Accounting

Scott Corporation issued a $100,000, eight-year, 7 percent note for cash on June 1, 2011. The note pays interest semiannually and the market rate of interest was 6 percent when the note was issued. Given this information, make the entries for the first year of the note’s life if Scott Corporation has a December 31 fiscal year-end. Show how Scott reports the note on its income statement, balance sheet, and cash flow statement for the year ended December 31, 2011.

Gland Corporation issued for cash a $400,000, 7 percent, three-year bond on September 1, 2010, that pays interest annually. Gland Corporation has a December 31 fiscal year-end. Make the entries for the first year of the note’s life if the market rate of interest is

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The Brinkerhoff Company signed a $400,000, 6 percent, four-year bond dated May 1, 2011, when the market rate of interest was 6 percent. Interest on the bond is payable semiannually on November 1 and May 1 each year. The company closes its books annually on December 31.

Prepare the entries for the issuance of the bond and for events related to the bond during the first year of the bond’s life. How is the bond reported on Brinkerhoff’s balance sheet, income statement, and cash flow statement for the year ended December 31, 2011?

6.5 percent.

 

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