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Return to question 7 Xonic Corporation issued $7.7 million of 20-year, 8 percent bonds on April 1, 2021, at 102. Interest is paid on March
Return to question 7 Xonic Corporation issued $7.7 million of 20-year, 8 percent bonds on April 1, 2021, at 102. Interest is paid on March 31 and September 30 of each year, and all of the bonds in the issue mature on March 31, 2041. Xonic's fiscal year ends on December 31. Prepare the following journal entries. 2. points a. April 1, 2021, to record the issuance of the bonds. b. September 30, 2021, to pay interest and to amortize the bond premium. c. March 31, 2041, to pay interest, amortize the bond premium, and retire the bonds at maturity (make two separate entries). Assume an adjusting entry was made on December 31, 2040, to recognize interest from October 1 to December 31. d. What is the effect of amortizing the bond premium on (1) annual net income and (2) annual net cash flow from operating activities. (Ignore possible income tax effects.) (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in dollars not in millions.) Answer is not complete. Complete this question by entering your answers in the tabs below. Reg A to C Req D a. April 1, 2021, to record the issuance of the bonds. b. September 30, 2021, to pay interest and to amortize the bond premium. c. March 31, 2041, to pay interest, amortize the bond premium, and retire the bonds at maturity (make two separate entries). Assume an adjusting entry was made on December 31, 2040, to recognize interest from October 1 to December 31. Show less No Date General Journal Debit Credit 1 Apr 01, 2021 7,854,000 Cash Bonds payable Premium on bonds payable 7,700,000 154,000 2 Sep 30, 2021 Bond interest expense Premium on bonds payable 4,000 308,000 Cash 3 Mar 31, 2041 Bond interest expense Premium on bonds payable Bond interest payable 4 Mar 31, 2041 x x Bond interest expense Premium on bonds payable Bond interest payable Cash Bonds payable x x Cash x Req A to C ReqD > Req A to C ReqD What is the effect of amortizing the bond premium on (1) annual net income and (2) annual net cash flow from operating activities. (Ignore possible income tax effects.) Effect on annual net income Increases (1) (2) Effect on annual net cash flow from operating activities No effect
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