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Entries for Bonds Payable and Installment Note Transactions The following transactions were completed by Winklevoss Inc., whose fiscal year is the calendar year: Year 1
Entries for Bonds Payable and Installment Note Transactions
The following transactions were completed by Winklevoss Inc., whose fiscal year is the calendar year:
Year 1 | |
July 1. | Issued $3,690,000 of five-year, 10% callable bonds dated July 1, Year 1, at a market (effective) rate of 11%, receiving cash of $3,550,931. Interest is payable semiannually on December 31 and June 30. |
Oct. 1. | Borrowed $170,000 by issuing a 10-year, 8% installment note to Nicks Bank. The note requires annual payments of $25,335, with the first payment occurring on September 30, Year 2. |
Dec. 31. | Accrued $3,400 of interest on the installment note. The interest is payable on the date of the next installment note payment. |
31. | Paid the semiannual interest on the bonds. The bond discount amortization of $13,907 is combined with the semiannual interest payment. |
Year 2 | |
June 30. | Paid the semiannual interest on the bonds. The bond discount amortization of $13,907 is combined with the semiannual interest payment. |
Sept. 30. | Paid the annual payment on the note, which consisted of interest of $13,600 and principal of $11,735. |
Dec. 31. | Accrued $3,165 of interest on the installment note. The interest is payable on the date of the next installment note payment. |
31. | Paid the semiannual interest on the bonds. The bond discount amortization of $13,907 is combined with the semiannual interest payment. |
Year 3 | |
June 30. | Recorded the redemption of the bonds, which were called at 98. The balance in the bond discount account is $83,441 after payment of interest and amortization of discount have been recorded. Record the redemption only. |
Sept. 30. | Paid the second annual payment on the note, which consisted of interest of $12,661 and principal of $12,674. |
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