Entries for Issuing Bonds and Amortizing Premium by Straight-Line Method Smiley Corporation wholesales repair products to...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Entries for Issuing Bonds and Amortizing Premium by Straight-Line Method Smiley Corporation wholesales repair products to equipment manufacturers. On April 1, 20Y1, Smiley issued $5,800,000 of 7-year, 6% bonds at a market (effective) interest rate of 3%, receiving cash of $6,891,274. Interest is payable semiannually on April 1 and October 1. a. Journalize the entry to record the issuance of bonds on April 1, 20Y1. If an amount box does not require an entry, leave it blank. b. Journalize the entry to record the first interest payment on October 1, 20Y1, and amortization of bond premium for six months, using the straight-line method. Round to the nearest dollar. If an amount box does not require an entry, leave it blank. c. Why was the company able to issue the bonds for $6,891,274 rather than for the face amount of $5,800,000? The market rate of interest is the contract rate of interest. Entries for Issuing Bonds and Amortizing Premium by Straight-Line Method Smiley Corporation wholesales repair products to equipment manufacturers. On April 1, 20Y1, Smiley issued $5,800,000 of 7-year, 6% bonds at a market (effective) interest rate of 3%, receiving cash of $6,891,274. Interest is payable semiannually on April 1 and October 1. a. Journalize the entry to record the issuance of bonds on April 1, 20Y1. If an amount box does not require an entry, leave it blank. b. Journalize the entry to record the first interest payment on October 1, 20Y1, and amortization of bond premium for six months, using the straight-line method. Round to the nearest dollar. If an amount box does not require an entry, leave it blank. c. Why was the company able to issue the bonds for $6,891,274 rather than for the face amount of $5,800,000? The market rate of interest is the contract rate of interest.
Expert Answer:
Posted Date:
Students also viewed these accounting questions
-
Using a resource-based view, explain why some firms improve their economic performance by adopting a CSR strategy, whereas others achieve no results or damaging results.
-
This chapter describes a black box concept that allows more detail to be shown as a process is exploded. Can the concept be applied in business management generally, or is it limited to information...
-
Access the Web site of the Copyright Office. a. Review Circular 7b. If there are two hardbound books, one on acid-free paper and one on average paper, which is the best edition? b. Review Factsheet...
-
In Example 13-1, we assumed we were going to use all available solvent. There are other alternatives. Determine if the following alternatives are capable of producing outlet water of desired acetic...
-
A man wants to help provide a college education for his young daughter. He can afford to invest $600/yr for the next 4 years, beginning on the girl's fourth birthday. He wishes to give his daughter...
-
paraphrase In quarter 6, Cloud Cycles Corporation declared bankruptcy. The accumulated losses exceeded the common stock investment, implying that the firm's equity had been depleted. In other words,...
-
To analyse the performance of a motor and a generator, you have been asked to produce a technical report in a professional format including the following information: a) A fully annotated, neatly...
-
Smith, CPA, has decided to assess control risk applicable to the existence of accounts receivable at a low level. Smith plans to use sampling to obtain substantive evidence concerning the existence...
-
An auditor searching for related party transactions should obtain an understanding of each subsidiary's relationship to the total entity because a. This may permit the audit of intercompany account...
-
The standard bank confirmation provides the auditor with evidence relating to accounts other than cash. State how this is done.
-
Analytical procedures used in the overall review stage of an audit generally include a. Gathering evidence concerning account balances that have not changed from the prior year. b. Retesting control...
-
In the audit of accounts receivable an auditor sends confirmations to all customers with balances of \(\$ 50,000\) or more and to a sample of 25 percent of the customers with balances of less than...
-
Which of the following statements is true regarding special order decisions? a. Special order decisions are long-run decisions. b. Both quantitative and qualitative impacts should be considered. c....
-
The water in tank A is at 270 F with quality of 10% and mass 1 lbm. It is connected to a piston/cylinder holding constant pressure of 40 psia initially with 1 lbm water at 700 F. The valve is opened,...
-
Columbia Sportswear Company vs Under Armour, Inc. The financial statements for the Columbia Sportswear Company can be found in Appendix A at the end of this book, and the financial statements of...
-
Recently hired as assistant controller for Finite, Inc., you are sitting next to the controller as she responds to questions at the annual stockholders' meeting. The firm's financial statements...
-
Parker Hannifin Corporation, headquartered in Cleveland, Ohio, manufactures motion control and fluid system components for a variety of industrial users. The firm's financial statements contain the...
Study smarter with the SolutionInn App