On March 1, 2009, Washington Gas & Electric issued $80,000,000 of 20-year, 6% debentures. Proceeds were...

  

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On March 1, 2009, Washington Gas & Electric issued $80,000,000 of 20-year, 6% debentures. Proceeds were $71,458,000, implying a market interest rate of 7%. (Enter all currency amounts in whole dollars.) Read the requirements. Requirement 1. By using the balance sheet equation format, prepare an analysis of bond transactions. Assume effective interest amortization. Show entries for the issuer concerning (a) issuance, (b) first semiannual interest payment, and (c) payment of maturity value. (Abbreviation used: RE = Retained Earnings. Enter all currency amounts in whole dollars. Use parentheses or a minus sign for a decrease in an accounting equation component. For contra accounts, show increases as negative and decreases as positive. Leave any unused cells blank.) Assets Liabilities + Stockholders' Equity Discount Premium RE: Bonds on Bonds on Bonds Interest Cash Payable Payable Payable Expense (a) (b) (c) Requirement 2. Show all the corresponding journal entries for (a), (b), and (c) in requirement 1. (Record debits first, then credits. Explanations are not required. Enter all currency amounts in whole dollars.) Begin by preparing the journal entry for (a) issuance. Accounts Debit Credit (a) Choose from any list or enter any number in the input fields and then continue to the next question. Now prepare the journal entry for (c) the payment of maturity value. Accounts Debit Credit (c) Requirement 3. Show how the bond-related accounts would appear on the balance sheets as of March 1, 2009, and March 1, 2010. Assume the March 1 interest payment and amortization of bond discount have been made. (Enter all currency amounts in whole dollars.) March 1, 2009 March 1, 2010 Bonds payable Net liability On March 1, 2009, Washington Gas & Electric issued $80,000,000 of 20-year, 6% debentures. Proceeds were $71,458,000, implying a market interest rate of 7%. (Enter all currency amounts in whole dollars.) Read the requirements. Requirement 1. By using the balance sheet equation format, prepare an analysis of bond transactions. Assume effective interest amortization. Show entries for the issuer concerning (a) issuance, (b) first semiannual interest payment, and (c) payment of maturity value. (Abbreviation used: RE = Retained Earnings. Enter all currency amounts in whole dollars. Use parentheses or a minus sign for a decrease in an accounting equation component. For contra accounts, show increases as negative and decreases as positive. Leave any unused cells blank.) Assets Liabilities + Stockholders' Equity Discount Premium RE: Bonds on Bonds on Bonds Interest Cash Payable Payable Payable Expense (a) (b) (c) Requirement 2. Show all the corresponding journal entries for (a), (b), and (c) in requirement 1. (Record debits first, then credits. Explanations are not required. Enter all currency amounts in whole dollars.) Begin by preparing the journal entry for (a) issuance. Accounts Debit Credit (a) Choose from any list or enter any number in the input fields and then continue to the next question. Now prepare the journal entry for (c) the payment of maturity value. Accounts Debit Credit (c) Requirement 3. Show how the bond-related accounts would appear on the balance sheets as of March 1, 2009, and March 1, 2010. Assume the March 1 interest payment and amortization of bond discount have been made. (Enter all currency amounts in whole dollars.) March 1, 2009 March 1, 2010 Bonds payable Net liability

Answer rating: 100% (QA)

B D H Washington Gas Electric Schedule of Bond discount Amortization Calculation Date Interest Payme... View the full answer