Problem 4. Assume that the following are independent situations recently reporte

Question

Problem 4. Assume that the following are independent situations recently reported in the Wall Street Jounal. 1 General Electric (GE) 7% bonds (interest payable annually on January 1), maturing January 1, 2037, were issued at 111.12 on January 1,2017 2 Boeing 7% bonds (interest payable annually on December 31 maturing January 1, 2043 were issued at 99.08 on January 1, 2018. Instructions o) Prepare the journal cntry to reord the issue of each of these two bonds, assuming cach company tssued S500,000 of bonds in total. (d) Prepare the adjusting entries to record the accrued interest and the amortization of the premium on the bonds for GE, on December 31, 2017 using (1) straight-line amortization, (2) effective interest rate (assumed 55%) amortization entries to record the interest payment and the amortization of the discount on the bonds for Boeing on December 31, 2018 using (i) straight-line amortization, (2) effective interest rate (assumed 7.5%) amortization.

Explanation / Answer

C) Journal entry :

d) Journal entry : for GE

E) Journal entry : for Boeing

Date accounts & explanation debit credit Jan 1,2017 Cash (500000*111.12%) 555600 Bonds payable 500000 Premium on bonds payable 55600 (To record issue bonds payable by GE) Jan 1,2018 Cash (500000*99.08%) 495400 Discount on bonds payable 4600 Bonds payable 500000 (To record issue bonds payable by boeing)

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.