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Five Accounting questions on Bonds payable

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Question;E10-6;According;to the accountant of Ulner Inc., its payroll taxes for the week were as;follows: $198.40 for FICA taxes, $19.84 for federal unemployment taxes, and;$133.92 for state unemployment taxes.;Instructions;Journalize;the entry to record the accrual of the payroll taxes.;E10-8;Jim;Thome has prepared the following list of statements about bonds.;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 stockholder control is not affected.;3.;When seeking long-term financing, an advantage of issuing common stock over;issuing;bonds;is that tax savings 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 term 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 stated 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.;Instructions;Identify;each statement above as true or false. If false, indicate how to correct the;statement.;*E10-18;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.;Instructions;Prepare;the journal entries to record the following. (Round to the nearest dollar.);(a);The issuance of the bonds.;(b);The payment of interest and the discount 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.;P10-3A;On May 1, 2011, Newby Corp. issued $600,000;9%, 5-year bonds at face value. The bonds were dated May 1, 2011, and pay;interest semiannually on May 1 and November 1.;Financial;statements are prepared annually on December 31.;Instructions;(a);Prepare the journal entry to record the issuance of the bonds.;(b);Prepare the adjusting entry 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 interest on May 1, 2012;assuming no accrual of interest from January 1, 2012, to May 1, 2012.;(e);Prepare the journal entry to record payment of interest on November 1, 2012.;(f);Assume that on November 1, 2012, Newby calls the bonds at 102. Record the;redemption of the bonds.;*P10-6A;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 semiannual interest July 1 and January 1.;Instructions;(Round;all computations to the nearest dollar.);(a);Prepare the journal entry to record the issuance of the bonds on July 1, 2011.;(b);Prepare an amortization table through December 31, 2012 (3 interest periods);for this bond issue.;(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.;(e);Prepare the journal entry to record the accrual of interest and the;amortization of the premium on December 31, 2012.

 

Paper#37455 | Written in 18-Jul-2015

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