Accounting Balance Sheet And Additional Homework Help

On September 1, 2015, Evansville Lumber Company issued $80 million in 20-year, 10 percent bonds payable. Interest is payable semiannually on March 1 and September 1. Bond discounts and premiums are amortized at each interest payment date and at year-end. The company’s fiscal year ends at December 31.

Question #1

 

 

Instructions

 

a-1. Prepare the necessary adjusting entries at December 31, 2015, and the journal entry to record the payment of bond interest on March 1, 2016, under the bonds were issued at 98: (If no entry is required for a transaction/event, select “No journal entry required” in the first account field. Round your answers to the nearest dollar amount.)
  Date General Journal Debit Credit
1 Dec 31, 2015 Bond interest expense 2,693,334  
2   Bond interest payable   2,666,667
3   Discount on bonds payable   26,667
4        
5 Mar 01, 2016 Bond interest expense 1,346,666  
6   Bond interest payable 2,666,667  
7   Cash   4,000,000
8   Discount on bonds payable   13,333

 

 

 

Prepare the necessary adjusting entries at December 31, 2015, and the journal entry to record the payment of bond interest on March 1, 2016, under the bonds were issued at 101: (If no entry is required for a transaction/event, select “No journal entry required” in the first account field. Round your answers to the nearest dollar amount.)

 

  Date General Journal Debit Credit
1 Dec 31, 2015 Bond interest expense    
2   Cash    
3   Premium on bonds payable    
4        
5 Mar 01, 2016 Bond interest expense    
6   Premium on bonds payable    

 

 

 

 

As of December 31 of the current year, Petersen Corporation has prepared the following information regarding its liabilities and other obligations:

Question #2

 

 

 

           
  Notes payable, of which $12,000 will be repaid within the next 12 months   $ 80,000  
  Interest expense that will result from existing liabilities over the next 12 months     125,000  
  Lawsuit pending against Petersen, in which $600,000 is claimed in damages. Legal counsel can make no reasonable estimate of the company’s ultimate liability at this time     600,000  
  20-year bond issue that matures in two years. The entire amount will be repaid from a bond sinking fund     900,000  
  Accrued interest on the 20-year bond issue as of the balance sheet date     36,000  
  Three-year commitment to John Hoskins as chief financial officer at a salary of $275,000 per year     825,000  
  Note payable due within 90 days (but that is approved to be extended for an additional 18 months     75,000  
  Cash deposits from customers for goods and services to be delivered over the next nine months     300,000  
  Income taxes, of which $100,000 are currently payable and the remainder deferred indefinitely     185,000  
 

 

 
 
 
 
PETERSEN CORPORATION  
Balance Sheet (Partial)  
December 31  
Liabilities:    
Current liabilities:    
Notes payable (current portion) $12,000  
Income taxes payable 100,000  
Accrued bond interest payable 36,000  
Unearned revenues 300,000  
     
     
Total current liabilities $448,000  
     
Long-term liabilities:    
Bonds payable    
Notes payable    
Deferred income taxes    
Legal fees    
     
Total long-term liabilities $0  
Total liabilities $448,000  

 

 

+

 

 

Question #3

 

Using this table to complete the next question:

http://lectures.mhhe.com/connect/0078111048/Appendix%20B/exhibitb-4.jpg

 

Tilman Company is required by a bond indenture to make equal annual payments to a bond sinking fund at the end of each of the next 20 years. The sinking fund will earn 8 percent interest and must accumulate to a total of $500,000 at the end of the 20-year period. Use Table FA–2 (in Exhibit B-4)

Instructions

a.

Calculate the amount of the annual payments. (Round FV factor to 3 decimal places and final answer to the nearest dollar amount.)

Annual Payment=____________

b.

Calculate the total amount of interest that will be earned by the fund over the 20-year period. (Round your answer to the nearest dollar amount.)

Total Interest=_______________

 

 

Make the general journal entry to record redemption of the bond issue at the end of the 20-year period, assuming that the sinking fund is recorded on Tilman’s accounting records at $500,000 and bonds payable are recorded at the same amount. (If no entry is required for a transaction/event, select “No journal entry required” in the first account field.)

 

 

  Transaction General Journal Debit Credit
  1 Bond payable    
         
 
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