Answered Essay: On July 1, 2014, Bobby's Building Corp. issued $1,000,000 of 10% bonds dated July 1, 2014 for $937,229. The bonds were sold to yield a market rat

28, (14 points) On July 1, 2014, Bobbys Building Corp. issued $1,000,000 of 10% bonds dated July 1, 2014 for $937,229. The bonds were sold to yield a market rate of 11% and pay interest semiannually on July 1 and January 1. Bobbys Building Corp. use of amortization. The companys fiscal year ends on February 28. s the effective interest method Required (Round all amounts to the nearest dollar): 1. Prepare the journal entry to issue the bond s on July 1, 2014. Omit explanations for all journal entries. 2. Prepare the amortization table for the first two interest periods. 3. Prepare the journal entry on January 1, 2015. Date July 1, 2014 Account Debit redit Discount Discount Bond Carrying Interest Payment Interest Expense Amortization Balance Date Amount July 1, 2014 Jan. 1, 2015 uly 1, 2015 Account Debit Credit Date Jan. 1, 2015

On July 1, 2014, Bobby’s Building Corp. issued $1,000,000 of 10% bonds dated July 1, 2014 for $937,229. The bonds were sold to yield a market rate of 11% and pay interest semiannually on July 1 and January 1. Bobby’s Building Corp. uses the effective interest method of amortization. The company’s fiscal year ends on February 28. Required (Round all amounts to the nearest dollar): Prepare the journal entry to issue the bonds on July 1, 2014. Omit explanations for all journal entries. Prepare the amortization table for the first two interest periods. Prepare the journal entry on January 1, 2015.

Expert Answer

 

Answer:

1

Date Account titles Debit Credit
July 1,2014 Cash A/c………………….dr $937,229
Discount on bonds payable (1000,000-937229)……………dr $62,771
To Bonds payable $1,000,000

2

Here we have been provided that use the effective interest method for amortization. Bond are sold to yield 11% return for the year so for 6 month it is

=11% * (1/2)

=5.5%

with this details we prepare the table for amortization as under

Date Interest payments Interest
expense		 Discount amortization Discount balance Bond carrying value
July1,2014 $62,771 $937,229
Jan1,2015 $50,000 $51,548 $1,548 $61,223 $938,777
Explanation (1,000,000×5%) (937,229×5.5%) (51,548-50000) (62771-1548) (937229+1548)
July1,2015 $50,000 $51,633 $1,633 $59,590 $940,410
Explanation (938777×5.5%) (51,663-50000) (61223-1633) (938777+1633)

3

Date Account titles Debit $ Credit $
Jan1,2015 Interest expense A/c…………..dr $51,548
To Discount on bonds payable $1,548
To   Cash $50,000
Buy Essay
Calculate your paper price
Pages (550 words)
Approximate price: -

Help Me Write My Essay - Reasons:

Best Online Essay Writing Service

We strive to give our customers the best online essay writing experience. We Make sure essays are submitted on time and all the instructions are followed.

Our Writers are Experienced and Professional

Our essay writing service is founded on professional writers who are on stand by to help you any time.

Free Revision Fo all Essays

Sometimes you may require our writers to add on a point to make your essay as customised as possible, we will give you unlimited times to do this. And we will do it for free.

Timely Essay(s)

We understand the frustrations that comes with late essays and our writers are extra careful to not violate this term. Our support team is always engauging our writers to help you have your essay ahead of time.

Customised Essays &100% Confidential

Our Online writing Service has zero torelance for plagiarised papers. We have plagiarism checking tool that generate plagiarism reports just to make sure you are satisfied.

24/7 Customer Support

Our agents are ready to help you around the clock. Please feel free to reach out and enquire about anything.

Try it now!

Calculate the price of your order

Total price:
$0.00

How it works?

Follow these simple steps to get your paper done

Place your order

Fill in the order form and provide all details of your assignment.

Proceed with the payment

Choose the payment system that suits you most.

Receive the final file

Once your paper is ready, we will email it to you.

HOW OUR ONLINE ESSAY WRITING SERVICE WORKS

Let us write that nagging essay.

STEP 1

Submit Your Essay/Homework Instructions

By clicking on the "PLACE ORDER" button, tell us your requires. Be precise for an accurate customised essay. You may also upload any reading materials where applicable.

STEP 2

Pick A & Writer

Our ordering form will provide you with a list of writers and their feedbacks. At step 2, its time select a writer. Our online agents are on stand by to help you just in case.

STEP 3

Editing (OUR PART)

At this stage, our editor will go through your essay and make sure your writer did meet all the instructions.

STEP 4

Receive your Paper

After Editing, your paper will be sent to you via email.

See all services
× How can I help you?