je act 229 exam 3

Issuing Bonds at Par (mkt=std)

Dr Cash

Cr Bonds Payable

Issuing Bonds at Discount (mkt>std)

Dr Cash
Dr Discount on Bonds Payable
Cr Bonds Payable

Issuing Bonds at Premium (mkt<std)

Dr Cash

Cr Bonds Payable

Cr Premium on Bonds Payable

Interest Payment (Effective Interest Method) Discount

Dr Interest Expense

Cr Discount on Bonds Payable

Cr Cash.

Interest Payment (Effective Interest Method) prem

Dr Interest Expense

Dr Premium on Bonds Payable

Cr Cash

Bond Retirement

Dr Bonds Payable

Dr Loss on Redemption (if needed)

Cr Cash

Cr Gain on Redemption (if needed)

Contingencies

Dr Loss
Cr Liability

Notes Payable (Interest-Bearing)

• Issuance: Debit Cash, Credit Notes Payable.

• Accrue Interest: Debit Interest Expense, Credit Interest Payable.

• Payment: Debit Notes Payable (Principal) and Interest Payable, Credit Cash.

Bond Interest Expense (Effective Interest Method):

• Discount: Debit Interest Expense, Credit Discount on Bonds Payable (amortization) and Cash (coupon payment).

Stockholder Equity & Dividends:

• Declaration Date: Debit Retained Earnings (or Dividends), Credit Dividends Payable.

• Payment Date: Debit Dividends Payable, Credit Cash.

• Issuing Stock (above par): Debit Cash, Credit Common Stock (par) and Paid-in Capital in Excess of Par.