(Round all computations to the nearest dollar.) (a) Prepare the journal entry to
ID: 2349716 • Letter: #
Question
(Round all computations to the nearest dollar.)(a) Prepare the journal entry to record the issuance of the bonds on July 1, 2011.
(b) Prepare an amortization table through December 31, 2012 (3 interest periods) for this bond
issue.
(c) Prepare the journal entry to record the accrual of interest and the amortization of the premium
on December 31, 2011.
(d) Prepare the journal entry to record the payment of interest and the amortization of the
premium on July 1, 2012, assuming no accrual of interest on June 30.
(e) Prepare the journal entry to record the accrual of interest and the amortization of the
premium on December 31, 2012.
Explanation / Answer
(a) July 1, 2011 Cash $100,000 Bonds payable $100,000 (Being bond issued for $2,000,000*10%/2 = 100,000) (b) Date------Int. Pmnt--Int. Exp.-Prem Adj--Book Value 7/1/2011 - - - - - - - - - - - - - - - - - - - - $2,271,813 1/1/2012 $100,000 $90,873 $(9,127) $2,262,686 7/1/2012 $100,000 $90,507 $(9,493) $2,253,193 1/1/2013 $100,000 $90,128 $(9,872) $2,243,321 (c) Dec 31, 2012 Interest expense $28,492 Bond Premium $5,000 Cash $33,492 (Interest expense upto Dec 31, 2012. And Bond premium = 100,000/20) (d) Dec 31, 2012 Interest expense $18,620 Bond Premium $5,000 Cash $23,620 (e) Dec 31, 2012 Interest expense $28,492 Bond Premium $5,000 Cash $33,492 July 1, 2011 Cash $100,000 Bonds payable $100,000Related Questions
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