Journalize the following transactions of Mecina Technologies Inc.: 2017 Jan. 2 Issued 7 percent, 10-year bonds with
Question:
Journalize the following transactions of Mecina Technologies Inc.:
2017
Jan. 2 Issued 7 percent, 10-year bonds with a maturity value of $5,000,000 at 97.00.
Jan. 2 Signed a five-year capital lease on equipment. The agreement requires annual lease payments of $400,000, with the first payment due immediately (BGN). The present value of the five lease payments is $1,724,851 (8 percent is the interest rate).
Jul. 2 Paid semi-annual interest and amortized the discount by the straight-line method on the 7 percent bonds.
Dec. 31 Accrued semi-annual interest expense and amortized the discount by the straight-line method on the 7 percent bonds.
31 Recorded amortization on the leased equipment using the straight-line method (five years).
31 Accrued interest expense at 8 percent on the lease liability.
2027
Jan. 2 Paid the 7 percent bonds at maturity. (Ignore the final interest payment.)
MaturityMaturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest...
Step by Step Answer:
Horngrens Accounting
ISBN: 978-0133855388
10th Canadian edition Volume 2
Authors: Tracie L. Miller Nobles, Brenda L. Mattison, Ella Mae Matsumura, Carol A. Meissner, Jo Ann L. Johnston, Peter R. Norwood