Exercise 10-20 Adcock Company issued $600,000, 9%, 20-year bonds on January 1, 2
ID: 2413124 • Letter: E
Question
Exercise 10-20
Adcock Company issued $600,000, 9%, 20-year bonds on January 1, 2019, at 103. Interest is payable annually on January 1. Adcock uses straight-line amortization for bond premium or discount.
Date
Account Titles and Explanation
Debit
Credit
Jan. 1
Date
Account Titles and Explanation
Debit
Credit
Dec. 31
Date
Account Titles and Explanation
Debit
Credit
Jan. 1
Date
Account Titles and Explanation
Debit
Credit
Jan. 1, 2039
Exercise 10-20
Adcock Company issued $600,000, 9%, 20-year bonds on January 1, 2019, at 103. Interest is payable annually on January 1. Adcock uses straight-line amortization for bond premium or discount.
Explanation / Answer
Journal entry :
(To record bond redemption)
Date accounts & explanation debit credit Jan 1 Cash (600000*1.03) 618000 Bonds payable 600000 Premium on bonds payable 18000 (To record bond issue) Dec 31 Interest expense 53100 Premium on bonds payable (18000/20) 900 Interest payable (600000*9%) 54000 (To record accured interest) Jan 1 Interest payable 54000 Cash 54000 (To record interest paid) Jan 1,2039 Bonds payable 600000 Cash 600000(To record bond redemption)
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