MNA3631
Jun 18, 2008, 10:15 AM
Okay... it seems like I can start the problem and even end it but for some reason when closing out the year (the third and fourth journal entry for this discount bond payable) my mind goes blank... I guess I just need either an explanation on how to do journalize them or something... HELP! (The Part that I need Major help with is Bolded and Underlined.. )
Original:
Face: 1,000,000
Int Dates: May 1 and Nov 1
Auth. Date: May 1, 1985
Maturity: 8 years
Selling Price: 96 1/2 %
Contract Interest: 7%
Selling Date: July 1, 1985
Fiscal Year: Jan 1st to Dec 31st.
Journalize the first 6 entries
Face: 1,000,000
Face: 1,000,000
Quotation: * .9625
SP: - 962,500
Selling Price: 962,500
Discount: 37,500
Interest: + 11,666
Cash Rec: 974,166
Interest: 1,000,000*.07*2/12= 11,666 (Rounding to the Nearest Dollar Place)
Journal
July 1
Cash (D) 974166
Discount Bond Pay. (D) 37500
Bond Pay. (Cr) 1000000
Int. Bond Pay (Cr) 11666
Nov 1
Bond Interest Exp (D) 24930
Bond Int. Payable (D) 11666
Discount on Bond Pay. (Cr.) 1596
Cash (Cr) 35000
Dec 31
Bond Int Expense (D)
Discounts on Bond Pay. (Cr.)
Bond Int Pay (Cr.)
Dec 31
Income Summary (D)
Bond Interest Exp (Cr)
May 1st
Bond Interest Expense (D)24929
Bond interest Pay. (D) 11667
Discount on bond Payable (Cr) 1596
Cash (Cr)35000
Nov. 1st
Bond Int. Expense (D) 37394
Discount on Bond Payable (Cr) 2394
Cash (Cr.) 35000
Original:
Face: 1,000,000
Int Dates: May 1 and Nov 1
Auth. Date: May 1, 1985
Maturity: 8 years
Selling Price: 96 1/2 %
Contract Interest: 7%
Selling Date: July 1, 1985
Fiscal Year: Jan 1st to Dec 31st.
Journalize the first 6 entries
Face: 1,000,000
Face: 1,000,000
Quotation: * .9625
SP: - 962,500
Selling Price: 962,500
Discount: 37,500
Interest: + 11,666
Cash Rec: 974,166
Interest: 1,000,000*.07*2/12= 11,666 (Rounding to the Nearest Dollar Place)
Journal
July 1
Cash (D) 974166
Discount Bond Pay. (D) 37500
Bond Pay. (Cr) 1000000
Int. Bond Pay (Cr) 11666
Nov 1
Bond Interest Exp (D) 24930
Bond Int. Payable (D) 11666
Discount on Bond Pay. (Cr.) 1596
Cash (Cr) 35000
Dec 31
Bond Int Expense (D)
Discounts on Bond Pay. (Cr.)
Bond Int Pay (Cr.)
Dec 31
Income Summary (D)
Bond Interest Exp (Cr)
May 1st
Bond Interest Expense (D)24929
Bond interest Pay. (D) 11667
Discount on bond Payable (Cr) 1596
Cash (Cr)35000
Nov. 1st
Bond Int. Expense (D) 37394
Discount on Bond Payable (Cr) 2394
Cash (Cr.) 35000