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Chapter 12: 1RQ (page 654)
Where is the current portion of notes payable reported on the balance sheet?
The current portion of the notes payable means the portion which becomes due within 12 months.
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What type of account is Premium on Bonds Payable? What is its normal balance? Is it added to or subtracted from the Bonds Payable account to determine the carrying amount?
On January 1, 2018, Fox Corporation signed an \(80,000, four-year, 4% note. The loan required Fox to make payments annually
on December 31 of \)20,000 principal plus interest.
1. Journalize the issuance of the note on January 1, 2018.
2. Journalize the first payment on December 31, 2018.
Retiring bonds payable before maturity
On January 1, 2018, Powell Company issued $350,000 of 10%, five-year bonds payable
at 102. Powell Company has extra cash and wishes to retire the bonds payable on
January 1, 2019, immediately after making the second semiannual interest payment. To
retire the bonds, Powell Company pays the market price of 98.
Requirements
1. What is Powell Company鈥檚 carrying amount of the bonds payable on the retirement
date?
2. How much cash must Powell Company pay to retire the bonds payable?
3. Compute Powell Company鈥檚 gain or loss on the retirement of the bonds payable.
What is a mortgage payable?
What is the journal entry to retire bonds at maturity?
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