gnment CALCULATOR FULL SCREEN PRINTER VERSION BACK NEXTI Brief Exercise 14-3 The
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Question
gnment CALCULATOR FULL SCREEN PRINTER VERSION BACK NEXTI Brief Exercise 14-3 The Stellar Company issued $220,000 of 8% bonds on January 1, 2017. The bonds January 1. The bonds were issued at 99 are due January 1, 2022, with interest payable each July 1 and Prepare the jounal entries for (a) January 1, (b) July 1, and (c) December 31. Assume The Stellar Company records straight-line amortization semiannually. (If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. Round intermediate calculations to 6 declmal 1.251247 and final answer to O decimal places, e.g. 38,548.) Date Account Titles and Explanation Debit Credit (aI January 1, 2017 Version 4.24. y Policy I 2000-2018 20 hn w le.ASona inc. All Rights Reserved. A Division ofantie. Ins. A 4Explanation / Answer
Journal Entries in the books of Stellar Company
No
Date
Accounts Tittles and explanations
Debit
Credit
(a)
January 1, 2017
Cash A/c
$217,800
Discount on Bond Payable A/c
$2,200
To Bond Payable
$220,000
(b)
July 1, 2017
Interest Expenses A/c
$9,020
To Discount on Bond Payable A/c
$220
To Cash A/c
$8,800
(c)
December31,2017
Interest Expenses A/c
$9,020
To Discount on Bond Payable A/c
$220
To Cash A/c
$8,800
Bond Face Value = $220,000
Bond Issue Price = $200,000 x 0.99 = $217,800
Discount on issue of Bond = $220,000 – 217,800 = $2,200
Amortization on Discount on issue of Bond in each semi annual period
= $2,200 / 10
= $220
Cash (Semi annual Interest ob bond) = $220,000 x 4% = $8,800
No
Date
Accounts Tittles and explanations
Debit
Credit
(a)
January 1, 2017
Cash A/c
$217,800
Discount on Bond Payable A/c
$2,200
To Bond Payable
$220,000
(b)
July 1, 2017
Interest Expenses A/c
$9,020
To Discount on Bond Payable A/c
$220
To Cash A/c
$8,800
(c)
December31,2017
Interest Expenses A/c
$9,020
To Discount on Bond Payable A/c
$220
To Cash A/c
$8,800
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