Description of this paper

Tarawa Limited issued $1,350,000 of 10-year, 5% bonds on January 1, 2015, at a price to....

Description

solution


Question

Question;Question 1.;Tarawa Limited issued;$1,350,000 of 10-year, 5% bonds on January 1, 2015, at a price to yield a;market interest rate of 6%. Interest is payable semi-annually on July 1 and;January 1. Tarawa has a December 31 year end.;a) Calculate the bond?s present;value (issue price) on January 1 (round to the nearest whole dollar);b) Record the journal entries;for the issue of the bonds on January 1;Date;Account Title;Debit;Credit;Jan 1;c) Record the journal entries;of the payment of interest on July 1;Date;Account Title;Debit;Credit;July 1;d) Record the journal entries;for the accrual of interest on December 31;Date;Account Title;Debit;Credit;Dec 31;Question 2;On;September 30, 2014, Coldwater Corporation purchased equipment for $1,112,300.;The equipment was purchased with a $108,000 down payment and a three-year, 9%;$1,004,300 bank loan for the balance. The terms provide for payment of the bank;loan with a quarterly fixed principal payments of $83,692, plus interest;starting on December 31. Coldwater has a November 30 year end and records;adjusting entries annually.;a) Record the journal entries;for the purchase of equipment on September 30, 2014 (round to the nearest whole;dollar).;Date;Account Title;Debit;Credit;Sept 30;b);Record the journal entries for accrual of interest expense on November 30, 2014;(round to the nearest whole dollar).;Date;Account Title;Debit;Credit;Jan 1;c) Record the journal entries;of the first two instalment payments, on December 31, 2014, and March 31, 2015;(round to the nearest whole dollar);Date;Account;Title;Debit;Credit;Dec;31;Mar;31;d) Record the journal entries;for accrual of interest expense on November 30, 2014 and the first two;instalment payments, on December 31, 2014, and March 31, 2015 assuming that the;terms provide for quarterly blended principal and interest payments of $96, 430;rather than fixed principal payments of $83,692 plus interest. (round to the;nearest whole dollar).;Date;Account;Title;Debit;Credit;Nov;30;Dec;31;Mar;31;Question 3;On;July 1 2014, Global Satellites Corporation issued $1,210,000 of 10-year, 8%;bonds to yield a market interest rate of 6%. The bond pays semi-annual interest;on July 1 and January 1. Global has a December 31 year end.;a) Calculate the bonds?;present value (issue price) on July 1;b) Complete the amortization;table through January 1, 2016 (three interest periods for this bond issue);Semi-annual Interest;Periods;Interest to;be paid;Interest;Expense to be recorded;Premium;Amortization;Unamortized;Premium;Bond Carrying Amount;July 1/14;N/A;N/A;N/A;Jan 1/15;July 1/15;Jan 1/16;July 1/16;c);Record the journal entry for the issue of the bonds on July 1;Date;Account Title;Debit;Credit;July;1, 2014;c) Record the journal entry;for the adjusting entry on December 31, 2015 to accrue the interest on the;bonds;Date;Account Title;Debit;Credit;Dec 31, 2015;d) Record the journal entry;for the payment of interest on January 1, 2016;Date;Account Title;Debit;Credit;Jan;1, 2016

 

Paper#37785 | Written in 18-Jul-2015

Price : $27
SiteLock