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Mortgage Note Records

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1. Bondorf Inc. issues a $600,000, 10%, 10-year mortgage note on December 31, 2012, to obtain financing for a new building. The terms provide for semiannual installment payments of $48,145. Prepare the entry to record the mortgage loan on December 31, 2012, and the first installment payment.

2. Pas Company issued $1,000,000 of bonds on January 1, 2012.
(a) Prepared the journal entry to record the issuance of the bonds if they are issued at (1) 100, (2) 98, and (3) 03.
(b) Prepare the journal entry to record the retirement of the bonds at maturity, assuming the bonds were issued at 100
(c) Prepare the journal entry to record the retirement of the bonds before maturity at 98. Assume the balance in
premium on bonds payable is $9,000
(d) Prepare the journal entry to record the conversion of the bonds into 30,000 shares of $10 par value common stock.
Assume the bonds were issued at par value.

3. Jacobson Company issued $500,000 of 5-year, 8% bonds at 97 on January 1, 2012. The bonds pay interest twice a year
(a) (1) Prepare the journal entry to record the issuance of the bonds
(2) Compute the total cost of borrowing for these bonds
(b) Repeat the requirements from part (a), assuming the bonds were issued at 105

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Solution Summary

The expert prepares journal entries to record the retirement of the bonds.

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