On May 1, 2010, Newby Corp. issued $634,100, 5%, 5-year bonds at face value. The
ID: 2346562 • Letter: O
Question
On May 1, 2010, Newby Corp. issued $634,100, 5%, 5-year bonds at face value. The bonds were dated May 1, 2010, and pay interest semiannually on May 1 and November 1. Financial statements are prepared annually on December 31.Prepare the journal entry to record payment of interest on May 1, 2011, assuming no accrual of interest from January 1, 2011, to May 1, 2011. (For multiple debit/credit entries, list amounts from largest to smallest eg 10, 5, 3, 2. Round answers to 0 decimal places, e.g. 125.)
Explanation / Answer
Prepare all the necessary journal entries to record the issuance of the bonds and bond interest expense for 2011, assuming that the bonds sold at 104. (For multiple debit/credit entries, list amounts from largest to smallest e.g. 10, 5, 3, 2.) July 1, 2011 Dr Cash 2,600,000 Cr Bonds Payable 2,500,000 Cr Premium on Bonds Payable 100,000 Dec 31, 2011 Dr Bond Interest Expense 95,000 Dr Premium on Bonds Payable 5,000 Cr Bond Interest Payable 100,000 Prepare journal entries as in the previous part of the question assuming that the bonds sold at 98. (For multiple debit/credit entries, list amounts from largest to smallest e.g. 10, 5, 3, 2.) July 1, 2011 Dr Cash 2,450,000 Dr Discount on Bonds Payable 50,000 Cr Bonds Payable 2,500,000 Dec 31, 2011 Dr Bond Interest Expense 102,500 Cr Bond Interest Payable 100,000 Cr Discount on Bonds Payable 2,500 Show balance sheet presentation for each bond issue at December 31, 2011. (Enter all amounts as positive amounts and subtract where necessary.) For the first one you would have a debit balance of 2,600,000 in Cash under Assets. Credit balance of 2,500,000 in Bonds Payable under Liabilities Credit balance of 95,000 in Premium on Bonds Payable under Liabilities Credit balance of 100,000 in Bond Interest Payable under Liabilities. Bond Interest Expense of 95,000 would go on the income statement and decrease equity. For the second one, the amounts will be different but the accounts will be the same, except there will be a debit balance in Discount on Bonds Payable instead of the credit balance in Premium on Bonds Payable.
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.