On January 1, 2017, Opal Company issued $2,000,000 face value, 7%, 10-year bonds at $2,147,202. This price resulted in a 6% effective-interest rate on the bonds. Opal uses the effective-interest method to amortize bond premium or discount. The bonds pay annual interest on each January 1. Prepare the journal entries to record the following transactions. (Round answers to decimal places, eg. 125. Credit account titles are automatically indented when amount is entered. Do not indent manually.) 1. The issuance of the bonds on January 1, 2017 2. Accrual of interest and amortization of the premium on December 31, 2017 3. The payment of interest on January 1, 2018 4. Accrual of interest and amortization of the premium on December 31, 2018, No. Debit Credit Date Account Titles and Explanation 1. Jan 1, 2017 2. Dec 31, 2017 3. Jan. 1, 2018 4. Dec. 31, 2018 Show the proper long-term liabilities balance sheet presentation for the liability for bonds payable at December 31, 2018. (Round answers to decimal places, eg. 125.) OPAL COMPANY Balance Sheet (Partial) Provide the answers to the following questions. 1. What amount of interest expense is reported for 2018? (Round answer to decimal places, e.g. 125.) Interest expense to be reported $ the amount that would be reported if the straight-line method of 2. The bond interest expense reported in 2018 would be amortization were used. On January 1, 2017, the ledger of Romada Company contained these liability accounts. Accounts Payable $42.500 Sales Taxes Payable 6,600 Unearned Service Revenue 19.000 During January, the following selected transactions occurred. Jan. 1 Borrowed $18,000 in cash from Apex Bank on a 4-month, 5%, $18,000 note. 5 Sold merchandise for cash totaling $6.254, which includes 6% sales taxes. 12 Performed services for customers who had made advance payments of $10,000. (Credit Service Revenue.) 14 Paid state treasurer's department for sales taxes collected in December 2016, $6,600, 20 Sold 500 units of a new product on credit at $48 per unit, plus 6% sales tax. During January, the company's employees earned wages of $70,000. Withholdings related to these wages were $5,355 for Social Security (FICA), $5,000 for federal income tax, and $1.500 for state income tax. The company owed no money related to these earnings for federal or state unemployment tax. Assume that wages earned during January will be paid during February. No entry had been recorded for wages or payroll tax expense as of January 31. Journalize the January transactions. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem. Round answers to nearest whole dollar amount, e.8. 5.275.) Date Account Titles and Explanation Debit Credit Journalize the adjusting entries at January 31 for the outstanding note payable and for salaries and wages expense and payroll tax expense. (Credit account titles are automatically indented when amount is entered. Do not indent manually) Debit Credit Date Account Titles and Explanation Jan. 31 (To record the interest on outstanding notes payable.) Jan. 31 (To record payroll and withholding taxes.) Jan. 31 (To record employer's payroll taxes.) Prepare the current liabilities section of the balance sheet at January 31, 2017. Assume no change in Accounts Payable. ROMADA COMPANY Balance Sheet (Partial) $ $
