Reference no: EM131794869

Assignment

1) Frankum Company has issued three different bonds during 2014. Interest is payable semiannually on each of these bonds.

1. On January 1, 2014, 1,110, 8%, 5-year, $1,000 bonds dated January 1, 2014, were issued at face value.
2. On July 1, $877,400, 9%, 5-year bonds dated July 1, 2014, were issued at 103.
3. On September 1, $348,300, 7%, 5-year bonds dated September 1, 2014, were issued at 98.

Prepare the journal entries to record each bond transaction at the date of issuance. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

2) The balance sheet for Miley Consulting reports the following information on July 1, 2014.

                                                         Long-term liabilities
Bonds payable                                $1,040,000
Less: Discount on bonds payable       83,200              $956,800

Miley decides to redeem these bonds at 101 after paying semiannual interest.

Prepare the journal entry to record the redemption on July 1, 2014. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

3) Prepare the journal entries that the lessee should make to record the following transactions. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

1. The lessee makes a lease payment of $73,060 to the lessor in an operating lease transaction.

2. Imhoff Company leases a new building from Noble Construction, Inc. The present value of the lease payments is $703,700. The lease qualifies as a capital lease.

4) Detwiler Orchard issues a $805,533, 4%, 15-year mortgage note to obtain needed financing for a new lab. The terms call for semiannual payments of $35,967 each.

Prepare the entries to record the mortgage loan and the first installment payment. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 0 decimal places e.g. 8,970.)

5) Jernigan Co. receives $226,800 when it issues a $226,800, 14%, mortgage note payable to finance the construction of a building at December 31, 2014. The terms provide for semiannual installment payments of $18,900 on June 30 and December 31.

Prepare the journal entries to record the mortgage loan and the first two installment payments. (Round answers to 0 decimal places, e.g. 15,250. Credit account titles are automatically indented when amount is entered. Do not indent manually.)