Question
1 Journalize the entries of these transactions for Parkway Inc. whose fiscal year is the calendar year. Round all amounts to the nearest dollar. Refer
1 Journalize the entries of these transactions for Parkway Inc. whose fiscal year is the calendar year. Round all amounts to the nearest dollar. Refer to the Chart of Accounts for exact wording of account titles. 2 Indicate the amount of the interest expense in (a) Year 1 and (b) Year 2. 3 Determine the carrying amount of the bonds as of December 31, Year 2. Year 1 July 1 Bond Issued: $58,800,000 of 20-year, 11% callable bonds dated July 1, Year 1, at a market rate of 13%, receiving cash of $50,482,396. Interest is payable semiannually on December 31 and June 30. Oct. 1 Went to bank and borrowed $320,000 by issuing a six-year, 5% installment note to Citizen's Bank. The note requires annual payments of $63,046, with the first payment occurring on September 30, Year 2. Dec. 31 Record the accrued $4,000 of interest on the installment note. The interest is payable on the date of the next installment note payment. 31 Record the payment of semiannual interest on the bonds. The bond discount amortization of $207,940 is combined with the semiannual interest payment. Year 2 June 30 Record the payment of semiannual interest on the bonds. The bond discount amortization of $207,940 is combined with the semiannual interest payment. Sept. 30 Record payment of annual payment on the note, interest of $16,000 and principal of $47,046. Dec. 31 Record accrued interest of $3,412 on the installment note. The interest is payable with the next installment note payment. 31 Record payment of semiannual interest on the bonds. The bond discount amortization of $207,940 is combined with the semiannual interest payment. Year 3 June 30 Redeem bond at 98. The balance in the bond discount account is $7,485,844 after payment of interest and amortization of discount have been recorded. Record the redemption only. Sept. 30 Record payment of the second annual payment on the note, which consisted of interest of $13,648 and principal of $49,398.
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