Question 1

On January 1, the Rodrigues Corporation leased some equipment on a 2-year lease, paying $15,000 per year each December 31. The lease is considered to be an operating lease. Prepare the general journal entry to record the first lease payment on December 31.

Accepted Answer

The answer of On January 1, the Rodrigues Corporation leased...

Question 2

On January 1, a company issued 10-year, 10% bonds payable with a par value of $500,000, and received $442,647 in cash proceeds. The market rate of interest at the date of issuance was 12%. The bonds pay interest semiannually on July 1 and January 1. The issuer uses the straight-line method for amortization. Prepare the issuer's journal entry to record the first semiannual interest payment on July 1.

Accepted Answer

The answer of On January 1, a company issued 10-year,...

Question 3

A company issued 10-year, 9% bonds with a par value of $500,000 when the market rate was 9.5%. The company received $484,087 in cash proceeds. Prepare the issuer's journal entry to record the issuance of the bond.

Accepted Answer

The answer of A company issued 10-year, 9% bonds with...

Question 4

A company issued 10-year, 9% bonds with a par value of $500,000 when the market rate was 9.5%. The company received $484,087 in cash proceeds. Using the effective interest method, prepare the issuer's journal entry to record the first semiannual interest payment and the amortization of any bond discount or premium.

Accepted Answer

The answer of A company issued 10-year, 9% bonds with...

Question 5

Johanna Corporation issued $3,000,000 of 8%, 20-year bonds payable at par value on January 1. Interest is payable each June 30 and December 31.
(a) Prepare the general journal entry to record the issuance of the bonds on January 1.
(b) Prepare the general journal entry to record the first interest payment on June 30.

Accepted Answer

The answer of Johanna Corporation issued $3,000,000 of 8%, 20-year...

Question 6

On January 1, a company issues 8%, 5-year, $300,000 bonds that pay interest semiannually each June 30 and December 31. On the issue date, the annual market rate of interest is 6%. Compute the price of the bonds on their issue date. The following information is taken from present value tables:
 $\begin{array}{l|l}
\text { Present value of an annuity for } 10 \text { periods at } & 8.5302 \
3 \% \ldots \ldots . &  \
\hline \begin{array}{l} 
\text { Present value of an annuity for } 10 \text { periods at } \
4 \% \ldots \ldots . . .
\end{array} & 8.1109\
\hline \begin{array}{l}
\text { Present value of } 1 \text { due in } 10 \text { periods at } \
3\%\
\end{array} & 0.7441\
\hline \begin{array}{l}
\text { Present value of } 1 \text { due in } 10 \text { periods at } \
4 \% \ldots \ldots \ldots . . . . . . . .
\end{array} & 0.6756 \
\hline
\end{array}$

Accepted Answer

The answer of On January 1, a company issues 8%,...

Question 7

On January 1, Haymark Corporation leased a truck, agreeing to pay $15,252 every December 31 for the six-year life of the lease. The present value of the lease payments, at 6% interest, is $75,000. The lease is considered a capital lease.
(a) Prepare the general journal entry to record the acquisition of the truck with the capital lease.
(b) Prepare the general journal entry to record the first lease payment on December 31.
(c) Record straight-line depreciation on the truck on December 31, assuming a 6-year life and no salvage value.

Accepted Answer

The answer of On January 1, Haymark Corporation leased a...

Question 8

A company issued 9.2%, 10-year bonds with a par value of $100,000. Interest is paid semiannually. The annual market interest rate on the issue date was 10%, and the issuer received $95,016 cash for the bonds. The issuer uses the effective interest method for amortization. On the first semiannual interest date, what amount of discount should the issuer amortize?

Accepted Answer

The answer of A company issued 9.2%, 10-year bonds with...

Question 9

A company issued 10-year, 9% bonds with a par value of $500,000 when the market rate was 9.5%. The company received $484,087 in cash proceeds. Using the straight-line method, prepare the issuer's journal entry to record the first semiannual interest payment and the amortization of any bond discount or premium.(Round amounts to the nearest whole dollar)

Accepted Answer

The answer of A company issued 10-year, 9% bonds with...

Question 10

On July 1 of the current year a corporation issued (sold) $1,000,000 of its 12% bonds at par. The bonds pay interest June 30 and December 31. What amount of bond interest expense should the company report on its current year income statement?

Accepted Answer

The answer of On July 1 of the current year...

Question 11

A company issued 10-year, 9% bonds, with a par value of $500,000 when the market rate was 9.5%. The issuer received $484,087 in cash proceeds. Prepare the issuer's journal entry to record the bond issuance.

Accepted Answer

The answer of A company issued 10-year, 9% bonds, with...

Question 12

A company issued 9%, 10-year bonds with a par value of $100,000. Interest is paid semiannually. The market interest rate on the issue date was 10%, and the issuer received $95,016 cash for the bonds. On the first semiannual interest date, what amount of cash should be paid to the holders of these bonds for interest?

Accepted Answer

The answer of A company issued 9%, 10-year bonds with...

Question 13

A company issues 6%, 5 year bonds with a par value of $800,000 and semiannual interest payments. On the issue date, the annual market rate of interest is 8%. Compute the issue (selling) price of the bonds. The following information is taken from present value tables:
Present value of an annuity for 10 periods at 3% 8.5302 Present value of an annuity for 10 periods at 4% 8.1109 Present value of 1 due in 10 periods at 3%................... 0.7441
Present value of 1 due in 10 periods at 4% 0.6756

Accepted Answer

The answer of A company issues 6%, 5 year bonds...

Question 14

On January 1, a company issued 10%, 10-year bonds payable with a par value of $720,000. The bonds pay interest on July 1 and January 1. The bonds were issued for $817,860 cash, which provided the holders an annual yield of 8%. Prepare the journal entry to record the first semiannual interest payment, assuming it uses the straight-line method of amortization.

Accepted Answer

The answer of On January 1, a company issued 10%,...

Question 15

Wasp Corporation has a loan agreement that provides it with cash today, and the company must pay
$25,000 one year from today, $15,000 two years from today, and $5,000 three years from today. Wasp agrees to pay 10% interest. The following are factors from a present value table:
 $$\begin{array} { l | l } 
& \text { Interest rate } \
\hline \text { Periods } & 10 \% \
\hline 1 & 0.9091 \
\hline 2 & 0.8264 \
\hline 3 & 0.7513
\end{array}$$ What is the amount of cash that Wasp receives today?

Accepted Answer

The answer of Wasp Corporation has a loan agreement that...

Question 16

On January 1, a company issues 8%, 5-year, $300,000 bonds that pay interest semiannually each June 30 and December 31. On the issue date, the annual market rate of interest for the bonds is 10%. Compute the price of the bonds on their issue date. The following information is taken from present value tables:
 $$\begin{array} { l | l } 
\text { Present value of an annuity for } 10 \text { periods at } & 8.1109 \
4 \% & \
\hline \text { Present value of an annuity for } 10 \text { periods at } \
5 \% & 7.7217 \
\hline \text { Present value of } 1 \text { for } 10 \text { periods at } 4 \% & 0.6756 \
\hline \text { Present value of } 1 \text { for } 10 \text { periods at } 5 \% & 0.6139
\end{array}$$

Accepted Answer

The answer of On January 1, a company issues 8%,...

Question 17

A company issued 10%, 10-year bonds with a par value of $1,000,000 on January 1, at a selling price of $885,295 when the annual market interest rate was 12%. The company uses the effective interest amortization method. Interest is paid semiannually each June 30 and December 31.
(1) Prepare an amortization table for the first two payment periods using the format shown below:
 $\begin{array}{|l|l|l|l|l|l|}
\hline\text { Semiannual } & \text { Cash } & \text { Bond } & & & \
\hline \text { Interest } & \text { Interest } & \text { Interest } & \text { Discount } & \text { Unam ortized } & \text { Carrying } \
\hline \text { Period } & \text { Paid } & \text { Expense } & \text { Amortization } & \text { Discount } & \text { Value } \
\hline\
\hline\
\hline\
\hline\
\hline
\end{array}$ (2) Prepare the journal entry to record the first semiannual interest payment.

Accepted Answer

The answer of A company issued 10%, 10-year bonds with...

Question 18

A company enters into an agreement to make 5 annual year-end payments of $3,000 each, starting one year from now. The annual interest rate is 6%. The present value of an annuity factor for 5 periods at 6% is 4.2124. What is the present value of these five payments?

Accepted Answer

The answer of A company enters into an agreement to...

Question 19

On January 1, a company issues 6%, 10 year $300,000 par value bonds that pay semiannual interest each June 30 and December 31. The bonds sell at par value. Prepare the general journal entry to record the issuance of the bonds on January 1.

Accepted Answer

The answer of On January 1, a company issues 6%,...

Question 20

Sharma Company's balance sheet reflects total assets of $250,000 and total liabilities of $150,000. Calculate the company's debt-to-equity ratio.

Accepted Answer

The answer of Sharma Company's balance sheet reflects total assets...

Quiz 14: Long-Term Liabilities

On January 1, the Rodrigues Corporation leased some equipment on a 2-year lease, paying $15,000 per year each December 31. The lease is considered to be an operating lease. Prepare the general journal entry to record the first lease payment on December 31.

A company issued 10-year, 9% bonds with a par value of $500,000 when the market rate was 9.5%. The company received $484,087 in cash proceeds. Prepare the issuer's journal entry to record the issuance of the bond.

On July 1 of the current year a corporation issued (sold) $1,000,000 of its 12% bonds at par. The bonds pay interest June 30 and December 31. What amount of bond interest expense should the company report on its current year income statement?

A company issued 10-year, 9% bonds, with a par value of $500,000 when the market rate was 9.5%. The issuer received $484,087 in cash proceeds. Prepare the issuer's journal entry to record the bond issuance.

A company enters into an agreement to make 5 annual year-end payments of $3,000 each, starting one year from now. The annual interest rate is 6%. The present value of an annuity factor for 5 periods at 6% is 4.2124. What is the present value of these five payments?

On January 1, a company issues 6%, 10 year $300,000 par value bonds that pay semiannual interest each June 30 and December 31. The bonds sell at par value. Prepare the general journal entry to record the issuance of the bonds on January 1.

Sharma Company's balance sheet reflects total assets of $250,000 and total liabilities of $150,000. Calculate the company's debt-to-equity ratio.