er transportese spenon blues S540000 of 7% tordi, ae n 5 years. wth moest payabl
ID: 2515720 • Letter: E
Question
er transportese spenon blues S540000 of 7% tordi, ae n 5 years. wth moest payable seranualy on ae30and Deente, each year Required Ieformatien 5.00 points Required: .r~ marketinterest rate is 7% the bor as we isse at S560000 Record re bond issue on Janary 1,2018. and tesrst two senur a rte est payment on Ar e 30. 2018. ad De erber 31, 2018 r no entrys required for a transaction/event, select "No journal entry sequired" in the first account field.) Journal entry worksheet Record the bond isse Genara anury O 2018Explanation / Answer
Req 1: Issue price: $560,000 Journal entries: Date Accounts title and explanations Debit $ Credit $ Jan 12018 Cash Account Dr. 560,000 Bonds payable 560,000 June 30 2018 Interest expense Dr. (560,000*3.5%) 19,600 Cash Account 19600 Dec 31 2018 Interest expense Dr. (560,000*3.5%) 19600 Cash Account 19600 Req 2: Issue Price: 511582 Par value 560,000 Total Discount 48,418 Amortization as follows: Date Cash paid Interest Increase in Carrying Expense Carrying Value Value 01.01.18 511,582 30.06.18 19600 20463 863 512,445 31.12.18 19600 20498 898 513,343 Journal entries: Date Accounts title and explanations Debit $ Credit $ Jan 12018 Cash Account Dr. 511,582 Discount on Bonds payble Dr. 48,418 Bonds payable 560,000 June 30 2018 Interest expense Dr. 20,463 Discount on bonds payable 863 Cash Account 19600 Dec 31 2018 Interest expense Dr. 20498 Discount on bonds payable 898 Cash Account 19,600 Req 3: Issue price: Date Cash paid Interest Decrease in Carrying Expense Carrying Value Value 01.01.18 614,881 30.06.2018 19600 18446 1154 613,727 31.12.18 19600 18412 1188 612,539 Journal entries: Date Accounts title and explanations Debit $ Credit $ Jan 12018 Cash Account Dr. 614,881 Premium on Bonds payable 54,881 Bonds payable 560,000 June 30 2018 Interest expense Dr. 18,446 Premium on bonds payable 1,154 Cash Account 19600 Dec 31 2018 Interest expense Dr. 18,412 Premium on bonds payable 1,188 Cash Account 19600
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