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Bonds Payable_Issue and Redemption_Five questions




Question;1. Instructions;Journalize the entries to record the accrual of payroll taxes;According to the accountant of Ulner Inc.;its payroll taxes for the week were as follows;$198.40 for FICA, $19.84 for federal;unemployment taxes, and $133.92 for state unemployment taxes;2. Instructions;Identify each statement below as true or false. If false indicate how to;correct the statement.;1. Bonds are a form of interest bearing;notes payable;2. When seeking long- term financing, an;advantage of issuing bonds over issuing common stock is that the stockholder;control is not affected.;3. When seeking long-term financing, an;advantage of issuing common stock over issuing bonds is that tax saving result.;4. Secured bonds have specific assets of;the issuer pledged as collateral for the bonds.;5. Secured bonds are also known as;debenture bonds.;6. Bonds that mature in installments are;called mature bonds.;7. A conversion feature may be added to;bonds to make them more attractive to bond buyers.;8. The rate used to determine the amount of;cash interest the borrower pays is called the standard rate.;9. Bond prices are usually quoted as a;percentage of the face value of the bond.;10. The present value of a bond is the;value at which it should sell in the marketplace.;3. Instructions;Prepare journal entries to record the following. (Round to the nearest dollar);(a);The issuance of bonds;(b);The payment of interest and the premium of amortization on July 1, 2011;assuming that interest was not accrued on June 30.;(c) The accrual of interest and the discount;amortization on December 31, 2011.;Hrabik Corporation issued $600,000, 9%, 10;year bonds on January 1, 2011 for $562,613. This price resulted in an;effective-interest rate of 10% on the bonds. Interest is payable semiannually;on July 1 and January 1. Hrabik uses the effective-interest method to amortize;bond premium or discount.;4. Instructions;(a);Prepare journal entries to record the issuance of bonds;(b);Prepare the adjusting entry to record to record the accrual of interest on;December 31, 2011.;(c) Show;the balance sheet presentation on December 31, 2011.;(d);Prepare the journal entry to record payment of entry on May 1, 2012, assuming;no accrual of interest from January 1, 2012, to May 1, 2012.;On May 1, 2011, Newby Corp issued $600,000;9%, 5 year bonds at face value. The bonds were dated May 1, 2011, and they pay;interest semiannually on May 1 and November 1. Financial statements are;prepared annually on December 31.;5. Instructions;(Round all computations to the nearest dollar.);(a);Prepare journal entries to record the following the following transactions.;(b);Prepare an amortization table through December 31, 2012. (3 interest periods);for this bond period;(c);Prepare the journal entry to record the accrual of interest and the;amortization of the premium on December 31, 2011;(d);Prepare the journal entry to record the payment of interest and the;amortization of the premium on July 1, 2012, assuming no accrual of interest on;June 30, 2012;(e);Prepare the journal entry to record the accrual of interest and the;amortization of the premium on December 31, 2012;On July 1, 2011, Atwater Corporation issued;$2,000,000, face value 10%, 10 year bonds at $2,271,813. This price resulted in;an effective-interest rate of 8% on the bonds. Atwater uses the;effective-interest method to amortize bond premium or discount. The bonds pay;premium interest on July 1 and January 1.


Paper#37368 | Written in 18-Jul-2015

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