problem 11-4A

Chapter 11 Liabilities: Bonds Payable 377 Appendix 1 and Appendix 2 PR 11-4A Bond discount, entries for bonds payable transactions, interest method of amortizing bond discount On July 1, Year 1, Danzer Industries Inc. issued $40,000,000 of 10-year, 7% bonds at a market (effective) interest rate of 8%, receiving cash of $37,282,062. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year. Instructions 1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds. 2. Journalize the entries to record the following: A. The first semiannual interest payment on December 31, Year 1, and the amortization of the bond discount, using the interest method. (Round to the nearest dollar.) B. The interest payment on June 30, Year 2, and the amortization of the bond discount, using the interest method. (Round to the nearest dollar.) 3. Determine the total interest expense for Year 1. -hiles from the Internet can contain viruses. Unless you need to edit, it's safer to stay in Protected View > fx Enable Editing C D E F G H K M N o P Common Stock Jan. 1 Bal. Treasury Stock Jan. 1 Bal Dec. 31 Bal. Dec. 31 Bal. Paid In Capital from Sale of Treasury Stock Paid-In Capital in Excess of Stated Value Jan. 1 Bal. Dec. 31 Bal. Stock Dividends Distributable Dec. 31 Bal Dec. 31 Bal. Retained Earnings Jan. 1 Bal Stock Dividends Dec. 31 Bal Dec. 31 Bal Cash Dividends Dec. 31 Bal. Jan 22 Pr. 11-4A Type here to search o i e > f B D TE G H 1 J M NO P 22 Apr Aug Pr. 11-4A Type here to search O i e a 199. CTED VIEW Be carefulfiles from the Internet can contain viruses. Unless you need to edit, it's safer to stay in Protected View Enable Editing X f B C D E F G H - J K M N O 31 1 IT 31 MORROW ENTERPRISES INC. Retained Earnings Statement For the Period Ended December 31, 2016 Retained earnings, January 1, 2016 Net income Less: Cash dividends Stock dividends Increase in retained earnings Retained earnings, December 31, 2016 MORROW ENTERPRISES INC. Balance Sheet December 31, 2016 Stockholders' Equity Paid-in capital: Pr. 11-4A Stock dividends Increase in retained earnings Retained earnings, December 31, 2016 MORROW ENTERPRISES INC. Balance Sheet December 31, 2016 Stockholders' Equity Paid-in capital: Common stock, $20 stated value (500,000 shares authorized, 468,000 shares issued) Excess of issue price over stated value From sale of treasury stock Total paid-in capital Retained earnings Total Deduct treasury stock (30,000 shares at cost) Total stockholders' equity Pr. 11-4A Type here to search o 99