 of 9%, 10 – year bonds on June 30, 2015, for...
(b) Brookfield Inc. issued $600,000 of 9%, 10 – year bonds on June 30, 2015, for $562,500. This price provided a yield of 10% on the bonds. Interest is payable semi annually on December 31 and June 30. Determine the amount of interest expense to record if financial statements are issued on October 31, 2015. (c) On October 1, 2015, Brimley Company sold 12% bonds having a maturity value of $800,000 for $853,382 plus accrued interest, which provides the bondholders...
On October 1, 2021, Monty Corp. issued $828,000, 7%, 10-year bonds at face value. The bonds...
On October 1, 2021, Monty Corp. issued $828,000, 7%, 10-year bonds at face value. The bonds were dated October 1, 2021, and pay interest annually on October 1. Financial statements are prepared annually on December 31. Part 1 Prepare the journal entry to record the issuance of the bonds. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Oct. 1, 2021 enter an account title for the journal...
On January 1, 2016, Bishop Company issued 8% bonds dated January 1, 2016, with a face...
On January 1, 2016, Bishop Company issued 8% bonds dated January 1, 2016, with a face amount of $20.6 million. The bonds mature in 2025 (10 years). For bonds of similar risk and maturity, the market yield is 10%. Interest is paid semiannually on June 30 and December 31. 1. Determine the price of the bonds at January 1, 2016 2.Prepare the journal entry to record the bond issuance by Bishop on January 1, 2016 3.Prepare the journal entry to...
Stottard Company issued 675,000 of 10 % , 10 year bonds on June 1 , 2017...
Stottard Company issued 675,000 of 10 % , 10 year bonds on June 1 , 2017 , at 103. The bonds were dated June 1, and interest is payable on June 1 and December 1 of each year. Required: 1. Record the issuance of the bonds on June 1, 2017. 2. Record the interest payment on December 1, 2017. Stottard uses the straight-line method of amortization. 3. Record the interest accrual on December 31, 2017, including amortization. 4. Record the...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT