Problem 10-10A January 1 2014, Lock Corporation issued $1,751,000 ace value, 6%

Question

Problem 10-10A January 1 2014, Lock Corporation issued $1,751,000 ace value, 6% 10-year bonds at $1,628 method to amortize bond premium or discount. The bonds pay annual interest January 1 17 This price resulted in an effective te estrate of 796 on the bonds o kuses the effective inter Prepare the journal entry to record the issuance of the bonds on January 1, 2014. (Round answers to O decimal places, e.g. 125. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Jan. 1 Cash Debit Credit 1,628,017 Discount on Bonds Payable 122983 Bonds Payable 1,751,000

Explanation / Answer

1-Jan Cash 1628017 Discount on Bonds payable 122983      Bonds payable 1751000 Annual interest periods Interest to be paid Interest expense to be recorded Discount amortization Unamortized discount Bond carrying value Issue date 122983 1628017 1 105060 113961 8901 114082 1636918 2 105060 114584 9524 104558 1646442 3 105060 115251 10191 94367 1656633 Dec-31-14 Interest expense 113961       Discount on Bonds payable 8901       Interest payable 105060 Jan-1-15 Interest payable 105060        Cash 105060 Dec-31-15 Interest expense 114584       Discount on Bonds payable 9524       Interest payable 105060

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