On July 1, 2016, Merideth Industries Inc. issued $28,500,000 of 10-year, 8% bonds at a market (effective)
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Question:
Required:
1. | Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, 2016.* | ||||
2. | Journalize the entries to record the following:*
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3. | Determine the total interest expense for 2016. | ||||
4. | Will the bond proceeds always be less than the face amount of the bonds when the contract rate is less than the market rate of interest? | ||||
5. | Compute the price of $26,646,292 received for the bonds by using the tables shown in Present Value Tables. (Round to the nearest dollar.)
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Journal
1. and 2. Journalize the entries to record the transactions. Be sure to include the year in the date for the entries. Refer to the Chart of Accounts for exact wording of account titles.
PAGE 10
JOURNAL
DATE | DESCRIPTION | POST. REF. | DEBIT | CREDIT | |
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1 | |||||
2 | |||||
3 | |||||
4 | |||||
5 | |||||
6 | |||||
7 | |||||
8 | |||||
9 |
Final Questions
3. Determine the total interest expense for 2016.
4. Will the bond proceeds always be less than the face amount of the bonds when the contract rate is less than the market rate of interest?
Yes
No
5. Compute the price of $26,646,292 received for the bonds by using the tables shown in Present Value Tables. (Round to the nearest dollar.)
Present value of the face amount | |
Present value of the semiannual interest payments | |
Price received for the bonds |
Related Book For
Financial and Managerial Accounting
ISBN: 978-1285866307
13th edition
Authors: Carl S. Warren, James M. Reeve, Jonathan Duchac
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