On January 1, 2016, Bishop Company issued 10% bonds dated January 1, 2016, with
ID: 2578630 • Letter: O
Question
On January 1, 2016, Bishop Company issued 10% bonds dated January 1, 2016, with a face amount of $19.5 million. The bonds mature in 2025 (10 years). For bonds of similar risk and maturity, the market yield is 12%. Interest is paid semiannually on June 30 and December 31. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided. Enter your answers in whole dollars.)
Journal entry worksheet
A. Record the issuance of bonds by Bishop
3. Prepare the journal entry to record interest on June 30, 2016, using the effective interest method. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
A. Record the interest on June 30, 2016, using the effective interest method.
4. Prepare the journal entry to record interest on December 31, 2016, using the effective interest method. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
A. Record the interest on December 31, 2016, using the effective interest method.
..........Jounralize from the list below.......
No journal entry required
Accounts receivable
Allowance for uncollectible accounts
Bond investment
Bonds payable
Building
Cash
Common stock
Conversion expense
Convertible bonds payable
Debt issue costs
Debt issue expense
Discount on bond investment
Discount on bonds payable
Discount on notes payable
Equipment
Equity—stock warrants
Gain on disposition of assets
Gain on early extinguishment
Gain on troubled debt restructuring
Interest expense
Interest payable
Interest receivable
Interest revenue
Inventory
Investment in common stock
Investment in convertible bonds
Investment in stock warrants
Land
Loss on early extinguishment
Loss on sale of investment
Machinery
Notes payable
Notes receivable
Premium on bond investment
Premium on bonds payable
Retained earnings
Unrealized holding gain
Unrealized holding loss
Required:Explanation / Answer
1 Amount PV factor Present value Interest 975000 11.46992 11183172 Principal 19500000 0.3118 6080100 Issue price 17263272 2 Cash 17263272 Discount on bonds payable 2236728 Bonds payable 19500000 3 Interest expense 1035796 Discount on bonds payable 60796 Cash 975000 4 Interest expense 1039444 Discount on bonds payable 64444 Cash 975000
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