Celine Dion Company issued $768,000 of 10%, 20-year bonds on January 1, 2014, at
ID: 2421159 • Letter: C
Question
Celine Dion Company issued $768,000 of 10%, 20-year bonds on January 1, 2014, at 102. Interest is payable semiannually on July 1 and January 1. Celine Dion Company uses the effective-interest method of amortization for bond premium or discount. Assume an effective yield of 9.7705%.
Prepare the journal entries to record the following. (Round answers to 0 decimal places, e.g. 38,548. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Question 1 Celine Dion Company issued $768,000 of 10%, 20-year bonds on January 1, 2014, at 102. Interest is payable semiannually on July 1 and January 1. Celine Dion Company uses the effective-interest method of amortization for bond premium or discount. Assume an effective yield of 9.7705%. Prepare the journal entries to record the following. (Round answers to 0 decimal places, e.g. 38,548. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) (a) The issuance of the bonds. (b) The payment of interest and related amortization on July 1, 2014. (c) The accrual of interest and the related amortization on December 31, 2014. No. Account Titles and Explanation Debit Credit 12/31/14Explanation / Answer
Journal Entries
1) On 01/01/2014
Cash 783360
To, Premium bonds payable 15360
To, Bonds payable 768000
2) On July 1 , 2014
Bond Interest expenses 38269
Premium bonds payable 131
To, Cash 38400
3) On December 1, 2014
Bond Interest expenses 38263
Premium bonds payable 137
To, Interest Payable 38400
Bond Amortization table, Interest rate=10% , Effective yield=9.7705% Date Payment Interest Expenses Bond Premium Carrying Value 01-01-2014 783360 01-07-2014 38400 38269.0944 130.9056 783229.0944 31-12-2014 38400 38262.69933 137.3006658 783091.7937Related Questions
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