Question
Need assistance with parts of section C, please Analyzing Financial Statement Effects of Bond Redemption Holthausen Corporation issued $100,000 of 11%, 20-year bonds at 108
Need assistance with parts of section C, please
Analyzing Financial Statement Effects of Bond Redemption
Holthausen Corporation issued $100,000 of 11%, 20-year bonds at 108 on January 1, 2010. Interest is payable semiannually on June 30 and December 31. Through January 1, 2016, Holthausen amortized $1,048 of the bond premium. On January 1, 2016, Holthausen retires the bonds at 103.
Required a. Prepare journal entries to record the issue and retirement of these bonds.
| General Journal | |||
|---|---|---|---|
| Date | Description | Debit | Credit |
| 01/01/10 | CASH
| 108000
| 0 |
| Bonds payable | 0
| 100000
| |
| Bond premium
| 0
| 8000 | |
| 01/01/16 | Bonds payable | 100000
| 0 |
| Bond premium
| 6952
| 0 | |
| Cash | 0
| 103000 | |
| Gain on retirement
| 0
| 3952 | |
b. Post the journal entries from part a to their respective T-accounts.
| Cash (A) | |||
|---|---|---|---|
| 01/01/10 | 108000
| 0 | |
| 01/01/16 | 0 | 103000 | |
| Bonds Payable (L) | |||
|---|---|---|---|
| 01/01/10 | 0
| 100000 | |
| 01/01/16 | 100000
| 0
| |
| Gain on Retirement of Bonds (R) | |||
|---|---|---|---|
| 01/01/10 | 0
| 0 | |
| 01/01/16 | 0
| 3952
| |
| Bond Premium (L) | |||
|---|---|---|---|
| 01/01/10 | 0
| 8000 | |
| 01/01/16 | 6952
| 0
| |
c. Record each of the transactions from part a in the financial statement effects template. Remember to use negative signs, when appropriate.
| Balance Sheet | Income Statement | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Transaction | Cash Asset | + | Noncash Asset | = | Liabilities | + | Contrib. Capital | + | Earned Capital | Revenues | - | Expenses | = | Net Income |
| 1/1/10 Issue bonds at a premium | 108000
| + | 0
| = | Answer
| + | 0
| + | Answer
| 0
| - | 0
| = | 0 |
| 1/1/16 Retire bonds issued on 1/1/10 | (103000)
| + | 0
| = | Answer
| + | 0
| + | Answer
| Answer
| - | 0
| = | Answer
|
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Process Driven Comprehensive Auditing A New Way To Conduct ISO 9001 2000 Internal Audits
Authors: Paul C. Palmes
1st Edition
0873896416, 978-0873896412
