Question

PLEASE USE THE CHARTS I HAVE PROVIDED (THIS IS ALL THE INFORMATION GIVEN) Hoover Corp., a...

PLEASE USE THE CHARTS I HAVE PROVIDED (THIS IS ALL THE INFORMATION GIVEN)

Hoover Corp., a wholesaler of music equipment, issued $30,500,000 of 20-year, 10% callable bonds on March 1, 20Y2, at their face amount, with interest payable on March 1 and September 1. The fiscal year of the company is the calendar year.

Journalize the entries to record the following selected transactions. Refer to the Chart of Accounts for exact wording of account titles.

20Y2
Mar. 1 Issued the bonds for cash at their face amount.
Sept. 1 Paid the interest on the bonds.
20Y4
Sept. 1 Called the bond issue at 102, the rate provided in the bond indenture. (Omit entry for payment of interest.)

CHART OF ACCOUNTSHoover Corp.General Ledger

ASSETS
110 Cash
111 Petty Cash
121 Accounts Receivable
122 Allowance for Doubtful Accounts
126 Interest Receivable
127 Notes Receivable
131 Merchandise Inventory
141 Office Supplies
142 Store Supplies
151 Prepaid Insurance
191 Land
192 Store Equipment
193 Accumulated Depreciation-Store Equipment
194 Office Equipment
195 Accumulated Depreciation-Office Equipment
LIABILITIES
210 Accounts Payable
221 Salaries Payable
231 Sales Tax Payable
232 Interest Payable
241 Notes Payable
251 Bonds Payable
252 Discount on Bonds Payable
253 Premium on Bonds Payable
EQUITY
311 Common Stock
312 Paid-In Capital in Excess of Par-Common Stock
315 Treasury Stock
321 Preferred Stock
322 Paid-In Capital in Excess of Par-Preferred Stock
331 Paid-In Capital from Sale of Treasury Stock
340 Retained Earnings
351 Cash Dividends
352 Stock Dividends
REVENUE
410 Sales
610 Interest Revenue
611 Gain on Redemption of Bonds
EXPENSES
510 Cost of Merchandise Sold
515 Credit Card Expense
516 Cash Short and Over
521 Sales Salaries Expense
522 Office Salaries Expense
531 Advertising Expense
532 Delivery Expense
533 Repairs Expense
534 Selling Expenses
535 Rent Expense
536 Insurance Expense
537 Office Supplies Expense
538 Store Supplies Expense
541 Bad Debt Expense
561 Depreciation Expense-Store Equipment
562 Depreciation Expense-Office Equipment
590 Miscellaneous Expense
710 Interest Expense
711 Loss on Redemption of Bonds

Journalize the entries to record the transactions for the 20Y2. Refer to the Chart of Accounts for exact wording of account titles.

PAGE 10

JOURNAL

ACCOUNTING EQUATION

DATE DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY

1

2

3

4

Journalize the entries to record the transactions for the 20Y4. Refer to the Chart of Accounts for exact wording of account titles.

PAGE 10

JOURNAL

ACCOUNTING EQUATION

DATE DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY

1

2

3

Homework Answers

Answer #1
DATE DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY
1 Mar. 1, 20Y2 Cash 110 30500000 +
2 Bonds Payable 251 30500000 +
3 Sept. 1, 20Y2 Interest Expense 710 1525000 -
4 Cash 110 1525000 -

Interest expense = $30500000 x 10% x 6/12 = $1525000

DATE DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY
1 Sept. 1, 20Y4 Bonds Payable 251 30500000 -
2 Loss on Redemption of Bonds 711 610000 -
3 Cash 110 31110000

Cash paid on redemption = $30500000 x 102/100 = $31110000

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