Mod 8(c) - CH 8 EXERCISES/PROBLEMS (68 pts)

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Bond Premium; Bonds payable Transactions

Beaufort Vaults Corporation produces and sells burial vaults. On July 1, 20Y3, Beaufort Vaults Corporation issued $25,000,000 of 10-year, 8% bonds at par. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year.

Instructions:

1. Illustrate the effects of the issuance of the bonds on July 1, 20Y3, on the accounts and financial statements. If no account or activity is affected, select "No effect" from the dropdown list and leave the corresponding number entry box blank. Enter account decreases and cash outflows as negative amounts.

Statement of Cash Flows	Balance Sheet
	Assets	=	Liabilities	+	Stockholders' Equity
		=		+
July 1.
Statement of Cash Flows						Income Statement

2. Illustrate the effects of the first semiannual interest payment on December 31, 20Y3, on the accounts and financial statements. If no account or activity is affected, select "No effect" from the dropdown list and leave the corresponding number entry box blank. Enter account decreases and cash outflows as negative amounts.

Statement of Cash Flows	Balance Sheet
	Assets	=	Liabilities	+	Stockholders' Equity
		=		+
Dec. 31.
Statement of Cash Flows						Income Statement

3. Illustrate the effects of the payment of the face value of bonds at maturity on the accounts and financial statements. If no account or activity is affected, select "No effect" from the dropdown list and leave the corresponding number entry box blank. Enter account decreases and cash outflows as negative amounts.

Statement of Cash Flows	Balance Sheet
	Assets	=	Liabilities	+	Stockholders' Equity
		=		+
June 30.
Statement of Cash Flows						Income Statement

4. The less is called a premium on Bonds payable; the amortization of a discount Interest expense, and the amortization of a premium Interest expense.

3 more Check My Work uses remaining.