Presented below are selected transactions on the books of Simonson Corporation.
ID: 2468271 • Letter: P
Question
Presented below are selected transactions on the books of Simonson Corporation.
May 1, 2014 : Bonds payable with a par value of $963,600, which are dated january 1, 2014 are sold at 106 plus accrued interest. They are coupon bonds, bear interest at 10% (payable annually at January 1), and mature january 1, 2014. (Use interest expense account for accrued interest.)
Dec. 31 : Adjusting entries are made to record the accrued interest on the bonds, and the amortization of the proper amount of premium. (Use straight-line amortization.)
Jan. 1, 2015: Interst on the bonds is paid.
April 1 : Bonds with par value of $369,300 are called at 102 plus accrued interest, and redeemed. (Bond premium is to be amortized only at the end of each year.)
Dec. 31 : Adjusting entries are made to record the accrued interest on the bonds, and the proper amount of premium amortized.
Prepare journal entries for the transactions above. (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.)
Interest Payable
(to record the interest)
Interst Expense
(to amortize the premium)
Interst Payable
(to record the interest(
Interest Expense
(to amortize the premium
Date Acct. Title Debit Credit May 1, 2014 Cash 1,053,536 Bonds Payable ? Interst Expense 32,120 Premium on Bonds Payable ? ? Dec. 31, 2014 Interest Expense 96,360Interest Payable
(to record the interest)
96,360 Premium on Bonds Payable ?Interst Expense
(to amortize the premium)
? Jan. 1, 2015 Interst Payable 96,360 Cash 96,360 Apr. 1, 2015 Bonds Payable ? Premium on Bonds Payable ? ? Interest Expense ? ? Cash ? ? Gain on redemption of Bonds ? ? Dec. 31, 2015 Interst Expense 59,430Interst Payable
(to record the interest(
59,430 ? ?Interest Expense
(to amortize the premium
?Explanation / Answer
Date Account Title Debit Credit May 1, 2014 Cash 1,053,536 Bonds payable 9,63,600 Interest expense 32,120 Premium on bonds payable 57,816 Jan 1, 2015 Interest payable 96,360 Cash 96,360 April 1, 2015 Bonds payable 369,300 Premium on redemtion of bonds 7,386 Interest expense 9233 Cash
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