Ex. 268
On January 1, Porter Corporation issued $600,000, 6%, 5-year bonds at face value. Interest is payable semiannually on July 1 and January 1.
Instructions
Prepare journal entries to record the
(a)Issuance of the bonds.
(b)Payment of interest on July 1, assuming no previous accrual of interest.
(c)Accrual of interest on December 31.
Ex. 269
The following section is taken from Brown Corp’s balance sheet at December 31, 2010.
Current liabilities
Bond interest Payable......................................$ 90,000
Long-term liabilities
Bonds Payable, 9%, due January 1, 2015 .......................... 2,000,000
Interest is payable semiannually on January 1 and July 1. The bonds are callable on any interest date.
Instructions
(a)Journalize the payment of the bond interest on January 1, 2011.
(b) Assume that on January 1, 2011, after paying interest, Brown calls bonds having a face value of $800,000. The call price is 104. Record the redemption of the bonds.
(c) Prepare the entry to record the payment of interest on July 1, 2011, assuming no previous accrual of interest on the remaining bonds.
Ex. 270
Carpino Company issued $500,000 of bonds on January 1, 2011.
Instructions
(a) Prepare the journal entry to record the retirement of the bonds at maturity, assuming the bonds were issued at 100.
(b) Prepare the journal entry to record the retirement of the bonds before maturity at 98. Assume the balance in Premium on Bonds Payable is $5,000.
(c) Prepare the journal entry to record the conversion of the bonds into 20,000 shares of $10 par value common stock. Assume the bonds were issued at par.
Ex. 271
Wood Company retired $500,000 face value, 9% bonds on June 30, 2011 at 98. The carrying value of the bonds at the redemption date was $508,000.
Instructions
Prepare the journal entry to record the redemption of the bonds.
Ex. 272
Presented below are three independent situations:
(a)Howell Corporation purchased $350,000 of its bonds on June 30, 2011, at 102 and immediately retired them. The carrying value of the bonds on the retirement date was $339,500. The bonds pay semiannual interest and the interest payment due on June 30, 2011, has been made and recorded.
(b)Justice, Inc. purchased $400,000 of its bonds at 97 on June 30, 2011, and immediately retired them. The carrying value of the bonds on the retirement date was $393,000. The bonds pay semiannual interest and the interest payment due on June 30, 2011, has been made and recorded.
(c)Riser Company has $80,000, 10%, year convertible bonds outstanding. These bonds were sold at face value and pay semiannual interest on June 30 and December 31 of each year. The bonds are convertible into 40 shares of Riser $5 par value common stock for each $1,000 par value bond. On December 31, 2011, after the bond interest has been paid, $20,000 par value of bonds were converted. The market value of Riser’s common stock was $38 per share on December 31, 2011.
Instructions
For each of the independent situations, prepare the journal entry to record the retirement or conversion of the bonds.