Ex. 14-120-Entries for Bonds Payable. Prepare journal entries to record the foll

Question

Ex. 14-120-Entries for Bonds Payable. Prepare journal entries to record the following transactions related to long-term bonds of Quirk Co (a) On April 1, 2013, Quirk issued $800,000.9% bondsfor $860,589 including accrued interest. Interest is payable annually on January 1, and the bonds mature on January 1, 2023. (b) On July 1, 2015 Quirk retired $240,000 of the bonds at 102 plus accrued interest. Quirk uses straight-line amortization. Solution 14-120 (a) Cash.. 860,589 Bonds Payable.. Premium on Bonds Payable. .. 800,000 18,000 42,589 (B"Interest Expense ($800,000×9%×3/12) 10,145 655 (b) Interest Expense Premium on Bonds Payable ($42,589 x .3 x 6/117).... Cash ($240,000 x 9% x 6/12). 10,800 Bonds Payable.. Premium on Bonds Payable ($42,589 x.3 x 90/117). . 240,000 9,828 Cash Gain on Redemption of Bonds... 244,800 5,028

Explanation / Answer

Accounts title and explanation Debit Credit (a) Cash 860589 Bonds payable 800000 Interest expenses(800000 x 9% x 3/12) 18000 Premium on bonds payable 42589 (b) Interest expense 10145 Premium on bonds payable ($42589 x 3 x 6/117) 655 Cash ($240000 x 9% 6/12) 10800 Bonds Payable 240000 Premium on bonds payable (43589 x 3 x 90/117) 9828 Cash 244800 Gain on redemption of bonds 5028

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