Prepare the journal to record the retirement of the bonds at maturity, assuming
ID: 2484394 • Letter: P
Question
Prepare the journal to record the retirement of the bonds at maturity, assuming the bonds were issued at 100. Prepare the journal entry to record the retirement of the bonds before maturity at 97. Assume the balance in Premium on Bonds Payable is $5,000. Prepare the journal entry to record the conversion of the bonds into 15.000 shares of S10 par value common stock. Assume the bonds were issued at par Pincher Company purchased 50 Issac Company 12%, 10-year, $1,000 bonds on January 1, 2012, for $54 000. Pincher Company also had to pay $500 of broker's fees. The bonds pay interest semiannually. On January 1, 2013, after receipt of interest, Pincher Company sold 30 of the bonds for $31.000. Prepare the journal entries to record the transactions described above. Rosco Company purchased 35,000 shares of common stock of Paxton Corporation as a long-term investment for $900,000. During the year, Paxton Corporation reported net income o $300,000 and paid dividends of $100,000. Assuming that the 35,000 shares represent a 10% interest in Paxton Corporation. Prepare the journal entry to record the investment in Paxton stock. Prepare any entries that Rosco Company should make in accounting for its in Paxton stock during the year.Explanation / Answer
7.
Journals
Date
Account title and explanation
Debit ($)
Credit($)
1/1/2012
Investment in bond
54,000
Broker’s fee
500
Cash
$54,500
To record purchase of bond after paying brokerage.
1/7/2012
Cash
3,000
Interest received
3,000
To record semi-annual interest received. (50 × $1,000 × 12% × ½ )
1/1/2013
Cash
3,000
Interest received
3,000
To record semi-annual interest received. (50 × $1,000 × 12% × ½ )
1/1/2013
Cash
31,000
Loss on sale of bond
1,400
Investment in bond
32,400
To record sale of bond. {(54,000/50) × 30 – 31,000}
Date
Account title and explanation
Debit ($)
Credit($)
1/1/2012
Investment in bond
54,000
Broker’s fee
500
Cash
$54,500
To record purchase of bond after paying brokerage.
1/7/2012
Cash
3,000
Interest received
3,000
To record semi-annual interest received. (50 × $1,000 × 12% × ½ )
1/1/2013
Cash
3,000
Interest received
3,000
To record semi-annual interest received. (50 × $1,000 × 12% × ½ )
1/1/2013
Cash
31,000
Loss on sale of bond
1,400
Investment in bond
32,400
To record sale of bond. {(54,000/50) × 30 – 31,000}