P12-2

A,B,C,D,E,F,G,H

Unpaid Principal Inter Decrease ONs. EXERCISES, PROBLEMS, AND Date Expense Cash $280,000 Payment 1/1/2003 2/1/2003 3/1/2003 4/1/2003 b. Prepare the journal entry to record the mortgage. Round answers to the nearest dolla Prepare the entry for the first payment. What will be the total interest paid over the life of the mortgage? P12-2 On January 1, 2004, Gerry Corporation issued $10,000,000 8 % semiannual coupon bonds had fallen to $9,875,200. Interest payment dates are January 1 and July 1 of each year. d. The bonds were issued at face value. By December 31, 2006, the market value of the bonds Required a. Prepare the entry to record the sale of the bonds on January 1, 2004 b. Prepare the entry made on the first coupon payment date of July 1, 2004 c What will the book value of the bonds be on December 31, 2006? d. What factors would have caused the market value of the bonds to fall below the face value? Explain. What accounting adjustment would Gerry be required to make on December 31, e. 2006? f Assume that Gerry retires the bonds on December 31, 2006, by buying the bonds on market. What journal entry would be made to retire the bonds? the en Indicate the impact of the bond retirement on Gerry's net income and debt-to- equity ratio. h Explain why management may sometimes retire bonds when it is not in the best in- terest of the company's stockholders. ae balance sheet and income statement of Coca-Cola Company and Subsidiaries at De- mber 31, 1999, are as follows: Coca-Cola Company and Subsidiaries Income Statement (in millions) erating revenues goods sold rofit administrati For the Year Ended 12/31/99 $19.805