Financial Accounting
14th Edition
ISBN: 9781305088436
Author: Carl Warren, Jim Reeve, Jonathan Duchac
Publisher: Cengage Learning
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Textbook Question
Chapter 14, Problem 9E
Emil Corp. produces and sells wind-energy-driven engines. To finance its operations, Emil Corp. issued $15,000,000 of 20-year, 9% callable bonds on May 1, 2016 at their face amount, with interest payable on May 1 and November 1. The fiscal year of the company is the calendar year.
2016
| May 1. | Issued the bonds for cash at their face amount. |
| Nov. 1. | Paid the interest on the bonds. |
2022
| Nov. 1. | Called the bond issue at 96, the rate provided in the bond indenture. (Omit entry for payment of interest.) |
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Saverin Inc. produces and sells outdoor equipment. On July 1, 2016, Şaverin
Inc. issued $62,500,000 of 10-year, 9% bonds at a market (effective)
interest rate of 8%, receiving cash of $66,747,178. Interest on the bonds is
payable semiannually on December 31 and June 30. The fiscal year of the
company is the calendar year.
Instructions
1. Journalize the entry to record the amount of cash proceeds from the
issuance of the bonds on July 1, 2016.
2. Journalize the entries to record the following:
a. The first semiannual interest payment on December 31, 2016,
and the amortization of the bond premium, using the straight-
line method. (Round to the nearest dollar.)
b. The interest payment on June 30, 2017, and the amortization of
the bond premium, using the straight-line method. (Round to the
nearest dollar.)
3. Determine the total interest expense for 2016.
The following transactions were completed by Winklevoss Inc., whose fiscal
year is the calendar year:
2016
July 1. Issued $74,000,000 of 20-year, 11% callable bonds dated July 1,
2016, at a market (effective rate of 13%, receiving cash of $63,532,267.
Interest is payable semiannually on December 31 and June 30.
October 1. Borrowed $200,000 by issuing a six-year, 6% installment note to
Nicks Bank. The note requires annual payments of $40,673, with the first
payment occurring on September 30, 2017.
December 31. Accrued $3,000 of interest on the installment note. The
interest is payable on the date of the next installment note payment.
December 31. Paid the semiannual interest on the bonds. The bond discount
amortization of $261,693 is combined with the semiannual interest payment.
Retrieved from:
Warren, C. S., Reeve, J. M., & Duchac, J. (2016). Accounting (26 ed.). Boston, MA: Cengage Learning.
December 31. Closed the interest expense account.
2017
June 30. Paid the semiannual interest…
The following transactions are taken from the records of the Elton Corporation. Prepare journal entries for the transactions for the following:
a. Bonds payable with a par value of $800,000, carrying a stated interest rate of 9% payable semiannually on March 1 and September 1, were issued on June 1, 2014, at 102.5 plus accrued interest. The bonds are dated March 1, 2014 and mature on March 1, 2024.
b. September 1 interest payment is made. (Bond premium amortization is recorded only at year end.)
c. Year-end (December 31) accrued interest on bonds payable is recorded and the bond premium is amortized using the straight-line method.
d. March 1 interest payment is made.
e. Bonds with a par value of $350,000 are purchased at 101 plus accrued interest on August 1, 2015, and retired. (Bond premium amortization is recorded only at year end.)
f. September 1 interest payment is made.
g. Year-end (December 31) accrued interest on bonds payable is recorded and the bond premium is amortized using…
Chapter 14 Solutions
Financial Accounting
Ch. 14 - Describe the two distinct obligations incurred by...Ch. 14 - Explain the meaning of each of the following terms...Ch. 14 - If you asked your broker to buy you a 12% bond...Ch. 14 - A corporation issues 26,000,000 of 9% bonds to...Ch. 14 - If bonds issued by a corporation are sold at a...Ch. 14 - Prob. 6DQCh. 14 - Bonds Payable has a balance of 5,000,000, and...Ch. 14 - What is a mortgage note?Ch. 14 - Fleeson Company needs additional funds to purchase...Ch. 14 - In what section of the balance sheet would a bond...
Ch. 14 - Prob. 1PEACh. 14 - Brower Co. is considering the following...Ch. 14 - On January 1, the first day of the fiscal year, a...Ch. 14 - On January 1, the first day of the fiscal year, a...Ch. 14 - On the first day of the fiscal year, a company...Ch. 14 - On the first day of the fiscal year, a company...Ch. 14 - Prob. 4PEACh. 14 - Prob. 4PEBCh. 14 - On the first day of the fiscal year, a company...Ch. 14 - On the first day of the fiscal year, a company...Ch. 14 - Prob. 6PEACh. 14 - Prob. 6PEBCh. 14 - A 1,500,000 bond issue on which there is an...Ch. 14 - A 500,000 bond issue on which there is an...Ch. 14 - On the first day of the fiscal year, a company...Ch. 14 - On the first day of the fiscal year, a company...Ch. 14 - Prob. 9PEACh. 14 - Prob. 9PEBCh. 14 - Prob. 1ECh. 14 - Prob. 2ECh. 14 - Prob. 3ECh. 14 - Prob. 4ECh. 14 - Prob. 5ECh. 14 - On the first day of its fiscal year, Pretender...Ch. 14 - Lerner Corporation wholesales repair products to...Ch. 14 - Prob. 8ECh. 14 - Emil Corp. produces and sells wind-energy-driven...Ch. 14 - On the first day of the fiscal year, Shiller...Ch. 14 - Prob. 11ECh. 14 - On January 1, 2016, Bryson Company obtained a...Ch. 14 - Prob. 13ECh. 14 - Prob. 14ECh. 14 - Prob. 15ECh. 14 - Prob. 16ECh. 14 - Tommy John is going to receive 1,000,000 in three...Ch. 14 - Prob. 18ECh. 14 - On January 1, 2016, you win 50,000,000 in the...Ch. 14 - Prob. 20ECh. 14 - Prob. 21ECh. 14 - Prob. 22ECh. 14 - Prob. 23ECh. 14 - Prob. 24ECh. 14 - Prob. 25ECh. 14 - Boyd Co. produces and sells aviation equipment. On...Ch. 14 - Prob. 1PACh. 14 - Prob. 2PACh. 14 - Saverin Inc. produces and sells outdoor equipment....Ch. 14 - The following transactions were completed by...Ch. 14 - Prob. 5PACh. 14 - Saverin, Inc. produces and sells outdoor...Ch. 14 - Prob. 1PBCh. 14 - Prob. 2PBCh. 14 - Prob. 3PBCh. 14 - The following transactions were completed by...Ch. 14 - Prob. 5PBCh. 14 - Prob. 6PBCh. 14 - General Electric Capital, a division of General...Ch. 14 - Solar Industries develops and produces...Ch. 14 - Prob. 3CPCh. 14 - Xentec Inc. has decided to expand its operations...Ch. 14 - Prob. 5CPCh. 14 - The following financial data (in thousands) were...
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