CHART OF ACCOUNTSRushton Corp.General LedgerASSETSREVENUE110 Cash410 Sales111 Petty Cash610 Interest Revenue121 Accounts Receivable611 Gain on Redemption of Bonds122 Allowance for Doubtful Accounts126 Interest ReceivableEXPENSES127 Notes Receivable510 Cost of Merchandise Sold131 Merchandise Inventory515 Credit Card Expense141 Office Supplies516 Cash Short and Over142 Store Supplies521 Sales Salaries Expense522 Office Salaries Expense151 Prepaid Insurance531 Advertising Expense191 Land532 Delivery Expense192 Store Equipment533 Repairs Expense193 Accumulated Depreciation-Store Equipment534 Selling Expenses194 Office Equipment535 Rent Expense195 Accumulated Depreciation-Office Equipment536 Insurance Expense Rushton Corp., a wholesaler of music equipment, issued $29,700,000 of 20-year, 6% callable bonds on March 1, 20Y1, at their face amount, with interest payable onMarch 1 and September 1. The fiscal year of the company is the calendar year.Required:Journalize the entries to record the following selected transactions. Refer to the chart of accounts for the exact wording of the account titles.CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals willautomatically indent a credit entry when a credit amount is entered.20Y1Mar.1.Issued the bonds for cash at their face amount.Sept.1.Paid the interest on the bonds.20Y5Sept.1.Called the bond issue at 105, the rate provided in the bond indenture. (Omit entry for payment ofinterest.)

Journal Entry: The process of recording business transactions in the books of accounts for the first…

Answered: Rushton Corp., a wholesaler of music…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The following transactions were completed by Winklevoss Inc., whose fiscal year is the calendar year: Required: 1. Journalize the entries to record the transactions. Round all amounts to the nearest dollar. Refer to the Chart of Accounts for exact wording of account titles. 2. Indicate the amount of the interest expense in (a) 20Y1 and (b) 20Y2. 3. Determine the carrying amount of the bonds as of December 31, 20Y2.
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On the first day of the fiscal year, a company issues $75,000, 4%, five-year installment notes that have annual payments of $16,847. The first note payment consists of $3,000 of interest and $13,847 of principal repayment. Required: Journalize the following transactions. Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered. 20Y1 Jan. 1 Installment notes are issued 20Y2 Jan. 1 First annual note payment is made CHART OF ACCOUNTS General Ledger ASSETS 110 Cash 111 Petty Cash 121 Accounts Receivable 122 Allowance for Doubtful Accounts 126 Interest Receivable 127 Notes Receivable 131 Merchandise Inventory 141 Office Supplies 191 Land 194 Office Equipment 195 Accumulated…
Smiley Corporation wholesales repair products to equipment manufacturers. On April 1, 20Y1, Smiley issued $23,100,000 of five-year, 9% bonds at a market (effective) interest rate of 8%, receiving cash of $24,036,717. Interest is payable semiannually on April 1 and October 1. Required: a. Journalize the entries to record the following. Refer to the Chart of Accounts for exact wording of account titles. 1. Issuance of bonds on April 1, 20Y1. 2. First interest payment on October 1, 20Y1, and amortization of bond premium for six months, using the straight-line method. (Round to the nearest dollar.) b. Explain why the company was able to issue the bonds for $24,036,717 rather than for the face amount of $23,100,000. C. The bonds sell for more than their face amount because the market rate of interest is______________ the contract rate of interest. Investors ____________ willing to pay more for bonds that pay a higher rate of interest (contract rate) than the rate…
On the first day of its fiscal year, Ebert Company issued $12,500,000 of 10-year, 7% bonds to finance its operations. Interest is payable semiannually. The bonds were issued at a market (effective) interest rate of 9%, resulting in Ebert receiving cash of $10,873,974. The company uses the interest method. Required: a. Journalize the entries to record the following transactions. Refer to the Chart of Accounts for exact wording of account titles. 1. Sale of the bonds. 2. First semiannual interest payment, including amortization of discount. Round to the nearest dollar. 3. Second semiannual interest payment, including amortization of discount. Round to the nearest dollar. b. Compute the amount of the bond interest expense for the first year. c. Explain why the company was able to issue the bonds for only $10,873,974 rather than for the face amount of $12,500,000.

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