Ramsey Company issued_Bonds Payable

On the first day of
its fiscal year, Ramsey Company issued $35,000,000 of 10-year, 9% bonds to
finance its operations. Interest is payable semiannually. The bonds were issued
at a market (effective) interest rate of 11%, resulting in Ramsey Company receiving
cash of $30, 817,399. The company uses the interest method.
a. Journalize the
entries to record the following:
1. Sale of the
bonds.
2. Prepare an
amortization table through December 31, 2014(4 interest periods for this bond
issue
3. First semiannual
interest payment, including amortization of discount. Round to the nearest
dollar.
4. Second
semiannual interest payment, including amortization of discount. Round to the
nearest dollar.
5. compute the
amount of the bond interest expense for the first year.
(B) Yates
Corporation has the following stockholders’ equity accounts on Jan 1, 2012:
Common Stock, $10
par value: $1,500,000
Paid-in Capital in
Excess of Par: 200,000
Retained Earnings:
500,000
Total Stockholders’
Equity: $2,200,000
The company uses
the cost method to account for treasury stock transactions. During 2012, the
following treasury stock transactions occurred:
April 1 Purchased
10,000 shares at $18 per share.
August 1 Sold 4,000
shares at $22 per share.
October 1 Sold
4,000 shares at $15 per share
Instructions:
(A) Journalize the
treasury stock transactions for 2012.
(B) Prepare the
Stockholders’ Equity section of the balance sheet for Yates Corporation at
December 31, 2012. Assume net income was $110,000 for 2012.
C. KT Corporation
wholesales auto parts to auto manufacturers. On march 1, 2012, Kt corporation
issued $17,500,000 of five year, 12% bonds at market (effective) interest rate
of 10%, receiving cash of $18,851,252. interest is payable semiannually. KT
corporation’s fiscal years begins on March 1. The company uses the interest
method.
a.Journalize the
entries to record the following:
1. sale of the
bonds.
2.prepare an
amortization table through 3 interest periods for this bond issue.
3. First semiannual
interest payment, including amortization of discount. Round to nearest dollar.
4.Second semiannual
interest payment, including amortization of discount. Round to nearest dollar.
5.Compute the
amount of the bond interest expense for the first year.