29 Jun Question Ex. 186 On January 1, Focus
Question
Ex. 186
On January 1, Focus Corporation issued $600,000, 12%, 5-year bonds at face value. Interest is payable semiannually on July 1 and January 1.
Instructions
Prepare journal entries to record the
(a) Issuance of the bonds.
(b) Payment of interest on July 1, assuming no previous accrual of interest.
(c) Accrual of interest on December 31.
Ex. 187
The following section is taken from Blue Corp’s balance sheet at December 31, 2011.
Current liabilities
Interest Payable…………………………………………………… $ 90,000
Long-term liabilities
Bonds Payable, 9%, due January 1, 2016 ……………… 2,000,000
Interest is payable semiannually on January 1 and July 1. The bonds are callable on any interest date.
Ex. 187 (Cont.)
Instructions
(a) Journalize the payment of the bond interest on January 1, 2012.
(b) Assume that on January 1, 2010, after paying interest, Blue calls bonds having a face value of $800,000. The call price is 106. Record the redemption of the bonds.
(c) Prepare the entry to record the payment of interest on July 1, 2012, assuming no previous accrual of interest on the remaining bonds.
Ex. 188
Niebuhr Company issued$500,000 of bonds on January 1, 2012.
Instructions
(a) Prepare the journal entry to record the retirement of the bonds at maturity, assuming the bonds were issued at 100.
(b) Prepare the journal entry to record the retirement of the bonds before maturity at 97. Assume the balance in Premium on Bonds Payable is $5,000.
(c) Prepare the journal entry to record the conversion of the bonds into 15,000
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