Purchase Solution

Bonds - Prepare the journal entries

Not what you're looking for?

Ask Custom Question

On July 1, 2008, Rossillon Company issued $4,000,000 face value, 8%, 10-year bonds
at $3,501,514.This price resulted in an effective-interest rate of 10% on the bonds. Rossillon uses the effective-interest method to amortize bond premium or discount.The bonds pay semiannual interest July 1 and January 1.

Instructions
(Round all computations to the nearest dollar.)
(a) Prepare the journal entries to record the following transactions.
(1) The issuance of the bonds on July 1, 2008.
(2) The accrual of interest and the amortization of the discount on December 31, 2008.
(3) The payment of interest and the amortization of the discount on July 1, 2009, assuming
no accrual of interest on June 30.
(4) The accrual of interest and the amortization of the discount on December 31, 2009.

Purchase this Solution
Solution Summary

An amortization schedule and the journal entries are shown for you. I used formulas (click on cells) so that you would have a template for other similar problems.

Solution Preview

An amortization schedule and the journal entries are shown for you. I used formulas (click on cells) so that you would have a template for other similar problems.

If ...

Solution provided by:
Carol Sargent, PhD
Education
  • BSc, University of Virginia
  • MSc, University of Virginia
  • PhD, Georgia State University
Recent Feedback
  • "hey just wanted to know if you used 0% for the risk free rate and if you didn't if you could adjust it please and thank you "
  • "Thank, this is more clear to me now."
  • "Awesome job! "
  • "ty"
  • "Great Analysis, thank you so much"
Purchase this Solution
Free BrainMass Quizzes
Situational Leadership

This quiz will help you better understand Situational Leadership and its theories.

Operations Management

This quiz tests a student's knowledge about Operations Management

Organizational Behavior (OB)

The organizational behavior (OB) quiz will help you better understand organizational behavior through the lens of managers including workforce diversity.

Lean your Process

This quiz will help you understand the basic concepts of Lean.

Learning Lean

This quiz will help you understand the basic concepts of Lean.

View More Free Quizzes
Related BrainMass Solutions

  • Available for sale debt securities

    Assume that the bonds are classified as available-for-sale. (b) Prepare the amortization schedule for the bonds. (c) Prepare the journal entries to record the semiannual interest on July 1, 2007, and December 31, 2007.

  • Journal entries - bond issuance, interest payment & amortization

    (a) Prepare the journal entry to record the issuance of the bonds on July 1, 2006. (b) Prepare the journal entry to record the accrual of interest and the amortization of the discount on December 31, 2006.

  • Entries for new bonds issued, interest, amortization, retirement

    table for the bonds' first two years. 4: Prepare the journal entries to record the first two interest payments. 5: Prepare the journal entry to record the bonds' retirement on January 1,2011 at 97 6: Assume that the market rate on January

  • Journal Entries for Bond Transactions

    Instructions (a) Prepare the entry for May 1, 2010. (b) The bonds are sold on August 1, 2011 for $425,000 plus accrued interest. Prepare all entries required to properly record the sale.

  • Stocks and Bond Questions

    Prepare the journal entries for interest revenue and the adjustment for fair value for the first three years.

  • Journal Entries of the Kramer Corporation

    Dec 31 Optic reported a net loss of $66,000 for the year. Prepare the journal entries Kramer Corporation should record for these these transactions and events. 2.

  • Requirements depreciation, Bonds with journal entries

    Prepare the journal entry to record the interest payment on February 28, 2012. See attached The requirements depreciation and bonds with journal entries are examined.

  • Bond Entries for Held-to-Maturity Securities

    (b) Prepare a bond amortization schedule. (c) Prepare the journal entry to record the interest received and the amortization for 2006. (d) Prepare the journal entry to record the interest received and the amortization for 2007.

  • Newby Corporation Adjusting Journal Entries

    419525 Adjusting Journal Entries P15-1A On May 1, 2010, Newby Corporation issued $600,000, 9%, 5-year bonds at face value. The bonds were dated May 1, 2010, and pay interest semiannually on May 1 and November 1.

  • Aumont Company: Entries for Bond Transactions

    (c) Prepare the journal entry to record the interest payment and the amortization for 2007. (d) Prepare the journal entry to record the interest payment and the amortization for 2009.

View More Related Solutions