Friday, April 23, 2010

ACC 281 Week 4: E11-18 Hrabik Corporation issued

ACC 281

Axia College of University of Phoenix (UoP)

Financial Accounting Transaction Analysis

Weygandt, J. J., Kimmel, P. D., & Kieso, D. E. (2008). Financial Accounting (6th ed.). Hoboken, NJ: Wiley.

ACC 281 Week Four Solution

Individual Assignment

E11-18 Prepare entries for issuance of bonds, payment of interest, and amortization of discount using effective-interest method
Hrabik Corporation issued $600,000, 9%, 10-year bonds on January 1, 2008, 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.
Prepare the journal entries to record the following. (Round to the nearest dollar.)
(a) The issuance of the bonds.
(b) The payment of interest and the discount amortization on July 1, 2008, assuming that interest was not accrued on June 30.
(c) The accrual of interest and the discount amortization on December 31, 2008

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