I have created a faux company to reinforce the weekly concepts. Participation is

Question

I have created a faux company to reinforce the weekly concepts. Participation is voluntary but I hope you do participate because it will make the learning experience more enjoyable. Background: Jeff is a graphic artist who designed and sold t-shirts out of his house for five years. After years of success, Jeff outgrew his basement and decided to rent an office space. Jeff hired two employees to help run his sole proprietorship. Jeff’s product line includes 100 different graphic t-shirts. Jeff also sells a t-shirt that incorporates a barcode as a logo that allows customers to wear it to the store and once scanned with their smart phone they receive discounts and/or promotions in the store. Jeff owns “rights” to the bar code technology that is integrated in the t-shirt. Other “companies” are interested in the technology. Jeff is not tech savvy but this “bar-code-integrated” t-shirt is performing well. Jeff came across a small business that develops smart phone apps and specializes in barcode technology. Jeff is not business oriented and a friend has mentioned his interest in his business. We will build upon this case study each week. Let’s have fun. During Week 6, we discuss long-term liabilities. We will discuss Jeff's long-term liabilities.

Bonds may be issued at face value, below face value (at a discount), or above face value (at a premium). Example Issuing Bonds at Face Value – Jeff Corporation issued $379,000 of 7%, 10-year bonds on January 1, 2010, at face value. Interest is payable semiannually on July 1 and January 1. Prepare the journal entries for the following events: The issuance of the bonds.

Explanation / Answer

Journal entry for the issue of Bonds:

Date Account Title Debit Credit Jan1 2010 Cash $379,000 7% Bonds Payable $379,000 (To record issue of bonds at face value)

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