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Journal entries

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1. You sold $100,000 of bonds on the date of issue for $92,278. The bonds have a stated rate of 8% and were sold to yield an effective rate of 10%. The bonds mature in 5 years and pay interest semi-annually on July 1st and January 1st. The discount is amortized on the straight-line method. What would total interest expense be for the first year?

2. On July 1, 2006 Company A enters into a six-year, $190,000 lease of equipment that requires five annual payments beginning July 1, 2006. The lease guarantees the lessor, Corporation B, a $30,000 residual value at lease end. The assumed interest rate is 12%.

12% Tables Present Value PV Annuity Due
Year 4 .63552 3.40183
Year 5 .56743 4.03735
Year 6 .50663 4.60478

Make a journal entry that shows the second lease payment on Company A's books.

3. A Corporate has 1,000,000 shares of authorized $2 par value common stock. The corporation issues 10,000 of the shares when the market price is $10 per share in exchange for cash and the land that is appraised at $50,000. Make a journal entry for this stock issuance.

4. On April 1, 2006, a baseball team sells $1,000,000 worth of tickets for 10 games to be played from June 1, 2006, through October 1, 2006. What is the journal entry for April 1, 2006?
a. Cash 1,000,000
Ticket Revenue Payable 1,000,000
b. Ticket Revenue Payable 1,000,000
Unearned Ticket Revenue 1,000,000
c. Cash 1,000,000
Unearned Ticket Revenue 1,000,000
d. Ticket Revenue Payable 1,000,000
Ticket Revenue 1,000,000

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Solution Summary

The solution explains some journal entries relating to interest expense, lease payment, stock issuance, revenue earned