1. Business
  2. Accounting
  3. on october 1 2016 ball company issued 10 bonds dated...

Question: on october 1 2016 ball company issued 10 bonds dated...

Question details

On October 1, 2016, Ball Company issued 10% bonds dated October 1, 2016, with a face amount of $190,000. The bonds mature in 11 years. Interest is paid semiannually on March 31 and September 30. The proceeds from the bond issuance were $195,094.43 to yield 9.60%. Ball Company has a December 31 fiscal year-end and does not use reversing entries.

Required:

1. Prepare journal entries to record the issuance of the bonds and the interest payments for 2016 and 2017 using the effective interest method.
2. Prepare journal entries to record the issuance of the bonds and the interest payments for 2016 and 2017 using the straight-line method.
CHART OF ACCOUNTS
Ball Company
General Ledger
ASSETS
111 Cash
121 Accounts Receivable
141 Inventory
152 Prepaid Insurance
181 Equipment
198 Accumulated Depreciation
LIABILITIES
211 Accounts Payable
231 Salaries Payable
250 Unearned Revenue
255 Bonds Payable
256 Premium on Bonds Payable
257 Discount on Bonds Payable
258 Interest Payable
261 Income Taxes Payable
EQUITY
311 Common Stock
331 Retained Earnings
REVENUE
411 Sales Revenue
EXPENSES
500 Cost of Goods Sold
511 Insurance Expense
512 Utilities Expense
521 Salaries Expense
532 Bad Debt Expense
540 Interest Expense
541 Depreciation Expense
559 Miscellaneous Expenses
910 Income Tax Expense

Prepare journal entries to record the issuance of the bonds and the interest payments for 2016 and 2017 using the effective interest method. Additional Instructions

PAGE 1

GENERAL JOURNAL

DATE ACCOUNT TITLE POST. REF. DEBIT CREDIT

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

Prepare journal entries to record the issuance of the bonds and the interest payments for 2016 and 2017 using the straight-line method. Additional Instructions

PAGE 1

GENERAL JOURNAL

DATE ACCOUNT TITLE POST. REF. DEBIT CREDIT

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

Solution by an expert tutor
Blurred Solution
This question has been solved
Subscribe to see this solution