ACC 201 Chapter 10 Problem set A

 

Problem 10-2A (Part Level Submission)

The following are selected transactions of Graves Company. Graves prepares financial statements quarterly.

Problem 10-3A

On May 1, 2014, Hopkins Corp. issued $720,000, 7%, 5-year bonds at face value. The bonds were dated May 1, 2014, and pay interest semiannually on May 1 and November 1. Financial statements are prepared annually on December 31.

(a) Prepare the journal entry to record the issuance of the bonds. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

(b) Prepare the adjusting entry to record the accrual of interest on December 31, 2014. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Problem 10-4A

Formosa Electric sold $400,000, 9%, 10-year bonds on January 1, 2014. The bonds were dated January 1 and paid interest on January 1 and July 1. The bonds were sold at 105.

(a) Prepare the journal entry to record the issuance of the bonds on January 1, 2014. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

(b) At December 31, 2014, the balance in the Premium on Bonds Payable account is $18,000. Show the balance sheet presentation of accrued interest and the bond liability at December 31, 2014.

(c) On January 1, 2016, when the carrying value of the bonds was $416,000, the company redeemed the bonds at 105. Record the redemption of the bonds assuming that interest for the period has already been paid. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Problem 10-5A (Part Level Submission)

Otto Electronics issues a $800,000, 8%, 10-year mortgage note on December 31, 2013. The proceeds from the note are to be used in financing a new research laboratory. The terms of the note provide for semiannual installment payments, exclusive of real estate taxes and insurance, of $58,865. Payments are due June 30 and December 31.

Problem 10-8A (Part Level Submission)

Guehler Electric sold $2,000,000, 9%, 10-year bonds on January 1, 2014. The bonds were dated January 1 and pay interest July 1 and January 1. Guehler Electric uses the straight-line method to amortize bond premium or discount. The bonds were sold at 104. Assume no interest is accrued on June 30.

 

 

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