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ACC - P10-3A Newby Corp. and P10-6A Atwater Corporation

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Question;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. (d) Int. exp. $18,000(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(c) Amortization $9,127(d) Amortization $9,493(e) Amortization $9,872

 

Paper#42756 | Written in 18-Jul-2015

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