Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The following transactions were completed by Winklevoss Inc., whose fiscal year is the calendar year: Year 1 July 1 Issued $74,000,000 of 20-year, 11% callable

The following transactions were completed by Winklevoss Inc., whose fiscal year is the calendar year:

Year 1
July 1 Issued $74,000,000 of 20-year, 11% callable bonds dated July 1, Year 1, at a market (effective) rate of 13%, receiving cash of $63,532,267. Interest is payable semiannually on December 31 and June 30.
Oct. 1 Borrowed $200,000 by issuing a six-year, 6% installment note to Nicks Bank. The note requires annual payments of $40,673, with the first payment occurring on September 30, Year 2.
Dec. 31 Accrued $3,000 of interest on the installment note. The interest is payable on the date of the next installment note payment.
31 Paid the semiannual interest on the bonds. The bond discount amortization of $261,693 is combined with the semiannual interest payment.
Year 2
June 30 Paid the semiannual interest on the bonds. The bond discount amortization of $261,693 is combined with the semiannual interest payment.
Sept. 30 Paid the annual payment on the note, which consisted of interest of $12,000 and principal of $28,673.
Dec. 31 Accrued $2,570 of interest on the installment note. The interest is payable on the date of the next installment note payment.
31 Paid the semiannual interest on the bonds. The bond discount amortization of $261,693 is combined with the semiannual interest payment.
Year 3
June 30 Recorded the redemption of the bonds, which were called at 98. The balance in the bond discount account is $9,420,961 after payment of interest and amortization of discount have been recorded. Record the redemption only.
Sept. 30 Paid the second annual payment on the note, which consisted of interest of $10,280 and principal of $30,393.

Required:

1. Journalize the entries to record the foregoing transactions. Round all amounts to the nearest dollar. Refer to the Chart of Accounts for exact wording of account titles.
2. Indicate the amount of the interest expense in (a) Year 1 and (b) Year 2.
3. Determine the carrying amount of the bonds as of December 31, Year 2.

Journal

1. Journalize the entries to record the foregoing transactions. Round all amounts to the nearest dollar. Refer to the Chart of Accounts for exact wording of account titles.

Year 1

PAGE 10

JOURNAL

ACCOUNTING EQUATION

DATE DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY

1

2

3

4

5

6

7

8

9

10

Year 2

PAGE 10

JOURNAL

ACCOUNTING EQUATION

DATE DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY

1

2

3

4

5

6

7

8

9

10

11

12

Year 3

PAGE 10

JOURNAL

ACCOUNTING EQUATION

DATE DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY

1

2

3

4

5

6

7

8

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Clinical Audit Book Improving The Quality Of Health Care

Authors: Clare Mayo, Gill Harvey

1st Edition

070202418X, 978-0702024184

More Books

Students also viewed these Accounting questions

Question

How do you add two harmonic motions having different frequencies?

Answered: 1 week ago

Question

2. Outline the functions of nonverbal communication

Answered: 1 week ago