Wiley assignment | Accounting homework help

Wiley Assignment
Brief Exercise 14­6
On January 1, 2013, JWS Corporation issued $649,000 of 7% bonds, due in 8 years. The bonds were issued for 
$611,190, and pay interest each July 1 and January 1. JWS uses the effective­interest method.
Prepare the company’s journal entries for (a) the January 1 issuance, (b) the July 1 interest payment, and (c) the 
December 31 adjusting entry. Assume an effective­interest rate of 8%. (Round answers to 0 decimal places, e.g.  
$38,548. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
No. Account Titles and Explanation

Debit

Credit

(a)

(b)

(c)

Exercise 14­16
On January 1, 2013, McLean Company makes the two following acquisitions.
1. Purchases land having a fair value of $394,000 by issuing a 5­year, zero­interest­bearing promissory note in the 
face amount of $663,913.
2. Purchases equipment by issuing a 6%, 9­year promissory note having a maturity value of $566,000. (interest 
payable annually).
The company has to pay 11% interest for funds from its bank.
(a)
(b)

Record the two journal entries that should be recorded by McLean Company for the two purchases on January 
1, 2013.
Record the interest at the end of the first year on both notes using the effective­interest method.

(Round answers to 0 decimal places, e.g. $38,548.)
No.

Account Titles and Explanation

(a) 1.

2.

Debit

Credit

(b) 1.
2.

Exercise 14­20
At December 31, 2012, Redmond Company has outstanding three long­term debt issues. The first is a 
$2,025,300 note payable which matures June 30, 2015. The second is a $6,046,300 bond issue which matures 
September 30, 2016. The third is a $12,559,000 sinking fund debenture with annual sinking fund payments of 
$2,511,800 in each of the years 2014 through 2018.
Prepare the required note disclosure for the long­term debt at December 31, 2012.
Long­term Debt
2013
2014
2015
2016
2017

$
$
$
$
$

Brief Exercise 17­3
Carow Corporation purchased, as a held­to­maturity investment, $72,100 of the 9%, 5­year bonds of Harrison, Inc. for 
$78,100, which provides a 7% return. The bonds pay interest semiannually.
Prepare Carow’s journal entries for (a) the purchase of the investment, and (b) the receipt of semiannual interest and 
premium amortization. Assume effective­interest amortization is used. (Round answers to 0 decimal places, e.g.  
2,500. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
No. Account Titles and Explanation

Debit

Credit

(a)
(b)

Brief Exercise 17­4
Hendricks Corporation purchased trading investment bonds for $52,040 at par. At December 31, Hendricks received 
annual interest of $2,580, and the fair value of the bonds was $49,530.
Prepare Hendricks’ journal entries for (a) the purchase of the investment, (b) the interest received, and (c) the fair 

value adjustment. (Credit account titles are automatically indented when amount is entered. Do not indent  
manually.)
No. Account Titles and Explanation

Debit

Credit

(a)
(b)
(c)

Problem 17­3
Cardinal Paz Corp. carries an account in its general ledger called Investments, which contained debits for investment 
purchases, and no credits, with the following descriptions.
Feb. 1, 2012

Sharapova Company common stock, $104 par, 208 shares

$45,800

April 1

U.S. government bonds, 12%, due April 1, 2022, interest payable April 1 and October 
1, 113 bonds of $1,000 par each

113,000

July 1

McGrath Company 12% bonds, par $53,000, dated March 1, 2012, purchased at 104 plus 
accrued interest, interest payable annually on March 1, due March 1, 2032

57,240

(a) Prepare entries necessary to classify the amounts into proper accounts, assuming that all the securities are 
classified as available­for­sale. (Credit account titles are automatically indented when amount is entered. Do  
not indent manually.)
Account Titles and Explanation

Debit

Credit

(b) Prepare the entry to record the accrued interest and the amortization of premium on December 31, 2012, using the 
straight­line method. (Round answers to 0 decimal places, e.g. $2,500. Credit account titles are automatically  
indented when amount is entered. Do not indent manually.)
Account Titles and Explanation

Debit

Credit

(c) The fair values of the investments on December 31, 2012, were:
Sharapova Company common stock

$34,630

U.S. government bonds

146,910

McGrath Company bonds

59,710

What entry or entries, if any, would you recommend be made? (Round answers to 0 decimal places, e.g. $2,500.  
Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Account Titles and Explanation

Debit

Credit

(d) The U.S. government bonds were sold on July 1, 2013, for $120,100 plus accrued interest. Give the proper 
entry. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Account Titles and Explanation

Debit

Credit

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