Year 1 July 1. Issued $75,000,000 of 10-year, 9% callable bonds dated July 1, Year 1, at a market (effective) rate of 7%, receiving cash of $85,659,600. Interest is payable semiannually on December 31 and June 30. Oct. 1. Borrowed $270,000 by issuing a six-year, 8% installment note to Main Street Bank. The note requires annual payments of $58,405, with the first payment occurring on September 30, Year 2. Dec. 31. Accrued $5,400 of interest on the installment note. The interest is payable on the date of the next installment note payment. Dec. 31. Paid the semiannual interest on the bonds. The bond premium amortization of $532,980 is combined with the semiannual interest payment. Year 2 June 30. Paid the semiannual interest on the bonds. The bond premium amortization of $532,980 is combined with the semiannual interest payment. Sept. 30. Paid the annual payment on the note, which consisted of interest of $21,600 and principal of $36,805. Dec. 31. Accrued $4,664 of interest on the installment note. The interest is payable on the date of the next installment note payment. Dec. 31. Paid the semiannual interest on the bonds. The bond premium amortization of $532,980 is combined with the semiannual interest payment. Year 3 June 30. Recorded the redemption of the bonds, which were called at 103. The balance in the bond premium account is $8,527,680 after payment of interest and amortization of premium have been recorded. Record the redemption only. Sept. 30. Paid the second annual payment on the note, which consisted of interest of $18,656 and principal of $39,749. Required: 1. Journalize the entries to record the foregoing transactions in chronological order. If an amount box does not require an entry, leave it blank. When required, round amounts to the nearest dollar.

Excel Applications for Accounting Principles

4th Edition

ISBN:9781111581565

Author:Gaylord N. Smith

Publisher:Gaylord N. Smith

ChapterMB: Model-building Problems

Section: Chapter Questions

Problem 13M

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Question

Year 1
July 1.	Issued $75,000,000 of 10-year, 9% callable bonds dated July 1, Year 1, at a market (effective) rate of 7%, receiving cash of $85,659,600. Interest is payable semiannually on December 31 and June 30.
Oct. 1.	Borrowed $270,000 by issuing a six-year, 8% installment note to Main Street Bank. The note requires annual payments of $58,405, with the first payment occurring on September 30, Year 2.
Dec. 31.	Accrued $5,400 of interest on the installment note. The interest is payable on the date of the next installment note payment.
Dec. 31.	Paid the semiannual interest on the bonds. The bond premium amortization of $532,980 is combined with the semiannual interest payment.
Year 2
June 30.	Paid the semiannual interest on the bonds. The bond premium amortization of $532,980 is combined with the semiannual interest payment.
Sept. 30.	Paid the annual payment on the note, which consisted of interest of $21,600 and principal of $36,805.
Dec. 31.	Accrued $4,664 of interest on the installment note. The interest is payable on the date of the next installment note payment.
Dec. 31.	Paid the semiannual interest on the bonds. The bond premium amortization of $532,980 is combined with the semiannual interest payment.
Year 3
June 30.	Recorded the redemption of the bonds, which were called at 103. The balance in the bond premium account is $8,527,680 after payment of interest and amortization of premium have been recorded. Record the redemption only.
Sept. 30.	Paid the second annual payment on the note, which consisted of interest of $18,656 and principal of $39,749.

Required:

1. Journalize the entries to record the foregoing transactions in chronological order. If an amount box does not require an entry, leave it blank. When required, round amounts to the nearest dollar.

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