# Ramsey Company issued_Bonds Payable

Question # 00004201 Posted By: ACCOUNTS_GURU Updated on: 11/27/2013 11:35 AM Due on: 12/31/2013
Subject Accounting Topic Accounting Tutorials:
Question

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.

Tutorials for this Question
1. ## Solution: Ramsey Company issued_Bonds Payable

Tutorial # 00003992 Posted By: ACCOUNTS_GURU Posted on: 11/27/2013 11:38 AM
Puchased By: 2
Tutorial Preview
The solution of Ramsey Company issued_Bonds Payable...
Attachments
Ramsey_Company_Bonds_Issue.docx (20.72 KB)
2. ## Solution: Ramsey Company issued_Bonds Payable

Tutorial # 00003993 Posted By: ACCOUNTS_GURU Posted on: 11/27/2013 11:43 AM
Puchased By: 2
Tutorial Preview
The solution of Ramsey Company issued_Bonds Payable...
Attachments
Ramsey_Company_Bonds_Issue.docx (25.07 KB)

Great! We have found the solution of this question!