Chapter 14: Q4BE (page 753)
Assume the bonds in BE14-2 were issued at 103. Prepare the journal entries for (a) January 1, (b) July 1, and (c) December 31. Assume The Colson Company records straight-line amortization semi-annually.
The total for both the debit and credit sides is $339,000.
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Devers Corporation issued $400,000 of 6% bonds on May 1, 2017. The bonds were dated January 1, 2017, and mature January 1, 2020, with interest payable July 1 and January 1. The bonds were issued at face value plus accrued interest. Prepare Devers’s journal entries for (a) the May 1 issuance, (b) the July 1 interest payment, and (c) the December 31 adjusting entry.
Using the same information as in E14-22 and E14-24, answer the following questions related to American Bank (creditor).
Instructions
Karen Austin Inc. has issued three types of debt on January 1, 2017, the start of the company’s fiscal year.
Instructions
Prepare a schedule that identifies the following items for each bond: (1) maturity value, (2) number of interest periods over life of bond, (3) stated rate per each interest period, (4) effective-interest rate per each interest period, (5) payment amount per period, and (6) present value of bonds at date of issue.
The following article appeared in the Wall Street Journal.
Bond Markets
Giant Commonwealth Edison Issue Hits Resale Market With \(70 Million Left Over
New york—Commonwealth Edison Co.’s slow-selling new 91 /4% bonds were tossed onto the resale market at a reduced price with about \)70 million still available from the \(200 million offered Thursday, dealers said.
The Chicago utility’s bonds, rated double-A by Moody’s and double-A-minus by Standard & Poor’s, originally had been priced at 99.803, to yield 9.3% in 5 years. They were marked down yesterday the equivalent of about \)5.50 for each $1,000 face amount, to about 99.25, where their yield jumped to 9.45%.
Instructions
(Equity Securities Entries) On December 21, 2017, Bucky Katt Company provided you with the following information
regarding its equity investments.
December 31, 2017
Investments Cost Fair Value Unrealized Gain (Loss)
Clemson Corp. stock \(20,000 \)19,000 \((1,000)
Colorado Co. stock 10,000 9,000 (1,000)
Buffaloes Co. stock 20,000 20,600 600
Total of portfolio \)50,000 \(48,600 (1,400)
Previous fair value adjustment balance –0–
Fair value adjustment—Cr. \)(1,400)
During 2018, Colorado Co. stock was sold for \(9,400. The fair value of the stock on December 31, 2018, was Clemson Corp.
stock—\)19,100; Buffaloes Co. stock—$20,500. None of the equity investments result in significant influence.
Instructions
(a) Prepare the adjusting journal entry needed on December 31, 2017.
(b) Prepare the journal entry to record the sale of the Colorado Co. stock during 2018.
(c) Prepare the adjusting journal entry needed on December 31, 2018.
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