Fogel Corp. produces and sells renewable energy equipment. To finance its operat
ID: 2362992 • Letter: F
Question
Fogel Corp. produces and sells renewable energy equipment. To finance its operations, Fogel Corp. issued $32,000,000 of 20-year, 11% callable bonds on January 1, 2012, with interest payable on January 1 and July 1. The fiscal year of the company is the calendar year .Journalize the entries to record the following selected transactions: 2012- Jan 1 Issued the bonds for cash at their face amount July 1 Paid the interest on the bonds 2018- July 1. Called the bond issue at 97, the rate provided in the bond indenture. (omit entry for payment of interest)Explanation / Answer
Step1. Identify the accounts involved in the transaction. For example the accounts involved in the above transactions are........ Transaction no.1................. Capital account, cash account Transaction no.2................. Building account, Cash account Transaction no. 3................ Furniture account, Furnituremart ltd. Transaction no. 4................ Purchases account, Cash account Transaction no. 5................ Transportation expenses account, Cash account Transaction no. 6. .............. Commission account, Cash account Identification of accounts involved in the transaction requires a lot of practice. With proper practice you would feel it easy identify the accounts. Step 2. Classify the accounts into Personal, Real or Nominal. Personal accounts------------ Accounts related to persons(natural or artificial). Real accounts------------------ Accounts related to assets. Nominal accounts------------- Accounts related to incomes and expenditures. Step 3. Apply the following rules......... Type of account Rule for Debit or Credit Personal Debit the Receiver, Credit the Giver. Real Debit what comes in, Credit what goes out. Nominal Debit all the Expenses and Losses, Credit all the Incomes and Gains. Now we will discuss each transaction mentioned above and make journal entries