Question

Data for the next 3 questions: Liberty Company issued $1,000,000, 4%, 10-year, bonds. Interest to be paid semiannually. The market rate on bonds issue date was 5%.

Q1. Provide the journal that must be made on issue date of the bonds

Account	Debit	Credit

Q2. Complete partial Amortization Schedule in the space provided below.

Title:

Payment #
0
1
2

Q3. Provide the necessary journal entry that company must make for 2^nd interest payment on the bond

Account	Debit	Credit

Data for the next 3 questions: Sara Company purchased a delivery truck at $40,000 plus 8% sales taxes. Sara paid $5,000 in cash and financed the rest at 6% requiring 36 equal monthly payment at the end of each month.

Q4. Provide the journal that must be made on purchase date

Account	Debit	Credit

Q5. Complete partial Loan Amortization Schedule in the space provided below.

Title:

Payment #
0
1
2

Q6. Provide the necessary journal entry that company must make for 2^nd monthly payment

Account	Debit	Credit

Data for the next 4 questions: Poland Company engaged in leasing a machine for quality control that requires payment of $2,800 at the end of each month. The economic life of the machine is 4 years. Poland Company normally is subject to 6% interest rate in business transactions.

Assume lease period is 40 months. Answer the following three questions

Q7. Provide journal on the date the lease contract was signed.

Account	Debit	Credit

Q8. Complete partial Lease Amortization Schedule in the space provided below.

Payment #
0
1
2

Q9. Provide the necessary journal entry that company must make for 2^nd monthly payment

Account	Debit	Credit

Assume lease period is 30 months. Answer the following three questions

Q10. Provide journal on the date the lease contract was signed

Account	Debit	Credit

Data for the next 3 questions: Poland Company engaged in leasing a machine for quality control that requires payment of $2,800 at the beginning of each month. The economic life of the machine is 4 years. Poland Company normally is subject to 6% interest rate in business transactions.

Assume lease period is 40 months. Answer the following three questions

Q11. Provide journal on the date the lease contract was signed.

Account	Debit	Credit

Q12. Complete partial Lease Amortization Schedule in the space provided below.

Payment #
0
1
2

Q13. Provide the necessary journal entry that company must make for 2^nd monthly payment

Account	Debit	Credit

Assume lease period is 30 months. Answer the following three questions

Q14. Provide journal on the date the lease contract was signed

Account	Debit	Credit

Data for the next 3 questions: Liberty Company issued $1,000,000, 4%, 10-year, bonds. Interest to be paid semiannually. The market rate on bonds issue date was 2%.

Q15. Provide the journal that must be made on issue date of the bonds

Account	Debit	Credit

Answer 1

	Interest per month	20000
	Pvifa(2.5%, 20)	15.5892
	Pvif(2.5%, 20)	0.6103
	Issue price	922084	(20000*15.5892)+(1000000*0.6103)
1
Date	Account title and Explanation	Debit	Credit
	Cash	922084
	Discount on Bond	77916
	Bond Payable		1000000
	(To record bond payable)
2
Payment #	Cash Payment	Interest expense	Amortization	Carrrying value
0				922084
1	20000	23052	3052	925136
2	20000	23128	3128	928265
Date	Account title and Explanation	Debit	Credit
3	Interest expense	23052
	Discount on Bond		3052
	Cash		20000
	(To record interest expense)