Reporting Financial Statement Effects of Bond Transactions (please show me how you got the answers) Lundholm, Inc., which reports financial statements each December 31, is
Reporting Financial Statement Effects of Bond Transactions (please show me how you got the answers) Lundholm, Inc., which reports financial statements each December 31, is authorized to issue $750,000 of 9%, 15 -year bonds dated May 1, 2015, with interest payments on October 31 and April 30. Assume the bonds are issued at par on May 1, 2015.
a. Prepare journal entries to record the bond issuance, payment of the first semiannual period's interest, and retirement of $450,000 of the bonds at 101 on November 1, 2016.
General Journal | |||
---|---|---|---|
Date | Description | Debit | Credit |
5/1/15 | Cash | Answer | Answer |
Bonds Payable | Answer | Answer | |
10/31/15 | Interest expense | Answer | Answer |
Cash | Answer | Answer | |
11/1/16 | Bonds payable | Answer | Answer |
Loss on retirement of bonds | Answer | Answer | |
Cash | Answer | Answer |
b. Post the journal entries from part a to their respective T-accounts.
Cash | |||
---|---|---|---|
Answer | Answer | ||
Answer | Answer |
Loss on Bonds | |||
---|---|---|---|
Answer | Answer |
Bonds Payable | |||
---|---|---|---|
Answer | Answer |
Gain on Bonds | |||
---|---|---|---|
Answer | Answer |
Interest Expense | |||
---|---|---|---|
Answer | Answer |
c. Record each of the transactions from part a in the financial statement effects template.
Use negative signs with answers, when appropriate.
Transaction | Cash Asset | + | Noncash Assets | = | Liabilities | + | Contr. Capital | + | Earned Capital | Revenue | - | Expenses | = | Net income | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
5/1/15 Issue bonds | $Answer | $Answer | $Answer | $Answer | $Answer | $Answer | $Answer | $Answer | |||||||||||||||
10/31/15 Interest payment on bonds | Answer | Answer | Answer | Answer | Answer | Answer | Answer | Answer | |||||||||||||||
11/1/16 Early retirement of bonds. | Answer | Answer | Answer | Answer | Answer | Answer | Answer | Answer |
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