Comments on: HELP! on adjusting entries for liabilities? http://www.paycheckloancenter.com/2009/01/help-on-adjusting-entries-for-liabilities/ Everything you want to know about Payday Loans and Cash Advances Sun, 05 Feb 2012 09:40:38 +0000 http://wordpress.org/?v=2.7 hourly 1 By: Sandy http://www.paycheckloancenter.com/2009/01/help-on-adjusting-entries-for-liabilities/comment-page-1/#comment-367 Sandy Tue, 20 Jan 2009 07:59:27 +0000 http://www.paycheckloancenter.com/2009/01/help-on-adjusting-entries-for-liabilities/#comment-367 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 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

]]> By: melodyimogene http://www.paycheckloancenter.com/2009/01/help-on-adjusting-entries-for-liabilities/comment-page-1/#comment-366 melodyimogene Mon, 19 Jan 2009 16:16:25 +0000 http://www.paycheckloancenter.com/2009/01/help-on-adjusting-entries-for-liabilities/#comment-366 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. 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.

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