On January 1, 2015, Loop Raceway issued 600 bonds, each with a face value of $1,
ID: 2514296 • Letter: O
Question
On January 1, 2015, Loop Raceway issued 600 bonds, each with a face value of $1,000, a stated interest rate of 5% paid annually on December 31, and a maturity date of December 31, 2017. On the issue date, the market interest rate was 6 percent, so the total proceeds from the bond issue were $583,950. Loop uses the straight-line bond amortization method and adjusts for any rounding errors when recording interest in the final year Required Prepare a bond amortization schedule. Cash Discount EndedPaidAmortized Expense Payable on BondsCarrying 2 31/15 1231/16 23117 Complete the required journal entries to record the bond issue, interest payments on December 31, 2015 and 2016, bond retirement. Assume the bonds are retired on January 1, 2017, at a price of 98. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) Journal entry worksheet Record the issuance of 600 bonds at face value of $1,000 each for $583,950 January 01. 2015Explanation / Answer
Req 1: Period ended cash Paid Discount Interest Bonds Discount on Carrying Value Amortized Expense Payable Bonds payable 01.01.015 600000 16050 583950 31.12.2015 30000 5350 35350 600000 10700 589300 31.12.2016 30000 5350 35350 600000 5350 594650 31.12202 30000 5350 35350 600000 0 600000 Req 2: Jouornal Entry: Date Accounts title and explanations Debit $ Credit $ 01.01.2015 Cash Account Dr. 583950 Discount on bonds payable Dr. 16050 Bonds payable 600000 31.12.2015 Interest expense Dr. 35350 Cash account 30000 Discount on bonds payable 5350 31.12.2016 Interest expense Dr. 35350 Cash account 30000 Discount on bonds payable 5350 01.01.2017 Bonds payable 600,000 Discount on bonds payable 5350 Cash Account 588000 Gain on retirement of bonds 6650
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