Q1. Exercise 10-8 (Part Level Submission) On August 1, 2017, Monty Corp. issued
ID: 2591802 • Letter: Q
Question
Q1. Exercise 10-8 (Part Level Submission)
On August 1, 2017, Monty Corp. issued $490,800, 8%, 10-year bonds at face value. Interest is payable annually on August 1. Monty’s year-end is December 31.
Q2. Exercise 10-2 (Part Level Submission)
On May 15, Wild Quest Clothiers borrowed some money on a 4-month note to provide cash during the slow season of the year. The interest rate on the note was 8%. At the time the note was due, the amount of interest owed was $430.
Q3. Exercise 10-11
Sunland Company issued $435,000, 15-year, 8% bonds at 98.
Prepare journal entry to record the issuance of the bonds. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Aug. 1 Cash 490800 Bonds Payable 490800 Click if you would like to Show Work for this question: Open Show Work SHOW LIST OF ACCOUNTS LINK TO TEXT VIDEO: APPLIED SKILLS VIDEO: SIMILAR EXERCISE Attempts: 1 of 15 used (b) Your answer is partially correct. Try again Prepare journal entry to record the accrual of interest on December 31, 2017. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Dec. 31 Interest Expense 39264 Interest Payable 39264 Click if you would like to Show Work for this question: Open Show WorkExplanation / Answer
As I can see the 1st part of Question 1 is correct and 2nd part has amount mistake so I will calculate the correct.
1(b)
It is mentioned that the Bonds are issued on August 1 and books close on December 31, so On December 31, we will accrue interest for 5 Months (i.e. from August to December)
Interest = 490,800 * 8% *5/12 months
Interest = 16,360
Interest Expense (Dr.) 16,360
Interest Payable (Cr.) 16,360
2(b)
Interest = Amount * Interest rate * time period
549 = 16,470 * Rate * 4/12 months
(549*12) / (16,470*4) = Interest rate
Interest Rate = 10%
(3)
It is mentioned that bond are issued at 98 so they are issued at 98% of the face value.
Bond Issued = $435,000 * 98% = 426,300
Bank (Dr.) 426,000
Discount on issue (Dr.) 8,700
8% 15 year Bonds (Cr.) 435,000
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