Reference no: EM132463731

a) Record bond transactions.

Lombard Company issued $400,000 of 8%, 10-year bonds on January 1, 2017, at face value. Interest is payable annually on January 1, 2018.

Instructions

Question a) Prepare the journal entries to record the following events:

(a) the issuance of the bonds.

(b) the accrual of interest on December 31, 2017.

(c) the payment of interest on January 1, 2018.

(d) Assuming Lombard has a September 30 year end, prepare the adjusting journal entry needed on September 30, 2017, and prepare the journal entry to record the interest payment on January 1, 2018, assuming reversing entries have not been used.

Question b) Record bond transactions.

On September 1, 2017, Praise Corporation issued $600,000 of 10-year, 3% bonds at 96. Interest is payable semi-annually on September 1 and March 1. Praise's fiscal year end is February 28.

Instructions

(a) Is the market rate of interest higher or lower than 3%? Explain.

(b) Record the issue of the bonds on September 1, 2017.

(c) Record the accrual of interest on February 28, 2018, assuming the semi-annual amortization amount for this interest period is $1,014.

(d) Record the payment of interest on March 1, 2018.

Question c) Record bond transactions.

On July 31, 2017, Mooney Inc. issued $500,000 of 5-year, 4% bonds at 102. Interest is payable semi-annually on July 31 and January 31. Mooney's fiscal year end is January 31.

Instructions

(a) Is the market rate of interest higher or lower than 4%? Explain.

(b) Record the issue of the bonds on July 31, 2017.

(c) Record the payment of interest on January 31, 2018, assuming the semi-annual amortization amount for this interest period is $923.

Question d) Calculate bond issue and make an amortization schedule of a bond premium.

Messer Company issued $600,000 of 8%, 7-year bonds on January 1, 2017. The bonds pay interest annually.

Instructions

(a) Assuming the market interest rate on January 1, 2017, was 7%, calculate the bond's issue price.

(b) Make an effective interest amortization table for this bond.

Question e) Calculate bond issue and make an amortization schedule of a bond discount.

Korman Company issued $800,000 of 7%, 7-year bonds on January 1, 2017. The bonds pay interest annually.

Instructions

(a) Assuming the market interest rate on January 1, 2017, was 8%, calculate the bond's issue price.

(b) Make an effective interest amortization table for this bond.

Question f) Prepare entries for bonds issued at a discount.

Amlani Company issues $500,000 of 5-year, 7% bonds on January 1, 2017. Interest is paid annually.

Instructions

(a) Assuming the market interest rate was 9% on the date of issue, record the issue of the bonds.

(b) Make an effective interest amortization table for the bonds.

(c) Prepare the journal entries to record the first three interest payments.

(d) Assuming Amlani has an October 31 year end, record the adjusting entry for interest on October 31, 2017.