Solved by verified expert :AE10-10
On
January 1, Neuer Company issued $438,000, 10%, 10-year bonds at par.
Interest is payable semiannually on July 1 and January 1.
Prepare
journal entries to record the following.
The issuance of the bonds.
Date
Account/Description
Debit
Credit
Jan. 1
The payment of interest on July 1,
assuming that interest was not accrued on June 30.
Date
Account/Description
Debit
Credit
July 1
The accrual of interest on December
31.
Date
Account/Description
Debit
Credit
Dec. 31
AE10-12
Deng Company issued $510,000 of
5-year, 7% bonds at 98 on January 1, 2011. The bonds pay interest twice a year.
Prepare the journal entry to record the
issuance of the bonds.
· Account/Description
Debit
Credit
· Compute the total cost of borrowing for these
bonds.
$
· Prepare the journal entry to record the
issuance of the bonds, assuming the bonds were issued at 103.
· Account/Description
Debit
Credit
· Compute the total cost of borrowing for these
bonds.
$
AE10-13
The
following section is taken from Budke Corp.’s balance sheet at December
31, 2010.
Current
liabilities
Bond interest payable
$ 70,160
Long-term
liabilities
Bonds payable, 8%, due January 1, 2015
1,754,000
Interest
is payable semiannually on January 1 and July 1. The bonds are callable
on any interest date.
Journalize
the payment of the bond interest on January 1, 2011.
Date
Account/Description
Debit
Credit
Jan.
1
Assume
that on January 1, 2011, after paying interest, Budke calls bonds having
a face value of $654,000. The call price is 104. Record the redemption of
the bonds. (For multiple debit/credit
entries, list amounts from largest to smallest e.g. 10, 5, 3, 2.)
Date
Account/Description
Debit
Credit
Jan.
1
Prepare
the entry to record the payment of interest on July 1, 2011, assuming no
previous accrual of interest on the remaining bonds.
Date
Account/Description
Debit
Credit
July
1
AE10-14
Presented below are three
independent situations.
Sigel Corporation retired
$134,700 face value, 12% bonds on June 30, 2011, at 104. The carrying
value of the bonds at the redemption date was $103,800. The bonds pay
semiannual interest, and the interest payment due on June 30, 2011, has
been made and recorded.
Diaz Inc. retired $152,300 face
value, 12.5% bonds on June 30, 2011, at 97. The carrying value of the
bonds at the redemption date was $153,823. The bonds pay semiannual
interest, and the interest payment due on June 30, 2011, has been made and
recorded.
Haas Company has $73,240, 8%,
12-year convertible bonds outstanding. These bonds were sold at face value
and pay semiannual interest on June 30 and December 31 of each year. The
bonds are convertible into 29 shares of Haas $7 par value common stock for
each $1,000 worth of bonds. On December 31, 2011, after the bond interest
has been paid, $25,000 face value bonds were converted. The market value
of Haas common stock was $45 per share on December 31, 2011.
For each independent situation
above, prepare the appropriate journal entry for the redemption or conversion
of the bonds. (For multiple debit/credit entries,
list amounts from largest to smallest e.g. 10, 5, 3, 2.)
Date
Account/Description
Debit
Credit
1.June 30
2.June 30
3.Dec. 31
AE10-15
Leoni Co. receives $220,000 when it
issues a $220,000, 11%, mortgage note payable to finance the construction of a
building at December 31, 2011. The terms provide for semiannual installment
payments of $18,333 on June 30 and December 31.
Prepare the journal entries to
record the mortgage loan and the first two installment payments. (For multiple debit/credit entries, list amounts from largest
to smallest e.g. 10, 5, 3, 2. Round answers to 0 decimal places, e.g. 125.)
Date
Account/Description
Debit
Credit
2011
Dec. 31
2012
June 30
2012
Dec. 31
AE11-3
During
its first year of operations, Klumpe Corporation had the following
transactions pertaining to its common stock.
Jan.
10
Issued
73,220 shares for cash at $5 per share.
July
1
Issued
43,840 shares for cash at $9 per share.
Journalize
the transactions, assuming that the common stock has a par value of $5
per share. (For multiple debit/credit
entries, list amounts from largest to smallest e.g. 10, 5, 3, 2.)
Date
Account/Description
Debit
Credit
Jan.
10
July
1
