Celine Dion Company issued $840,000 of 10%, 20-year bonds on January 1, 2014, at

Question

Celine Dion Company issued $840,000 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.)

No.

Account Titles and Explanation

Debit

Credit

(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.

Explanation / Answer

1/1/2014 Bank A/ dr        893,520.00 To 9% Bonds        876,000.00 To Premium on Bonds Payable          17,520.00 (Being Bonds Issued 876000*102%) 1/7/2014 Interest on 9% Bonds Account Dr          43,650.00 To Bank          43,650.00 (Being interst on Bonds paid 893520000*9.7705%*1/2) 1/7/2014 Premium on Bonds Payable                438.00 To Profit and Loss Account                438.00 (Being Premium Amortised) 31/12/2014 Interest on 9% Bonds Account Dr          43,650.00 To Bank          43,650.00 (Being interst on Bonds paid 893520000*9.7705%*1/2) 31/12/2014 Profit and loss Account Dr          87,300.00 To Interest on 9% Bonds Account          87,300.00 (Being Interst amortised to profit an dloss Account) 31/12/2014 Premium on Bonds Payable                438.00 To Profit and Loss Account                438.00 (Being Premium Amortised)

Related Questions

Navigate

• Browse (All)
• Browse C
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.