Homework SourseThe following transactions were completed by Winklevoss Inc
The following transactions were completed by Winklevoss Inc., whose fiscal year is the calendar year:
Required:
| 2016 | ||
| July | 1 | Issued $71,100,000 of 20-year, 12% callable bonds dated July 1, 2016, at a market (effective) rate of 14%, receiving cash of $61,621,133. Interest is payable semiannually on December 31 and June 30. |
| Oct. | 1 | Borrowed $250,000 by issuing a six-year, 5% installment note to Nicks Bank. The note requires annual payments of $49,254, with the first payment occurring on September 30, 2017. |
| Dec. | 31 | Accrued $3,125 of interest on the installment note. The interest is payable on the date of the next installment note payment. |
| 31 | Paid the semiannual interest on the bonds. The bond discount amortization of $236,972 is combined with the semiannual interest payment. | |
| 31 | Closed the interest expense account. | |
| 2017 | ||
| June | 30 | Paid the semiannual interest on the bonds. The bond discount amortization of $236,972 is combined with the semiannual interest payment. |
| Sept. | 30 | Paid the annual payment on the note, which consisted of interest of $12,500 and principal of $36,754. |
| Dec. | 31 | Accrued $2,666 of interest on the installment note. The interest is payable on the date of the next installment note payment. |
| 31 | Paid the semiannual interest on the bonds. The bond discount amortization of $236,972 is combined with the semiannual interest payment. | |
| 31 | Closed the interest expense account. | |
| 2018 | ||
| June | 30 | Recorded the redemption of the bonds, which were called at 98. The balance in the bond discount account is $8,530,979 after payment of interest and amortization of discount have been recorded. (Record the redemption only.) |
| Sept. | 30 | Paid the second annual payment on the note, which consisted of interest of $10,662 and principal of $38,592. |
Solution
the question ssays to use exact wordings of chart of accounts. since i don\'t have it I have used my own wordings. Pleas change them according to the chart provided to you
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| 2016 | ||||
| Jul-01 | Cash A/c | Dr | 61,621,133 | |
| Discount on Bonds A/c | Dr | 9,478,867 | ||
| To 12% Callable Bonds A/c | 71,100,000 | |||
| Oct-01 | Cash A/c | Dr | 250,000 | |
| To 5% Note Payable A/c | 250,000 | |||
| Dec-31 | Interest on Note Payable A/c | Dr | 3,125 | |
| To Interest Payable on Notes A/c | 3,125 | |||
| Dec-31 | Interest on Bonds A/c | Dr | 4,502,972 | |
| To Cash A/C | 4,266,000 | |||
| To Discount on Bonds A/c | 236,972 | |||
| Dec-31 | Income summary A/c | Dr | 4,506,097 | |
| To Interest on Note Payable A/c | 3,125 | |||
| To Interest on Bonds A/c | 4,502,972 | |||
| 2017 | ||||
| Jun-30 | Interest on Bonds A/c | Dr | 4,502,972 | |
| To Cash A/C | 4,266,000 | |||
| To Discount on Bonds A/c | 236,972 | |||
| Sep-01 | 5% Note Payable A/c | Dr | 36,754 | |
| Interest Payable on Note A/c | Dr | 3,125 | ||
| Interest on Note Payable A/c | Dr | 9,375 | ||
| To Cash A/c | 49,254 | |||
| Dec-31 | Interest on Note Payable A/c | Dr | 2,166 | |
| To Interest Payable on Notes A/c | 2,166 | |||
| Dec-31 | Interest on Bonds A/c | Dr | 4,502,972 | |
| To Cash A/C | 4,266,000 | |||
| To Discount on Bonds A/c | 236,972 | |||
| Dec-31 | Income summary A/c | Dr | 9,017,485 | |
| To Interest on Note Payable A/c | 11,541 | |||
| To Interest on Bonds A/c | 9,005,944 | |||
| 2018 | ||||
| Jun-30 | 12% Callable Bonds A/c | Dr | 71,100,000 | |
| Loss on redemption A/c | Dr | 7,108,979 | ||
| To Cash A/c | 69,678,000 | |||
| To Discount on Bonds A/c | 8,530,979 | |||
| Sep-30 | 5% Note Payable A/c | Dr | 38,592 | |
| Interest Payable on Note A/c | Dr | 2,166 | ||
| Interest on Note Payable A/c | Dr | 8,496 | ||
| To Cash A/c | 49,254 |
