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#### 1)Whiteside Corporation issues \$500,000 of 9% bonds, due in 10 years, with interest payable semiannually

###### Accounting

1)Whiteside Corporation issues \$500,000 of 9% bonds, due in 10 years, with interest payable semiannually. At the time of issue, the annual market rate for such bonds is 10%. Compute the issue price of the bonds. (Use the present value tables in the text. Round your answer to zero decimal places, e.g. 2,510.)

2 The Colson Company issued \$300,000 of 10% bonds on January 1, 2013. The bonds are due January 1, 2018, with interest payable each July 1 and January 1. The bonds are issued at face value. Prepare Colson's journal entries for (a) the January issuance, (b) the July 1 interest payment, and (c) the December 31 adjusting entry.

3 The Colson Company issued \$300,000 of 10% bonds on January 1, 2013. The bonds are due January 1, 2018, with interest payable each July 1 and January 1. The bonds are issued at 98. Prepare the journal entries for (a) January 1, (b) the July 1, and (c) December 31. Assume The Colson Company records straight-line amortization annually on December 31. (List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.)

4The Colson Company issued \$300,000 of 10% bonds on January 1, 2013. The bonds are due January 1, 2018, with interest payable each July 1 and January 1. The bonds are issued at 103. Prepare Colson’s journal entries for (a) January 1, (b) July 1, and (c) December 31. Assume The Colson Company records straight-line amortization semi-annually. (List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.)

5 Devers Corporation issued \$400,000 of 6% bonds on May 1, 2013. The bonds were dated January 1, 2013, and mature January 1, 2015, with interest payable July 1 and January 1. The bonds were issued at face value plus accrued interest. Prepare Devers's journal entries for (a) the May 1 issuance, (b) the July 1 interest payment, and(c) the December 31 adjusting entry. (List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.)

6 On January 1, 2013, JWS Corporation issued \$600,000 of 7% bonds, due in 10 years. The bonds were issued for \$559,224, and pay interest each July 1 and January 1. JWS uses the effective interest method. Prepare the company's journal entries for (a) the January 1 issuance, (b) the July 1 interest payment, and (c) the December 31 adjusting entry. Assume an effective interest rate of 8%. (List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2. Round answers to 0 decimal places, e.g. 2,510.)

7 On January 1, 2013, JWS Corporation issued \$600,000 of 7% bonds, due in 10 years. The bonds were issued for \$644,636, and pay interest each July 1 and January 1. JWS uses the effective interest method. Prepare the company's journal entries for (a) the January 1 issuance, (b) the July 1 interest payment, and (c) the December 31 adjusting entry. Assume an effective interest rate of 6%. (List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2. Round answers to zero decimal places, e.g. 2,510.)

8 Teton Corporation issued \$600,000 of 7% bonds on November 1, 2013, for \$644,636. The bonds were dated November 1, 2013, and mature in 10 years, with interest payable each May 1 and November 1. Teton uses the effective interest method with an effective rate of 6%. Prepare Teton's December 31, 2013, adjusting entry. (List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2. Round answers to zero decimal places, e.g. 2,210.)

9 At December 31, 2013, Hyasaki Corporation has the following account balances:

 Bonds payable, due January 1, 2021 \$2,000,000 Discount on bonds payable 88,000 Bond interest payable 80,000

10 Wasserman Corporation issued 10-year bonds on January 1, 2013. Costs associated with the bond issuance were \$160,000. Wasserman uses the straight-line method to amortize bond issue costs. Prepare the December 31, 2013, entry to record 2013 bond issue cost amortization.

11 On January 1, 2013, Henderson Corporation retired \$500,000 of bonds at 99. At the time of retirement, the unamortized premium was \$15,000 and unamortized bond issue costs were \$5,250. Prepare the corporation's journal entry to record the reacquisition of the bonds. (List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.)

12 Coldwell, Inc. issued a \$100,000, 4-year, 10% note at face value to Flint Hills Bank on January 1, 2013, and received \$100,000 cash. The note requires annual interest payments each December 31. Prepare Coldwell's journal entries to record (a) the issuance of the note and (b) the December 31 interest payment.

13 Samson Corporation issued a 4-year, \$75,000, zero-interest-bearing note to Brown Company on January 1, 2013, and received cash of \$47,664. The implicit interest rate is 12%. Prepare Samson's journal entries for (a) the January 1 issuance and (b) the December 31 recognition of interest. (List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2. Round answers to zero decimal places, e.g. 12,510.)

14 McCormick Corporation issued a 4-year, \$40,000, 5% note to Greenbush Company on January 1, 2013, and received a computer that normally sells for \$31,495. The note requires annual interest payments each December 31. The market rate of interest for a note of similar risk is 12%. Prepare McCormick's journal entries for (a) the January 1 issuance and (b) the December 31 interest. (Round answers to zero decimal places, e.g. 5,210. List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.)

(Classification of Liabilities)

16 Presented below are various account balances of Navajo Inc.

Indicate whether each of the items below should be classified on December 31, 2013, as a current liability, or a long-term liability, or under some other classification. Consider each one independently from all others; that is, do not assume that all of them relate to one particular business. If more than one classification is possible, select the most likely one.

 (a) Bank loans payable of a winery, due March 10, 2016. (The product requires aging for 5 years before sale.)

 (b) Unamortized premium on bonds payable, of which \$3,000 will be amortized during the next year.

 (c) Serial bonds payable, \$1,000,000, of which \$250,000 is due each July 31.

 (d) Amounts withheld from employees' wages for income taxes.

 (e) Notes payable due January 15, 2015.

 (f) Credit balances in customers' accounts arising from returns and allowances after collection in full of account.

 (g) Bonds payable of \$2,000,000 maturing June 30, 2014.

 (h) Overdraft of \$1,000 in a bank account. (No other balances are carried at this bank.)

 (i) Deposits made by customers who have ordered goods.

Classification

17 Indicate how each of the following items should be classified in the financial statements.

 (a) Discount on bonds payable

 (b) Interest expense (credit balance)

 (c) Unamortized bond issue costs

 (d) Gain on repurchase of debt

 (e) Mortgage payable (payable in equal amounts over next 3 years)

 (f) Debenture bonds payable (maturing in 5 years)

 (h) Notes payable (due in 4 years)

 (i) Income bonds payable (due in 3 years)

(Amortization Schedule—Effective Interest)

18 Spencer Company sells 10% bonds having a maturity value of \$3,000,000 for \$2,783,724. The bonds are dated January 1, 2012, and mature January 1, 2017. Interest is payable annually on January 1.

Set up a schedule of interest expense and discount amortization under the effective interest method. (Hint: The effective interest rate must be computed rounded to the nearest whole percent). (Round all answers to 2 decimal places, e.g. 45,310.20. Use rounded amounts for successive computations. In using your calculator, be sure that the rounded amounts are in the calculators memory.)

.

*AE14-20

(Long-Term Debt Disclosure)

19 At December 31, 2012, Redmond Company has outstanding three long-term debt issues. The first is a \$2,173,900 note payable which matures June 30, 2015. The second is a \$6,040,600 bond issue which matures September 30, 2016. The third is a \$12,637,200 sinking fund debenture with annual sinking fund payments of \$2,527,440 in each of the years 2014 through 2018.

Prepare the note disclosure for the long-term debt at December 31, 2012. (If answer is zero, please enter 0, do not leave any fields blank.)

Print by: ZACH DUCHESNE
Acct 3011 - 60052- 201260 Intermediate Accounting II / 14 LTD HW

(Analysis of Amortization Schedule and Interest Entries)

20 The following amortization and interest schedule reflects the issuance of 10-year bonds by Capulet Corporation on January 1, 2006, and the subsequent interest payments and charges. The company's year-end is December 31, and financial statements are prepared once yearly.

 Amortization Schedule Year Cash Interest Amount Unamortized Book Value 1/1/2006 \$11,000 \$5,651 \$ 94,349 2006 11,000 \$11,322 5,329 94,671 2007 11,000 11,361 4,968 95,032 2008 11,000 11,404 4,564 95,436 2009 11,000 11,452 4,112 95,888 2010 11,000 11,507 3,605 96,395 2011 11,000 11,567 3,038 96,962 2012 11,000 11,635 2,403 97,597 2013 11,000 11,712 1,691 98,309 2014 11,000 11,797 894 99,106 2015 11,000 11,894 100,000

21 Indicate whether the bonds were issued at a premium or a discount?

22 Is the amortization schedule based on the straight-line method or the effective interest method?

23 Determine the stated interest rate and the effective interest rate.

24 On the basis of the schedule above, prepare the journal entry to record the issuance of the bonds on January 1, 2006. (List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.)

25 On the basis of the schedule above, prepare the journal entry or entries to reflect the bond transactions and accruals for 2006. (Interest is paid January 1.) (List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.)

26 On the basis of the schedule above, prepare the journal entry or entries to reflect the bond transactions and accruals for 2013. Capulet Corporation does not use reversing entries. (List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.)

 (Issuance and Retirement of Bonds; Income Statement Presentation) 27 Holiday Company issued its 9%, 25-year mortgage bonds in the principal amount of \$3,000,000 on January 2, 1998, at a discount of \$150,000, which it proceeded to amortize by charges to expense over the life of the issue on a straight-line basis. The indenture securing the issue provided that the bonds could be called for redemption in total but not in part at any time before maturity at 104% of the principal amount, but it did not provide for any sinking fund.         On December 18, 2012, the company issued its 11%, 20-year debenture bonds in the principal amount of \$4,000,000 at 102, and the proceeds were used to redeem the 9%, 25-year mortgage bonds on January 2, 2013. The indenture securing the new issue did not provide for any sinking fund or for retirement before maturity.

Prepare journal entries to record the issuance of the 11% bonds and the retirement of the 9% bonds. (List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.)

28 How would the gain or loss from retirement be shown in the income statement?

## 5.83 USD

### Option 2

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