Jackson, Inc.’s fiscal year ends December 31. Selected transactions for the period 20-1 through 20-8 involving bonds payable issued by Jackson are as follows: 20-1 Transactions: Oct. 31 Issued $600,000 of 10-year, 7%, callable bonds dated October 31, 20-1, for $612,000. Interest is payable semiannually on October 31 and April 30. The bond indenture provides that Jackson is to pay to the trustee bank $20,000 by May 15 of each year (except the tenth year) as a sinking fund for the retirement of the bonds on call or at maturity. Dec. 31 Made the adjusting entry for interest payable and amortized two months’ premium on the bonds (straight-line method).
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
20-1 Transactions: | ||
Oct. | 31 | Issued $600,000 of 10-year, 7%, callable bonds dated October 31, 20-1, for $612,000. Interest is payable semiannually on October 31 and April 30. The bond indenture provides that Jackson is to pay to the trustee bank $20,000 by May 15 of each year (except the tenth year) as a sinking fund for the retirement of the bonds on call or at maturity. |
Dec. | 31 | Made the |
20-2 Transactions: | ||
Jan. | 2 | Reversed the adjusting entry for interest payable and bond premium amortization. |
Apr. | 30 | Paid the semiannual interest on the bonds and amortized six months’ premium. |
May | 15 | Paid the sinking fund trustee $20,000. |
Oct. | 31 | Paid the semiannual interest on the bonds and amortized six months’ premium. |
Dec. | 31 | Made the adjusting entry for interest payable and amortized two months’ premium on the bonds. |
31 | Sinking fund earnings for the year were $900. |
20-8 Transactions: | ||
May | 15 | Paid the sinking fund trustee $20,000. |
Oct. | 31 | Paid the semiannual interest on the bonds and amortized six months’ premium. |
31 | Redeemed the bonds, which were called at 97. |
1. | Enter the preceding transactions in general journal form. |
2. | Calculate the carrying |
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