Activity 2

Activity 2 - In-Class Activity#2(30 points)List the two...

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Unformatted text preview: In-Class Activity #2 (30 points)List the two members of today’s activity__________________________________________________________________ABC incorporated issued bonds on January 1, 2007:•The bonds have a face value of $1,000,000•The bonds make interest payments on June 30thand December 31stof each year.•The stated rate on the bonds is 5%•The annual effective rate for the bonds is 6% (3% per 6 months)•The bonds mature on January 1, 2017•The company uses the effective interest method to amortize premiums or discounts•The company incurred legal costs associated with the issuance of the bonds that totaled $80,000. Bond issuance costs are amortized on a straight-line basis.1.State alljournal entries necessary on January 1, 2007? (10 points)Cash925,613=0.55368*1000000 + 14.87747*25000Discount on Bonds Payable74,387Bonds Payable1,000,000Unamortized bonds issuance costs80,000Cash 80,0002.State the journal entry to recognize interest expense on June 30th2007? (10 points)Interest Expense27,768Discount on Bonds Payable2,768Cash25,0003.What is the balance of unamortized bond issuance costs on January 1, 2008 (10 points)72,000=90%*80,000In-Class Activity #2 (30 points)List the two members of today’s activity__________________________________________________________________ABC incorporated issued bonds on January 1, 2007:•The bonds have a face value of $1,000,000•The bonds make interest payments on June 30thand December 31stof each year.•The stated rate on the bonds is 7%•The annual effective rate for the bonds is 6% (3% per 6 months)•The bonds mature on January 1, 2017•The company uses the effective interest method to amortize premiums or discounts•The company incurred legal costs associated with the issuance of the bonds that totaled $60,000. The company incurred legal costs associated with the issuance of the bonds that totaled $60,000....
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This note was uploaded on 12/04/2009 for the course MGMT 351 taught by Professor Staff during the Fall '08 term at Purdue.

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Activity 2 - In-Class Activity#2(30 points)List the two...

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