Accounting 200: Comprehensive Homework 3 Part 3 Green Glove Corp and Ankle Construction

Accounting 200
Comprehensive Homework 3

Part 3: Long - term liabilities
1. Green Glove Corporation issued $600,000, 9%, 20-yr bonds on Jan 1, 2014, for $___________at 8%.
PV of 600,000 x __________=______________
PV of interest payment (600,000 x ___ %) ______ x __________=______________
This price resulted in an effective-interest rate of 8% on the bonds. Interest is payable annually on January 1. Green Glove uses the effective-interest method to amortize bond premium or discount.

Prepare the journal entries for:
1. The issuance of the bonds on Jan 1, 2014.
2. The accrual of interest and the premium amortization on December 31, 2014.
3. The payment of interest on January 1, 2015.

2. Ankle Construction takes out a loan of $550,000 for a building on December 31, 2013. The mortgage payable terms are 8.2%. The terms provide for semiannual installment payments of $30,275 on June 30 and December 31.
Prepare the journal entries to record the mortgage loan and the first two installment payments.
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