Stowers Research issues bonds dated January 1, 2011, that payinterest semiannually on June 30 and December 31. The bonds have a$34,000 par value and an annual contract rate of 8%, and theymature in 10 years.
1. The market rate at the date of issuance is 6%.
(a) Determine the bonds' issue price on January 1, 2011. (Round "PV Factors" to4 decimal places, intermediate calculations and final answer to thenearest dollar amount. Omit the "$" sign in yourresponse.)
Issue price $
(b) Prepare the journal entry to record their issuance. (Round "PV Factors" to4 decimal places, intermediate calculations and final answers tothe nearest dollar amount. Omit the "$" sign in yourresponse.)
Date General Journal Debit Credit Jan. 1 (Click to select)CashDiscount on bonds payableAccountsreceivableBond interest payableBond interest expensePremium onbonds payableAccounts payableBonds payable (Click to select)Premiumon bonds payableBond interest expenseBonds payableCashDiscount onbonds payableAccounts payableAccounts receivableBond interestpayable (Click to select)Bondinterest payableDiscount on bonds payableAccounts payablePremium onbonds payableBonds payableBond interest expenseAccountsreceivableCash
2. The market rate at the date of issuance is 8%.
(a) Determine the bonds' issue price on January 1, 2011. (Round "PV Factors" to 4 decimal places, intermediate calculationsand final answer to the nearest dollar amount. Omit the "$" sign inyour response.)
Issue price $
(b) Prepare the journal entry to record their issuance. (Round "PV Factors" to 4 decimal places, intermediate calculationsand final answers to the nearest dollar amount. Omit the "$" signin your response.)
Date General Journal Debit Credit Jan. 1 (Click to select)Accounts receivableBond interestexpenseBond interest payableBonds payableCashAccountspayablePremium on bonds payableDiscount on bonds payable (Click to select)AccountspayableDiscount on bonds payablePremium on bonds payableBondinterest expenseCashAccounts receivableBond interest payableBondspayable
3. The market rate at the date of issuance is 10%.
(a) Determine the bonds' issue price on January 1, 2011. (Round "PV Factors" to 4 decimal places, intermediate calculationsand final answer to the nearest dollar amount. Omit the "$" sign inyour response.)
Issue price $
(b) Prepare the journal entry to record their issuance. (Round "PV Factors" to 4 decimal places, intermediate calculationsand final answers to the nearest dollar amount. Omit the "$" signin your response.)
Date General Journal Debit Credit Jan. 1 (Click to select)Bond interest payableAccountsreceivableBond interest expensesAccounts payableCashDiscount onbonds payablePremium on bonds payableBonds payable (Click to select)Accounts receivablePremium on bondspayableDiscount on bonds payableBond interest expensesCashBondspayableBond interest payableAccounts payable (Click to select)Premiumon bonds payableCashDiscount on bonds payableAccountsreceivableBonds payableBond interest expenseAccounts payableBondinterest payable
Stowers Research issues bonds dated January 1, 2011, that payinterest semiannually on June 30 and December 31. The bonds have a$34,000 par value and an annual contract rate of 8%, and theymature in 10 years. |
| 1. | The market rate at the date of issuance is 6%. |
| (a) | Determine the bonds' issue price on January 1, 2011. (Round "PV Factors" to4 decimal places, intermediate calculations and final answer to thenearest dollar amount. Omit the "$" sign in yourresponse.) |
| Issue price | $ |
| (b) | Prepare the journal entry to record their issuance. (Round "PV Factors" to4 decimal places, intermediate calculations and final answers tothe nearest dollar amount. Omit the "$" sign in yourresponse.) |
| Date | General Journal | Debit | Credit |
| Jan. 1 | (Click to select)CashDiscount on bonds payableAccountsreceivableBond interest payableBond interest expensePremium onbonds payableAccounts payableBonds payable | ||
| (Click to select)Premiumon bonds payableBond interest expenseBonds payableCashDiscount onbonds payableAccounts payableAccounts receivableBond interestpayable | |||
| (Click to select)Bondinterest payableDiscount on bonds payableAccounts payablePremium onbonds payableBonds payableBond interest expenseAccountsreceivableCash | |||
| 2. | The market rate at the date of issuance is 8%. |
| (a) | Determine the bonds' issue price on January 1, 2011. (Round "PV Factors" to 4 decimal places, intermediate calculationsand final answer to the nearest dollar amount. Omit the "$" sign inyour response.) |
| Issue price | $ |
| (b) | Prepare the journal entry to record their issuance. (Round "PV Factors" to 4 decimal places, intermediate calculationsand final answers to the nearest dollar amount. Omit the "$" signin your response.) |
| Date | General Journal | Debit | Credit |
| Jan. 1 | (Click to select)Accounts receivableBond interestexpenseBond interest payableBonds payableCashAccountspayablePremium on bonds payableDiscount on bonds payable | ||
| (Click to select)AccountspayableDiscount on bonds payablePremium on bonds payableBondinterest expenseCashAccounts receivableBond interest payableBondspayable | |||
| 3. | The market rate at the date of issuance is 10%. |
| (a) | Determine the bonds' issue price on January 1, 2011. (Round "PV Factors" to 4 decimal places, intermediate calculationsand final answer to the nearest dollar amount. Omit the "$" sign inyour response.) |
| Issue price | $ |
| (b) | Prepare the journal entry to record their issuance. (Round "PV Factors" to 4 decimal places, intermediate calculationsand final answers to the nearest dollar amount. Omit the "$" signin your response.) |
| Date | General Journal | Debit | Credit |
| Jan. 1 | (Click to select)Bond interest payableAccountsreceivableBond interest expensesAccounts payableCashDiscount onbonds payablePremium on bonds payableBonds payable | ||
| (Click to select)Accounts receivablePremium on bondspayableDiscount on bonds payableBond interest expensesCashBondspayableBond interest payableAccounts payable | |||
| (Click to select)Premiumon bonds payableCashDiscount on bonds payableAccountsreceivableBonds payableBond interest expenseAccounts payableBondinterest payable | |||
Related questions
Stowers Research issues bonds dated January 1, 2011, that payinterest semiannually on June 30 and December 31. The bonds have a$34,000 par value and an annual contract rate of 8%, and theymature in 10 years. |
| Required: |
| Consider each of the following three separate situations. (UseTableB.1, TableB.3) |
| 1. | The market rate at the date of issuance is 6%. |
| (a) | Determine the bonds' issue price on January 1, 2011. (Round "PV Factors" to4 decimal places, intermediate calculations and final answer to thenearest dollar amount. Omit the "$" sign in yourresponse.) |
| Issue price | $ |
| (b) | Prepare the journal entry to record their issuance. (Round "PV Factors" to4 decimal places, intermediate calculations and final answers tothe nearest dollar amount. Omit the "$" sign in yourresponse.) |
| Date | General Journal | Debit | Credit |
| Jan. 1 | (Click to select)Premium on bonds payableAccountsreceivableCashDiscount on bonds payableBond interest payableBondinterest expenseBonds payableAccounts payable | ||
| (Click to select)AccountsreceivablePremium on bonds payableAccounts payableBonds payableBondinterest payableDiscount on bonds payableCashBond interestexpense | |||
| (Click to select)Discounton bonds payablePremium on bonds payableAccounts payableBondinterest payableAccounts receivableCashBonds payableBond interestexpense | |||
| 2. | The market rate at the date of issuance is 8%. |
| (a) | Determine the bonds' issue price on January 1, 2011. (Round "PV Factors" to 4 decimal places, intermediate calculationsand final answer to the nearest dollar amount. Omit the "$" sign inyour response.) |
| Issue price | $ |
| (b) | Prepare the journal entry to record their issuance. (Round "PV Factors" to 4 decimal places, intermediate calculationsand final answers to the nearest dollar amount. Omit the "$" signin your response.) |
| Date | General Journal | Debit | Credit |
| Jan. 1 | (Click to select)Bond interest expensePremium on bondspayableBonds payableDiscount on bonds payableBond interestpayableAccounts receivableAccounts payableCash | ||
| (Click to select)Premiumon bonds payableAccounts receivableDiscount on bonds payableBondinterest payableAccounts payableCashBond interest expenseBondspayable | |||
| 3. | The market rate at the date of issuance is 10%. |
| (a) | Determine the bonds' issue price on January 1, 2011. (Round "PV Factors" to 4 decimal places, intermediate calculationsand final answer to the nearest dollar amount. Omit the "$" sign inyour response.) |
| Issue price | $ |
| (b) | Prepare the journal entry to record their issuance. (Round "PV Factors" to 4 decimal places, intermediate calculationsand final answers to the nearest dollar amount. Omit the "$" signin your response.) |
| Date | General Journal | Debit | Credit |
| Jan. 1 | (Click to select)Bonds payableCashDiscount on bondspayablePremium on bonds payableAccounts receivableAccountspayableBond interest payableBond interest expenses | ||
| (Click to select)Bonds payableCashPremium on bondspayableAccounts payableDiscount on bonds payableBond interestexpensesAccounts receivableBond interest payable | |||
| (Click to select)BondspayableBond interest expenseAccounts receivableCashAccountspayablePremium on bonds payableDiscount on bonds payableBondinterest payable | |||
Heathrow issues $2,200,000 of 7%, 15-year bonds dated January 1,2011, that pay interest semiannually on June 30 and December 31.The bonds are issued at a price of $2,692,790. |
| Required: | |
| 1. | Prepare the January 1, 2011, journal entry to record thebonds%u2019 issuance. (Omit the "$" sign in your response.) |
| Date | General Journal | Debit | Credit |
| Jan. 1 | (Click to select)Discount on bonds payableBond interestexpenseAccounts receivableBond interest payableAccountspayablePremium on bonds payableBonds payableCash | ||
| (Click to select)AccountsreceivablePremium on bonds payableBond interest payableAccountspayableBonds payableCashBond interest expenseDiscount on bondspayable | |||
| (Click to select)Premiumon bonds payableCashAccounts payableBond interest expenseBondinterest payableDiscount on bonds payableBonds payableAccountsreceivable | |||
| 2(a) | For each semiannual period, compute the cash payment. (Omit the "$" sign inyour response.) |
| Cash payment | $ |
| 2(b) | For each semiannual period, compute the the straight-line premiumamortization. (Round your answer tothe nearest dollar amount. Omit the "$" sign inyour response.) |
| Amount of premium amortized | $ |
| 2(c) | For each semiannual period, compute the the bond interest expense.(Omit the "$" sign inyour response.) |
| Bond interest expense | $ |
| 3. | Determine the total bond interest expense to be recognized over thebonds' life. (Omit the "$" sign in yourresponse.) |
| Total bond interest expense | $ |
| 4. | Prepare the first two years of an amortization table using thestraight-line method. (Omit the "$" sign in yourresponse.) |
| Semiannual Period-End | Unamortized Premium | Carrying Value |
| 1/01/2011 | $ | $ |
| 6/30/2011 | ||
| 12/31/2011 | ||
| 6/30/2012 | ||
| 12/31/2012 | ||
| 5. | Prepare the journal entries to record the first two interestpayments. (Omit the "$" sign in yourresponse.) |
| Date | General Journal | Debit | Credit |
| June 30 | (Click to select)Premium on bonds payableBond interestpayableDiscount on bonds payableBonds payableBond interestexpenseCashAccounts receivableAccounts payable | ||
| (Click to select)Accounts payablePremium on bondspayableCashDiscount on bonds payableBonds payableBond interestexpenseAccounts receivableBond interest payable | |||
| (Click to select)AccountspayableCashBond interest expenseAccounts receivablePremium on bondspayableBonds payableDiscount on bonds payableBond interestpayable | |||
| Dec. 31 | (Click to select)Bond interest expenseAccountsreceivableDiscount on bonds payablePremium on bonds payableCashBondinterest payableAccounts payableBonds payable | ||
| (Click to select)Premium on bonds payableAccountsreceivableBond interest payableAccounts payableDiscount on bondspayableBond interest expenseBondspayableCash | |||
| (Click to select)AccountsreceivableAccounts payableDiscount on bonds payableCashBondinterest expenseBond interest payablePremium on bonds payableBondspayable | |||
