Alpha company uses the straight-line method for amortization ofall bond premium & discounts. During FY 2016 Alpha had thefollowing bond payable transaction: -January 2, issued 10, $1,000bonds at 102 1/2. These 5-year bonds are dated January 1, 2016. Thecontract interest rate is 6%. Interest is payable semi-annual onJanuary 1 and July 1. -July 1, Alpha issued $500,000 of 10%,10-year bonds. These bonds are dated January 1, 2016, were issuedat 88 1/2, and pay interest on July and January 1. -October 1,Alpha issues 10-year bonds $10,000 face value bonds for $10,860cash. The bonds have a stated rate of 8%. Interest is payable onOctober 1 and April 1. Use this information to prepare GeneralJournal entries for the three bonds issued and any interestaccruals and payments for the FY 2016. There are Three 12/31/16transactions for the fiscal year accruals.
Alpha company uses the straight-line method for amortization ofall bond premium & discounts. During FY 2016 Alpha had thefollowing bond payable transaction: -January 2, issued 10, $1,000bonds at 102 1/2. These 5-year bonds are dated January 1, 2016. Thecontract interest rate is 6%. Interest is payable semi-annual onJanuary 1 and July 1. -July 1, Alpha issued $500,000 of 10%,10-year bonds. These bonds are dated January 1, 2016, were issuedat 88 1/2, and pay interest on July and January 1. -October 1,Alpha issues 10-year bonds $10,000 face value bonds for $10,860cash. The bonds have a stated rate of 8%. Interest is payable onOctober 1 and April 1. Use this information to prepare GeneralJournal entries for the three bonds issued and any interestaccruals and payments for the FY 2016. There are Three 12/31/16transactions for the fiscal year accruals.
Related questions
| On February 1, 2016, Sanford & Son issued 10% bonds dated February 1, 2016, with a face amount of $230,000. The bonds sold for $275,524 and mature in 20 years. The effective interest rate for these bonds was 8%. Interest is paid semiannually on July 31 and January 31. Sanford & Son's fiscal year is the calendar year. A. Record the bond issuance on February 1, 2016. B. Record interest on July 31, 2016, using the straight-line method. C. Record the necessary entry on December 31, 2016. D. Prepare the necessary journal entry on January 31, 2017. |
| BONDS |
| On January 1, 2016, Lagune& Sons issued 9% bonds dated January 1, 2016, with a faceamount of $200,000. The bonds sold for $182,841 and mature in 20years. The effective interest rate for these bonds was 10%.Interest is paid semiannually on July 1 and December 31. Lagune'sfiscal year is the calendar year. |
REQUIRED:
| 1. Prepare the journal entryto record the bond issuance on January 1, 2016. |
| 2. Prepare the entry to record interest onJuly 1, 2016, using the effective interest method. |
| 3. Prepare the necessary journal entry onDecember 31, 2016. |
| 4. Prepare the entry to record interest onJuly 1, 2016, using the straight-line method. |
| 5. Prepare the necessary journal entry onDecember 31, 2016 using the straight-line methods. |
