Bonds Payable_Issue and Redemption_Five questions

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1. Instructions:
Journalize the entries to record the accrual of payroll taxes

According to the accountant of Ulner Inc.,
its payroll taxes for the week were as follows:

$198.40 for FICA, $19.84 for federal
unemployment taxes, and $133.92 for state unemployment taxes

2. Instructions:
Identify each statement below as true or false. If false indicate how to
correct the statement.

1. Bonds are a form of interest bearing
notes payable

2. When seeking long- term financing, an
advantage of issuing bonds over issuing common stock is that the stockholder
control is not affected.

3. When seeking long-term financing, an
advantage of issuing common stock over issuing bonds is that tax saving result.

4. Secured bonds have specific assets of
the issuer pledged as collateral for the bonds.

5. Secured bonds are also known as
debenture bonds.

6. Bonds that mature in installments are
called mature bonds.

7. A conversion feature may be added to
bonds to make them more attractive to bond buyers.

8. The rate used to determine the amount of
cash interest the borrower pays is called the standard rate.

9. Bond prices are usually quoted as a
percentage of the face value of the bond.

10. The present value of a bond is the
value at which it should sell in the marketplace.

3. Instructions:
Prepare journal entries to record the following. (Round to the nearest dollar)

(a)
The issuance of bonds

(b)
The payment of interest and the premium of amortization on July 1, 2011,
assuming that interest was not accrued on June 30.

(c) The accrual of interest and the discount
amortization on December 31, 2011.

Hrabik Corporation issued $600,000, 9%, 10
year bonds on January 1, 2011 for $562,613. This price resulted in an
effective-interest rate of 10% on the bonds. Interest is payable semiannually
on July 1 and January 1. Hrabik uses the effective-interest method to amortize
bond premium or discount.

4. Instructions:

(a)
Prepare journal entries to record the issuance of bonds

(b)
Prepare the adjusting entry to record to record the accrual of interest on
December 31, 2011.

(c) Show
the balance sheet presentation on December 31, 2011.

(d)
Prepare the journal entry to record payment of entry on May 1, 2012, assuming
no accrual of interest from January 1, 2012, to May 1, 2012.

On May 1, 2011, Newby Corp issued $600,000,
9%, 5 year bonds at face value. The bonds were dated May 1, 2011, and they pay
interest semiannually on May 1 and November 1. Financial statements are
prepared annually on December 31.

5. Instructions:
(Round all computations to the nearest dollar.)

(a)
Prepare journal entries to record the following the following transactions.

(b)
Prepare an amortization table through December 31, 2012. (3 interest periods)
for this bond period

(c)
Prepare the journal entry to record the accrual of interest and the
amortization of the premium on December 31, 2011

(d)
Prepare the journal entry to record the payment of interest and the
amortization of the premium on July 1, 2012, assuming no accrual of interest on
June 30, 2012

(e)
Prepare the journal entry to record the accrual of interest and the
amortization of the premium on December 31, 2012

On July 1, 2011, Atwater Corporation issued
$2,000,000, face value 10%, 10 year bonds at $2,271,813. This price resulted in
an effective-interest rate of 8% on the bonds. Atwater uses the
effective-interest method to amortize bond premium or discount. The bonds pay
premium interest on July 1 and January 1.

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