Edit View ? 0%10 Sun 5:27 AM a g eduger WeyPLUS WileyPLUS: l Help I Contaa Us I

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Edit View ? 0%10 Sun 5:27 AM a g eduger WeyPLUS WileyPLUS: l Help I Contaa Us I Log Out US Kieso, Intermediate Accounting, 16e INTERMEDIATE ACCOUNTING 1 & (310/311/312) Gradebook ORION Downlondable aTextbook ssignment CALCULATOR PILL S REEN PRINTER VERSION : BACK Exercise 14-9 (Part Level Submission) On June 30, 2017, wildhorse Compamy issued $5,500,000 face value of 13%, 20-year bonds at $5,913,762, a yield of 12%. Wildhorse uses the effective interest method to amortize bond premium or discount. The bonds pey semiannual Interest on June 30 and December 31. Prepare the journal entries to record the following transactions. (Round answer to 0 decimal places, e.g. 38,548. 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.) (1) The issuance of the bonds on June 30, 2017 (2) The payment of interest and the amortization of the premium on December 31, 2017 (3) The payment of interest and the amortization of the premium on June 30, 2018 (4) The payment of interest and the amortization of the premium on December 31, 2018. Date Account Titles and Explanation (1) June 30, 2017 (2) December 31, 2017 MacBook Pro 4) 8 0

Explanation / Answer

Solution:

Journal Entries S. No. Date Particulars Debit Credit 1 30-Jun-17 Cash A/c Dr $59,13,762       To bonds payable $55,00,000       To Preimum on bonds $4,13,762 (Being bond issued at premium) 2 31-Dec-17 Interest Expense Dr ($5913762 *12%*6/12) $3,54,826 Premium on bond Dr $2,674       To Cash ($5500000*13%*6/12) $3,57,500 (Being first semiannual interest payment made and premium amortized) 3 30-Jun-18 Interest Expense Dr ($5913762-2674)*12%*6/12) $3,54,665 Premium on bond Dr $2,835       To Cash $3,57,500 (Being 2nd semiannual interest payment made and premium amortized) 4 31-Dec-18 Interest Expense Dr ($5913762-2674-2835)*12%*6/12) $3,54,495 Premium on bond Dr $3,005       To Cash $3,57,500 (Being 3rd semiannual interest payment made and premium amortized)

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