CHAPTER 14 INTERMEDIATE ACCOUNTING
Jan 1, Masterwear issues $700,000 of 12% bonds. Interest of $42,000 is payable
semiannually on June 30 and December 31. Bonds mature in 3 years. Entire bond issue
sold at face amount. JE for Jan 1? (From Masterwear's perspective) - Answers -Db:
Cash 700,000
Cr: Bonds Payable 700,000
Jan 1, Masterwear issues $700,000 of 12% bonds. Interest is payable semiannually on
June 30 and December 31. Bonds mature in 3 years. Market yield for bonds is 14%.
Jan 1 JE? - Answers -Db: Cash 666,633
Db: Discount on bonds payable 33,367
Cr: Bonds Payable 700,000
Jan 1, Masterwear issues $700,000 of 12% bonds. Interest is payable semiannually on
June 30 and December 31. Bonds mature in 3 years. Market yield for bonds is 10%.
Jan 1 JE? - Answers -Db: Cash 735,533
Cr: Premium on bonds payable 35,533
Cr: Bonds Payable 700,000
Coupon= - Answers -Face value*Stated rate
$700,000 of 12% bonds. Market Yield 14%. Under the Effective Interest Method, JE for
June 30? - Answers -Db: Interest expense 46,664
Cr: Discount on bonds payable 4,664
Cr: Cash 42,000
$700,000 of 12% bonds. Market Yield 14%. Under the straight line method determine
JE for each of the six interest dates - Answers -Db: Interest expense 47,561
Cr: Discount on bonds payable 5,561
Cr: Cash 42,000
$700,000, 12% bonds, mkt yield is 14%, june 30 market yield drops to 11% AND
RESULTING FAIR VALUE OF THE BOND IS $714,943. assuming they choose fair
value option, carrying value of bond $671,297. JE for fair value adjustment? - Answers -
Db: Unrealized holding loss 43,646
Cr: Fair Value Adjustment 43,646
carrying value was $791,200 and issues new bonds. New bonds $1,000,000, 10%
bonds sold at 102 and mature in 20 years. Straight line amortization. Interest paid on
December 31 and June 30.
JE to record retirement of old issue and new issue June 30, 2019 - Answers -June 30,
2019 JE:
Db: B/P 800,000
Db: Loss on Extinguishment 40,800
Cr: Discount B/P 8,800
Jan 1, Masterwear issues $700,000 of 12% bonds. Interest of $42,000 is payable
semiannually on June 30 and December 31. Bonds mature in 3 years. Entire bond issue
sold at face amount. JE for Jan 1? (From Masterwear's perspective) - Answers -Db:
Cash 700,000
Cr: Bonds Payable 700,000
Jan 1, Masterwear issues $700,000 of 12% bonds. Interest is payable semiannually on
June 30 and December 31. Bonds mature in 3 years. Market yield for bonds is 14%.
Jan 1 JE? - Answers -Db: Cash 666,633
Db: Discount on bonds payable 33,367
Cr: Bonds Payable 700,000
Jan 1, Masterwear issues $700,000 of 12% bonds. Interest is payable semiannually on
June 30 and December 31. Bonds mature in 3 years. Market yield for bonds is 10%.
Jan 1 JE? - Answers -Db: Cash 735,533
Cr: Premium on bonds payable 35,533
Cr: Bonds Payable 700,000
Coupon= - Answers -Face value*Stated rate
$700,000 of 12% bonds. Market Yield 14%. Under the Effective Interest Method, JE for
June 30? - Answers -Db: Interest expense 46,664
Cr: Discount on bonds payable 4,664
Cr: Cash 42,000
$700,000 of 12% bonds. Market Yield 14%. Under the straight line method determine
JE for each of the six interest dates - Answers -Db: Interest expense 47,561
Cr: Discount on bonds payable 5,561
Cr: Cash 42,000
$700,000, 12% bonds, mkt yield is 14%, june 30 market yield drops to 11% AND
RESULTING FAIR VALUE OF THE BOND IS $714,943. assuming they choose fair
value option, carrying value of bond $671,297. JE for fair value adjustment? - Answers -
Db: Unrealized holding loss 43,646
Cr: Fair Value Adjustment 43,646
carrying value was $791,200 and issues new bonds. New bonds $1,000,000, 10%
bonds sold at 102 and mature in 20 years. Straight line amortization. Interest paid on
December 31 and June 30.
JE to record retirement of old issue and new issue June 30, 2019 - Answers -June 30,
2019 JE:
Db: B/P 800,000
Db: Loss on Extinguishment 40,800
Cr: Discount B/P 8,800
