Pearson Co, McGraw Constuction: Journal Entries for bond transactions
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8. FOR THE FOLLOWING TWO PROBLEMS PREPARE THE JOURNAL ENTRIES AND INDICATE THE INTEREST EXPENSES FOR 1977 AND 1978. I ALSO NEED THE 1987 INTEREST BY THE BOND CARRYING AMOUNT.
THE FOLLOWING TRANSACTIONS WERE COMPLETED BY PEARSON CO. WHOSE FISCAL YEAR IS A CALENDER YEAR.
1977
SEPT 30 ISSUED 2,000,000 OF 20 YEAR 7% CALLABLE BOND DATED SEPT 30, 1977 FOR CASH OF 1802072. INTEREST PAYABLE SEMI ANUALLY ON SEPT 30 AND MARCH 31
DEC 31 RECORDED AN ADJUSTED ENTRY FOR INTEREST PAYABLE
DEC 31 RECORDED AMORTIZATION OF 1,042 DISCOUNT ON BONDS
DEC 31 CLOSED INTEREST EXPENSE ACCOUNTS
1978
JAN 1 REVERSED THE ADJUSTING ENTRY FOR INTEREST PAYABLE
MAR 31 PAID THE SEMI ANNUAL INTEREST ON BONDS
SEP 30 PAID THE SEMI ANNUAL INTEREST ON BONDS
DEC 31 RECORDED AMORTIZATION OF 4,334 DISCOUNT ON BONDS
RECORDED THE ADJUSTED ENTRY FOR INTEREST PAYABLE
DEC 31 CLOSED THE INTEREST EXPENSE ACCT.
1992
SEPT 30 RECORDED THE REDEMPTION OF BONDS WHICH WERE CALLED AT 101 1/2. THE BALANCE OF THE BOND DISCOUNT IS 81,108 AFTER THE PAYMENT OF INTEREST AND AMORTIZATION IS RECORDED (RECORD THE REDEMPTION ONLY)
DO THE SAME FOR THIS PROBLEM TOO
DURING 1977 AND 1978 MCGRAW CONSTRUCTION COMPLETED THE TRANSACTIONS DESCRIBED BELOW, RELATING TO ITS 1,000,000 ISSUE OF 10 YEAR 9% BONDS DATED APRIL 1ST, 1977, INTEREST PAYABLE ON APRIL 1 AND OCTOBER 1. THE CORPORATION'S FISCAL YEAR IS THE CALENDER YEAR.
1977
APRIL 1 SOLD BOND ISSUES 1,067,951 CASH
OCT 1 PAID THE SEMI ANNUAL INTEREST ON BONDS
DEC 31 RECORDED AMORTIZATION FOR 3,469 CASH IN A BOND SINKING FUND
DEC 31 APPROPRIATED 75,000 OF RETAINED EARNINGS FOR BONDED INDEBTEDNESS
DEC 31 APPROPRIATED 75,000 OF REYTAINED EARNINGS FOR BONDED INDEBTEDNESS
1978
JAN 1 REVERSED THE ADJUSTING FOR INTEREST PAYABLE
JAN 8 PURCHASED VARIOUS SECURITIES WITH SINKING FUND CASH COST 52,710
APR 1 PAID SEMI ANNUAL INTEREST ON BONDS
OCT 1 PAID SEMI ANNUAL INTEREST ON BONDS
DEC 31 RECORDED ENTRY OF INTEREST PAYABLE
RECORDED AMORTIZATION OF 4,938 FOR BOND PREMIUM
DEPOSITED 76,000 CASH IN A BOND SINKING FUND
DEC 31 APPROXIMATELY 100,0000 OF RETAINED EARNINGS FOR BONDED INDEBTEDNESS
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Solution Summary
The solution presents all the journal entries in good form. McGraw Construction journal entries are determined.
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