Assignment Choice #2: Straight-Line: Bond Computations, Amortization, and Bond Retirement
Register for QuickBooks Online Simple Start 2015: https://qbo.intuit.com For PC and Mac.
You may have to start with a free trial with a credit card and cancel directly after this module submission.
Once QuickBooks™ is loaded, you may have to reboot your computer.
Setting up company:
Go to Home page, select the widget to the direct top right of the word ‘help’ and select on the left side ‘settings’, then company setting.
For each edit, hit the pen picture on the right hand side of each section. Enter the company name, Shea Corporation. Enter information as indicated below:
Company address: c/o CSU- Global;***** Suite 200
City: Greenwood Village, CO 80111
ZIP code: 80111
Phone Number: ***-***-****
Choose Accrual Basis
Go to advanced setting and be sure everything is turned on except the accounting setting for the closing of the books
X out of this screen, which returns you to the home page
- In the home page, go to the top right hand corner, to the right of the name of the company, click the gear symbol, which is the main link for everything you need for changes.
- For doing the journal entries below: Go to top panel, in the middle of the top of the screen, where there is a plus sign (+) and select journal entries found in the other section. In the
- It is up to you to create the correct accounts, with the proper journal entries
Important to remember
- Do not forget to click on ‘save and new’ after you input and file.
- Backup your company information many times as you work. To do this, click the button at the bottom of each screen called: save and new
- Always check to be sure your input dates are correct. Transaction input date are on the top left side above the journal entry
- Always best to record terms within the journal entry in the extra line provided to the right of A/R or A/P
- Prepare journal entries. Be sure all dates agree with the problem and are not today’s date
On January 1, 2013, Shea Company issues 700 bonds, 15 years (1000 par value bonds at 97) with a coupon rate of 6% and maturing in 2030. The straight line method is used to amortize any bond discount or premium on a semi-annual basis. Be sure to label the discount or premium as: discount on bonds within long-term liability or premium on bonds within long-term liability (the discount r premium in the system relates to the sale of inventory and does not apply here). Also label to cash inflow and outflows from the bonds including interest payments as: Cash, Bonds- within the bank and checking account. Do not forget the journals required every six months.
Two years later, on December 31, 2014 Shea retires 20% of these bonds by buying them on the open market at 104 (or $1040 a bond). All interest and amortization is accounted for by two separate journal entries for each and paid through December 31, 2016, the day before the purchase is to occur. Purchase these bonds with Cash, Bonds within the bank and checking account
- In QuickBooks™, provide the journal entry at January 1, 2015 for the issuance of the 700 bonds.
- In QuickBooks™, provide the entries for interest expense and amortization expense up to December 31, 2016.
- In QuickBooks™, provide the journal entry which retires 20% (140 bonds) of the bond in the public market.
- Go to Company widget, select settings and then chart of accounts. Select Cash, bonds and Bonds, Liability registers. Click on each and you will see the transactions you made in each register. Copy and paste (or export) each to word document being sure two columns of number show and submit to the assignment area.