Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Journal entry worksheet Prepare the entry for interest expense on mortgages. Note: Enter debits before credits. Date General Journal Debit Credit December 31 Interest expense

image text in transcribed

Journal entry worksheet

Prepare the entry for interest expense on mortgages.

Note: Enter debits before credits.

Date General Journal Debit Credit
December 31 Interest expense
Discount on mortgage 0.600
Cash

1. How much interest expense did the company record during Year 2 on the 7% debentures? How much of the original issue discount was amortized during Year 2? Assume the interest for all the bonds are based on annual basis. (Enter your answers in whole dollars and not millions of dollars.) 2. How much interest expense did the company record during Year 2 on the zero coupon bonds? (Enter your answers in whole dollars and not millions of dollars.)

1. Interest expense
Total discount amortization
2. Interest expense
Information taken from a Sears, Roebuck and Company annual report follows. December 31 Long-Term Debt ($ in millions) 7% debentures, $300 million face value, due Year 11, effective Year 2 Year 1 rate $14.6% effective rate 12.0% effective rate 8.7%, collateralized by Sears Tower and $ 188.6 182.7 Zero coupon bonds, $500 million face value, due Year 8, 267.9 239.2 Participating mortgages, $850 million face value, due Year 5, related properties Various other long-term debt Total long-term debt 833.9 16,329.2 13,735.2 $17,585.0 834.5 12.444.2 Required 1, How much interest expense did the company record during Year 2 on the 7% debentures? How much of the original issue discount was amortized during Year 2? 2. How much interest expense did the company record during Year 2 on the zero coupon bonds? 3. Suppose that interest payments on the participating mortgages are made on December 31 of each year. What journal entry did the company make in Year 2 to recognize interest expense on this debt? 4. How much cash interest did the company pay out during Year 2 on the 7% debentures and the zero coupon bonds? Complete this question by entering your answers in the tabs below Req 1 and 2 Req 3 Req 4 Suppose that interest payments on the participating mortgages are made on December 31 of each year. What journal entry did the company make in Year 2 to recognize interest expense on this debt? (If no entry is required for a particular transaction, select "No journal entry required" in the first account field. Enter your answers in millions rather than whole dollars rounded to 3 decimal places (e.g. $100,500,000 should be entered as $100.500).) Show lessA

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Accounting A Smart Approach

Authors: Mary Carey, Cathy Knowles

4th Edition

0198844808, 9780198844808

More Books

Students also viewed these Accounting questions

Question

Distinguish between the terms open interest and trading volume.

Answered: 1 week ago

Question

What are the assumptions of a logistic regression model?

Answered: 1 week ago