Project #42144 - Accounting 2

Entries for Bonds Payable and Installment Note Transactions

The following transactions were completed by Hobson Inc., whose fiscal year is the calendar year:

2014  
July 1. Issued $1,030,000 of five-year, 6% callable bonds dated July 1, 2014, at a market (effective) rate of 8%, receiving cash of $946,458. Interest is payable semiannually on December 31 and June 30.
Oct. 1. Borrowed $430,000 as a 10-year, 6% installment note from Marble Bank. The note requires annual payments of $58,423, with the first payment occurring on September 30, 2015.
Dec. 31. Accrued $6,450 of interest on the installment note. The interest is payable on the date of the next installment note payment.
Dec. 31. Paid the semiannual interest on the bonds. The bond discount is amortized annually in a separate journal entry.
Dec. 31. Recorded bond discount amortization of $8,354, which was determined using the straight-line method.
Dec. 31. Closed the interest expense account.
2015  
June 30. Paid the semiannual interest on the bonds.
Sept. 30. Paid the annual payment on the note, which consisted of interest of $25,800 and principal of $32,623.
Dec. 31. Accrued $5,961 of interest on the installment note. The interest is payable on the date of the next installment note payment.
Dec. 31. Paid the semiannual interest on the bonds. The bond discount is amortized annually in a separate journal entry.
Dec. 31. Recorded bond discount amortization of $16,708, which was determined using the straight-line method.
Dec. 31. Closed the interest expense account.
2016  
June 30. Recorded the redemption of the bonds, which were called at 98. The balance in the bond discount account is $50,126 after payment of interest and amortization of discount have been recorded. (Record the redemption only.)
Sept. 30. Paid the second annual payment on the note, which consisted of interest of $23,843 and principal of $34,580.

Required:

1.  Journalize the entries to record the foregoing transactions. For compound transactions, if an amount box does not require an entry, leave it blank or enter "0". When required, round your answers to the nearest dollar.

DateAccountDebitCredit
2014      
July 1
 
 
       
Oct. 1  
   
       
Dec. 31-Note  
   
       
 Dec. 31-Bond  
   
       
 Dec. 31-Amort.  
   
       
 Dec. 31-Closing  
   
       
2015      
June 30  
   
       
Sept. 30
 
 
 
       
Dec. 31-Note  
   
       
 Dec. 31-Bond  
   
       
 Dec. 31-Amort.  
   
       
 Dec. 31-Closing  
   
       
2016      
June 30
 
 
 
       
Sept. 30
 
 
 

2.  Indicate the amount of the interest expense in (a) 2014 and (b) 2015.

a.  2014   $ 

b.  2015   $

3.  Determine the carrying amount of the bonds as of December 31, 2015. 
$

Subject Mathematics
Due By (Pacific Time) 10/04/2014 08:00 pm
Report DMCA
TutorRating
pallavi

Chat Now!

out of 1971 reviews
More..
amosmm

Chat Now!

out of 766 reviews
More..
PhyzKyd

Chat Now!

out of 1164 reviews
More..
rajdeep77

Chat Now!

out of 721 reviews
More..
sctys

Chat Now!

out of 1600 reviews
More..
sharadgreen

Chat Now!

out of 770 reviews
More..
topnotcher

Chat Now!

out of 766 reviews
More..
XXXIAO

Chat Now!

out of 680 reviews
More..
All Rights Reserved. Copyright by AceMyHW.com - Copyright Policy