I just want to check my answers against someone who can help…. If you can’t do all of these it’s ok, just try as many as possible because this is *worth marks* and it’s my last assignment for my class… Thx in advanced!!!
Question #1: On March 31, 2004, Gardner Corporation received authorization to issue $50,000 of 9 percent, 30-year debenture bonds. The bonds pay interest on March 31 and September 30. The entire issue was dated March 31, 2004, but the bonds were not issued until April 30, 2004. They were issued at par.
b) Prepare the journal entry at April 30, 2004 to record the sale of the bonds.
c) Prepare the adjusting entry at September 30, 2004 to record the semi-annual bond interest payment.
e) Prepare the adjusting entry at December 31, 2004 to record bond interest expense accrued since September 30, 2004. (Assume no monthly adjusting entries to accrue interest expense had been made prior to December 31, 2004).
Question #2: On April 1, 2003, Alison Trucking Lines Ltd. bought four trucks from Michael Boldson Motors for a total price of $272, 000. The transactions required Alison Truck Lines Ltd. to pay $80, 000 cash and to issue a 12% promissory note. Interest and full payment are due in 18 months.
Prepare all journal entries for Alison Trucking Lines Ltd. that relate to the purchase of the trucks and the note for the year ended December 31. Include the adjusting entries to record interest expense and depreciation expense for the year. (Trucks are depreciated over an eight-year service life using the straight-line method of depreciation with no expected salvage value).
…Can ya LOOK for them?
Payday Loans
January 19th, 2009 at 11:16 am
You would have to make a bond amortization chart for these questions. Also you need your present and future value of a dollar amount and of an anuity tables. I hate these questions and I just had to do a bunch of them for school as well. I don’t have the tables anymore or else I’d help.
you have to calculate interest exp, interest at market value, subtract the two and add it to the carrying value of the bond to get the market value of the bond for each period.
January 20th, 2009 at 2:59 am
You don’t need PV tables or bond amortisation charts. The question says the bonds were issued at par, i.e. there’s no discount or premium. What’s there to amortise?
Question #1
b) Prepare the journal entry at April 30, 2004 to record the sale of the bonds.
Dr Cash $50,375
Cr Bonds payable $50,000
Cr Bond interest payable $375 ($50,000 x 9% x 1/12)
c) Prepare the adjusting entry at September 30, 2004 to record the semi-annual bond interest payment.
Dr Bond interest payable $375 (1 mth’s interest)
Dr Bond interest expense $1,875 (5 mths’ interest)
Cr Cash $2,250
e) Prepare the adjusting entry at December 31, 2004 to record bond interest expense accrued since September 30, 2004. (Assume no monthly adjusting entries to accrue interest expense had been made prior to December 31, 2004).
Dr Bond interest expense $1,125 (3 mths’ interest)
Cr Bond interest payable $1,125
Question #2
Prepare all journal entries for Alison Trucking Lines Ltd. that relate to the purchase of the trucks and the note for the year ended December 31.
Dr Trucks $272,000
Cr Cash $80,000
Cr Notes payable $192,000 (L-T liability)
Include the adjusting entries to record interest expense and depreciation expense for the year.
Dr Interest expense $17,280 ($192,000 x 12% x 9/12)
Cr Interest payable $17,280
Dr Depreciation expense $25,500 ($272,000/8 x 9/12)
Cr Accumulated depreciation $25,500