Question : 106) Wolverines, Inc. issued $1,000,000 of 7.5%, 10-year bonds dated : 1230258

 

106) Wolverines, Inc. issued $1,000,000 of 7.5%, 10-year bonds dated June 1, 2012, with semiannual interest payments on June 1 and December 1. The bonds were issued on June 1, 2012, at 103 3/4. Wolverines’ year end is December 31.

1.If the company uses the straight-line method of amortization, what is the amount of interest expense for the year ended December 31, 2012?

2.What is the carrying value of the bonds on December 31, 2012?

107) On January 1, 2012, Peterson Corporation issued $100,000, 9%, 5-year bonds with semiannual interest payments on June 30 and December 31. The bonds were issued at $93,529 yielding an effective-interest rate of 10%. Peterson uses the effective-interest method of amortization. Prepare the journal entries that Peterson would make on January 1, June 30 and December 31, 2012. Round all amounts to the nearest dollar.

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108) On January 1, 2012, Tata Corporation issued $4,000,000, 9%, 5-year bonds at 96. The bonds pay semiannual interest on January 1 and July 1. Tata uses the straight-line method of amortization and has a calendar year end. Prepare all the journal entries that Tata Corporation would make related to this bond issue through January 1, 2013.

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109) On July 1, 2012, Bobby’s Building Corp. issued $1,000,000 of 10% bonds dated July 1, 2012 for $937,229. The bonds were sold to yield 11% and pay interest semiannually on June 31 and December 31. Bobby’s Building Corp. uses the effective interest method of amortization.

Required (Round all amounts to the nearest dollar):

1.Prepare the journal entry to record the issuance of the bonds on July 1, 2012.

2.Complete the amortization table below for the first two interest periods.

 

Date

Interest Payment

Interest Expense

Discount Amortization

Discount Balance

Bond Carrying Amount

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3.Prepare the journal entry to record the interest payment on December 31, 2012.

4.Suppose Bobby’s Building Corp. has a fiscal year end of February 28. Prepare any adjusting entry needed on February 28, 2012.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

110) Fairways West, Inc. has $500,000 of bonds payable outstanding. The bonds have an unamortized discount of $30,000. Management of Fairways West, Inc. would like to pay off the bonds. The bonds have a call price of 102 and Fairways West calls the bonds. Determine the gain or loss on the retirement of the bonds and prepare the journal entry required for the calling of the bonds.

111) Bandana Corp. has convertible bonds with a par value of $200,000 and an unamortized discount of $7,000. The bonds can be converted into 2,000 shares of Bandana’s common stock that has a $50 par value. Prepare the journal entry to record the conversion.

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