BUSINESS COLLEGE

Presented below are two independent situations. 1. On January 1, 2017, Monty Company issued $216,000 of 8%, 10-year bonds at par. Interest is payable quarterly on April 1, July 1, October 1, and January 1. 2. On June 1, 2017, Flounder Company issued $168,000 of 12%, 10-year bonds dated January 1 at par plus accrued interest. Interest is payable semiannually on July 1 and January 1. For each of these two independent situations, prepare journal entries to record the following. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) (a) The issuance of the bonds. (b) The payment of interest on July 1. (c) The accrual of interest on December 31.

Answers

Answer 1
Answer:

Answer:

MONTY

cash 216,000

  bond payable 216,000

interest expense 4,320

   cash                               4,320

interest expense 4,320

   interest payable            4,320

Flounder

cash 178,080

       bond payable 168,000

     interest payable 10,080

interest payable   10,080

   cash                              10,080

interest expense 10,080

   interest payable           10,080

Explanation:

Monty

issuance will receive the same amount as face value, as it was issued at par

July 1st payment: 216,000 x 8%/4 = 4,320

we divide by 4 as the payment are quarterly and there are 4 quarter per year

we recognize this interest expense and pay it.

accrued interest at December 31th:

we will recognize the interest accrued form october 1st to december 31th

we put a payable account as there is no cash payment

Flounder

issuance will receive the same amount as face value, and the interest accrued from Jan 1st to June 30th as the bonds were issued with delay

168,00 x 12%/2 = 10,080 interest payable

(the payment are semiannually so we split the rate in two)

The sum of these payable and the face value will be the cash proceeds to Flounder

july 1st payment

we "pay" the interest agains the payable account

accrued interest at December 31th:

168,00 x 12%/2 = 10,080 interest expense

we will recognize the nterest accrued form July 1st to december 31th

we put a payable account as there is no cash payment

Related Questions

Clovix Corporation has $50 million in​ cash, 10 million shares​ outstanding, and a current share price of $30. Clovix is deciding whether to use the $50 million to pay an immediate special dividend of $5.00 per​ share, or to retain and invest it at the​ risk-free rate of 10% and use the $5.00 million in interest earned to increase its regular annual dividend of $0.50 per share. Assume perfect capital markets. a. Suppose Clovix pays the special dividend. How can a shareholder who would prefer an increase in the regular dividend create it on her​ own? b. Suppose Clovix increases its regular dividend. How can a shareholder who would prefer the special dividend create it on her​ own?
"If the previous chart measures CaliMart’s revenues in millions of dollars, how much money did CaliMart make in 2005"
Provided $1,350 of piano lessons to students who paid in cash.Provided $1,060 of piano lessons on account.Collected $795 from students who took piano lessons during April.Paid April’s piano rental bill of $600.Received May’s piano rental bill of $650 and set it aside for payment in June. Assuming the company uses accrual basis accounting, what is net income for May?Multiple Choice
Assume this process continues, with each successive loan deposited into a checking account and no banks keeping any excess reserves. Under these assumptions, the $500,000 injection into the money supply results in an overall increase of ______ in demand deposits.
True or False: Increasing the number of stocks in a portfolio reduces market risk.Consider two stock portfolios. Portfolio B consists of 20 different stocks from firms in different industries. Portfolio A consists of 10 different stocks, also from firms in different industries. The return on Portfolio B is likely to be volatile than that of Portfolio A.

Which account would be listed on a post-closing trial balance?a. Sales Revenue
b. Depreciation Expense
c. Retained Earnings
d. Income Tax Expense.

Answers

Answer: c. Retained Earnings

Explanation:

The post-closing trial balance reflects balance sheet items that do not have a $0 balance in them when a period has ended and is prepared after the temporary accounts have been closed off. The purpose is to make sure that the debits equal the credits.

As there are no temporary accounts, all income statement items will have been closed off and moved to the Retained earnings account which will reflect the total for the income statement for the year. The only account that will be listed in the post-closing trial balance therefore will be the Retained earnings account.

Portside Watercraft uses a job order costing system. During one month Portside purchased $153,000 of raw materials on credit; issued materials to production of $164,000 of which $24,000 were indirect. Portside incurred a factory payroll of $95,000, of which $25,000 was indirect labor. Portside uses a predetermined overhead rate of 170% of direct labor cost. The journal entry to record the application of factory overhead to production is:

Answers

Answer:

Payroll = $95,000,

Indirect labor   = $25000

Direct labor paid = $95000 - $25000 = $70000

∵ predetermined overhead application rate is 170 % of direct labor cost

Overhead applied to work in process = 70000 × 170 %

= $119,000

Journal entry:

Debit  ⇒ Work in process = $1190000

Credit ⇒ Factory Overheads = $119000

Final answer:

To record the application of factory overhead to production, you first calculate the direct labor cost, then multiply by the predetermined overhead rate. The journal entry is a debit to Work in Process and a credit to Factory Overhead for this calculated amount.

Explanation:

The Portside Watercraft company is using a job order costing system and a predetermined overhead rate based on direct labor cost. In this case, to record the application of factory overhead to production, you would first calculate the factory overhead applied by multiplying the direct labor cost (total labor cost minus indirect labor cost) by the predetermined rate.

The direct labor cost would be calculated by subtraction: $95,000 (total factory payroll) - $25,000 (indirect labor) = $70,000. Then multiply $70,000 by 170% (the predetermined overhead rate) to get $119,000. The journal entry would then be a debit to Work in Process for $119,000 and a credit to Factory Overhead for $119,000.

Learn more about direct labor cost here:

brainly.com/question/28295481

#SPJ3

Stark Company's most recent balance sheet reported total assets of $1.82 million, total liabilities of $0.84 million, and total equity of $0.98 million. Its Debt to equity ratio is:

Answers

Answer:

Debt to Equity Ratio = 0.86

Explanation:

Debt to Equity Ratio = Total Liabilities / Stockholder's Equity

Total Liabilities = $0.84 million

Stockholder's Equity = $0.98 million

Debt to Equity Ratio = $0.84 million / $0.98 million

Debt to Equity Ratio = 0.857143

Debt to Equity Ratio = 0.86

Assume that you’re the director of one of the corporations listed below and have been presented with the business opportunity described in the scenario. Would you advise the corporation to accept the opportunity? Make sure to fully explain your answer, considering both the financial return expected and any related ethical concerns.BabyHealth is seeing decreasing sales of its powdered infant formula in the United States due to more and more mothers choosing to breastfeed their babies. In an effort to offset these losses, BabyHealth chooses to sell their formula in third world countries. However, it is widely known that the water sources in these countries is often contaminated and not boiled prior to use.

Answers

Being the director of the company, i would have to take harsh step keeping in my mind the financial standing of the company.

I would go for the export of powdered milk to the third world countries. But before going for this decision, I would ask my team to first do intensive marketing and do the sales process of the product within the United States as much as possible. After that, i would go for the export of my product.

I know, it is not ethically correct, but being the director, I shall try to minimize the financial losses by taking bold actions. So I would go with the export of the milk to the third world countries.  

Well it would be good in a financial viewpoint because you would make money guaranteed but in a ethical viewpoint it would be bad because your forcing people in a third world country to buy powder or their kids will die.

Assuming a tax rate of 30%, the after-tax cost of a $100,000 dividend payment is a. $70,000 b. $100,000 c. $30,000 d. None of the options

Answers

The answer is c. $30,000

True or false:If the owners of Six Flags over Texas want to know where the amusement park's patrons are coming from, they could send an employee out to collect the state names from the license plates of cars parked in the Six Flags' parking lot. This is an example of the observational method of gathering marketing research.

Answers

Answer: True i think

Explanation:
Other Questions
Elenor Company sells 400 units of inventory for $40 each. The inventory originally cost Elenor $26 each. What is Elenor’s gross profit on this transaction?
At her current level of consumption, Jess gets half as much marginal utility from an additional bagel as from an additional muffin. If the price of muffin is $2 each, then Jess is maximizing her utility if the price of a bagel is:
During January, Luxury Cruise Lines incurs employee salaries of $2.9 million. Withholdings in January are $221,850 for the employee portion of FICA, $435,000 for federal income tax, $181,250 for state income tax, and $29,000 for the employee portion of health insurance (payable to Blue Cross Blue Shield). The company incurs an additional $179,800 for federal and state unemployment tax and $87,000 for the employer portion of health insurance.Required:A) Record the employee salary expense, withholdings, and salaries payable.B) Record the employer-provided fringe benefits.C) Record the employer payroll taxes.
Suppose you invest equal amounts in a risky asset with an expected return of 16% and a standard deviation of returns of 18% and a risk-free asset with an interest rate of 4%. Calculate the standard deviation of the returns on the resulting portfolio.