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P7.8 7.10 Unearned Rev Bonds Payable Kirkland Theater Coley Co.

E7.8 Unearned revenues-ticket sales Kirkland Theater sells season tickets for six events at a price of $252. For the 2010 season, 1,200 season tickets were sold.

Required:
a. Use the horizontal model (or write the journal entry) to show the effect of the sale of the season tickets.
b. Use the horizontal model (or write the journal entry) to show the effect of presenting an event.
c. Where on the balance sheet would the account balance representing funds received for performances not yet presented be classified?

E7.10 Bonds payable-record issuance and discount amortization Coley Co. issued
$30 million face amount of 9%, 10--year bonds on June 1, 2010. The bonds pay interest
on an annual basis on May 31 each year.

Required:
a. Assume that the market interest rates were slightly higher than 9% when the bonds were sold. Would the proceeds from the bond issue have been more than, less than, or equal to the face amount? Explain.
b. Independent of your answer to part a, assume that the proceeds were
$29,640,000. Use the horizontal model (or write the journal entry) to show the effect of issuing the bonds.
c. Calculate the interest expense that Coley Co. will show with respect to these bonds in its income statement for the fiscal year ended September 30, 2010, assuming that the discount of $360,000 is amortized on a straight-line basis.

Solution Summary

Your tutorial is in excel, attached. Instructional notes are provided to assist. Click in cells to see computations.

$2.19