Weiskopf Corporation has $8,000,000 of 9.5 percent, twenty-five-year bonds dated
ID: 2366675 • Letter: W
Question
Weiskopf Corporation has $8,000,000 of 9.5 percent, twenty-five-year bonds dated March 1, with interest payable on March 1 and September 1. The company's fiscal year ends on November 30. It uses the straight-line method to amortize bond premiums or discounts. 1. Assume the bonds are issued at 103.5 on March 1. Prepare general journal entries for March 1, September 1, and November 30. 2. Assume the bonds are issued at 96.5 on March 1. Prepare general journal entries for March 1, September 1, and November 30.Explanation / Answer
1) on March1
Bank A/c Dr 8,280,000
To Bond A/c 8,000,000
To premium on isuue of bond a/c 280,000
( Being bond issued at premium)
on Sept1
Interest on Bond A/c Dr 380,000
To Bank A/c 380,000
( Being Interest on bond paid)
on Nov30
Interest on Bond A/c Dr 190,000
To Interest on bond accrued a/c 190,000
( Being interest on bond accrued for 3months)
on Nov30
P&L A/c Dr 570,000
To Interest on bond 570,000
( Being interest on bond a/c transferred to p&l a/c)
2) on March1
Bank A/c Dr 7,720,000
Discount on isuue of bond a/c Dr 280,000
To Bond A/c 8,000,000
( Being bond issued at discount)
on Sept1
Interest on Bond A/c Dr 380,000
To Bank A/c 380,000
( Being Interest on bond paid)
on Nov30
Interest on Bond A/c Dr 190,000
To Interest on bond accrued a/c 190,000
( Being interest on bond accrued for 3months)
on Nov30
P&L A/c Dr 570,000
To Interest on bond 570,000
( Being interest on bond a/c transferred to p&l a/c)
on Nov30
P&L A/c Dr 8400
To Discount on issue of Bond a/c 8,400
( BeingDiscount on issue of Bonda/c for 9monthsis transferred to p&l a/c)
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