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Team B Muddiest Points

Amanda Beaver, Mollie Brown, Crystal Senter, Gregory Stevenson

May 20, 2013

ACC/291

Michael Barsch

Team B Muddiest Points

The third week of Accounting Principles II had confusing topics for some team members. Discussion between team members this week contained the topics of calculating bonds, treasury stock and how to journalize the stock, cumulative dividends, and debt investments. Each team member explained his or her confusion about the topics and the other team members explained the topic. Through this discussion the team members understood the topics of confusion.

Calculating Bonds

Amanda’s muddiest point was how to calculate and journalize bonds. Her team members explained that following examples is helpful in understanding them. When bonds are purchased, you would journalize them on the day of the purchase and credit cash for the amount purchased including any fees. You would then debit investments for this same amount since the bond is an investment. In accounting for debt investments, companies make entries to record the acquisition, the interest revenue, and the sale. If there are brokerage fees, you also add that to the price of the bonds for a total and list it in the debit and credits. Once those journal entries are recorded, the interest needs to be recorded. If interest was paid twice in the year, take the total amount of the bonds and multiply that by the percent of the bonds at the time of purchase and multiply that by 6 because that is the total month of interest to be recorded and divide by 12 because that is the total amount of months in a year. Cash would be debited the amount of the interest and interest revenue would be credited.

Treasury Stock

Mollie’s muddiest point was understanding treasure stock, she had some trouble with question five on the homework because of treasure stock. Amanda helped explain that treasury stock is when a company repurchases its own stock that had been...