On May 1, the Mixler Corporation issued $9,000,000 worth of 25-year, 9 percent bonds, dated May 1,
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On May 1, the Mixler Corporation issued $9,000,000 worth of 25-year, 9 percent bonds, dated May 1, with interest payable May 1 and November 1. The corporation’s fiscal year is the calendar year. The following transactions pertain to the bond issue for the first two years:
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Year 1 May 1 Sold bond issue at 103. Nov. 1 Paid semiannual interest on bonds. Dec. 31 Deposited $160,500 in a bond sinking fund. Year 2 31 Recorded adjusting entry for accrued interest payable. 31 Recorded adjusting entry for amortization of bond premium. Closed the Interest Expense account. 31 Jan. 1 12 May 1 July 1 2 Nov. 1 Dec. 31 Reversed adjusting entry for accrued interest payable. Bought various securities with sinking fund cash; cost, $157,400. Paid semiannual interest on bonds. Recorded receipt of $5,624 of income derived from sinking fund investments, depositing cash in sinking fund. Bought various securities with sinking fund cash, $7,290. Paid semiannual interest on bonds. Recorded receipt of $6,331 of income derived from sinking fund investments, depositing cash in sinking fund. 31 Deposited $201,200 in bond sinking fund. 31 Recorded adjusting entry for accrued interest payable. 31 Recorded adjusting entry for amortization of bond premium. 31 Closed the Sinking Fund Income account. 31 Closed the Interest Expense account.
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College Accounting Chapters 1-26
ISBN: 9780395796993
6th Edition
Authors: Douglas J. McQuaig, Patricia A. Bille
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