Tugas Pertemuan

1. Global Airlines Ltd. issued NT$900,000 of 8%, 10-year bonds on January 1, 2017, at face value.
Interest is payable annually on January 1.

Instructions

Prepare the journal entries to record the following events. (a) The issuance of the bonds. (b) The
accrual of interest on December 31. (c) The payment of interest on January 1, 2018. (d) The
redemption of bonds at maturity, assuming interest for the last interest period has been paid and
recorded.

2. Trawler SA borrowed €500,000 on December 31, 2017, by issuing a €500,000, 7% mortgage note
payable. The terms call for annual installment payments of €80,000 on December 31.

Instructions

(a) Prepare the journal entries to record the mortgage loan and the first two installment payments.
(b) Indicate the amount of mortgage note payable to be reported as a current liability and as a non-
current liability at December 31, 2018.

3. Lee Software Ltd. has successfully developed a new spreadsheet program. To produce and market
the program, the company needs additional fi nancing. On January 1, 2017, Lee borrowed money as
follows. 1. Lee issued NT$1 million, 10%, 10-year bonds at face value. Interest is payable annually on
January 1. 2. Lee also issued a NT$400,000, 6%, 15-year mortgage payable. The terms provide for
annual installment payments of NT$41,185 on December 31.

Instructions

1. For the 10-year, 10% bonds: (a) Journalize the issuance of the bonds on January 1, 2017. (b)
Prepare the journal entries for interest expense in 2017. (c) Prepare the entry for the redemption of
the bonds at 101 on January 1, 2020, after paying the interest due on this date.

2. For the mortgage payable: (a) Prepare the entry for the issuance of the note on January 1, 2017.
(b) Prepare a payment schedule for the fi rst four installment payments. (c) Indicate the current and
non-current amounts for the mortgage payable at December 31, 2017.