Exercise 10-20 Adcock Company issued $220,000, 6%, 20-year bonds on January 1, 2
ID: 2533917 • Letter: E
Question
Exercise 10-20
Adcock Company issued $220,000, 6%, 20-year bonds on January 1, 2015, at 105. Interest is payable semiannually on July 1 and January 1. Adcock uses straight-line amortization for bond premium or discount.
Date
Account Titles and Explanation
Debit
Credit
Jan. 1, 2015
SHOW LIST OF ACCOUNTS
Date
Account Titles and Explanation
Debit
Credit
July 1, 2015
SHOW LIST OF ACCOUNTS
Date
Account Titles and Explanation
Debit
Credit
Dec. 31, 2015
SHOW LIST OF ACCOUNTS
Date
Account Titles and Explanation
Debit
Credit
Jan. 1, 2035
Exercise 10-20
Adcock Company issued $220,000, 6%, 20-year bonds on January 1, 2015, at 105. Interest is payable semiannually on July 1 and January 1. Adcock uses straight-line amortization for bond premium or discount.
Prepare the journal entry to record the issuance of the bonds. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)Date
Account Titles and Explanation
Debit
Credit
Jan. 1, 2015
SHOW LIST OF ACCOUNTS
Prepare the journal entry to record the payment of interest and the premium amortization on July 1, 2015, assuming that interest was not accrued on June 30. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)Date
Account Titles and Explanation
Debit
Credit
July 1, 2015
SHOW LIST OF ACCOUNTS
Prepare the journal entry to record the accrual of interest and the premium amortization on December 31, 2015. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)Date
Account Titles and Explanation
Debit
Credit
Dec. 31, 2015
SHOW LIST OF ACCOUNTS
Prepare the journal entry to record the redemption of the bonds at maturity, assuming interest for the last interest period has been paid and recorded. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)Date
Account Titles and Explanation
Debit
Credit
Jan. 1, 2035
Explanation / Answer
Straight Line Method: 1) Date Account Name Debit($) Credit($) 1.1.2015 Cash 231000 Bonds Payable 220000 Premium on Bonds Payable 11000 2) 1.7.2015 Interest Expense 6325 Premium on Bonds Payable 275 Cash 6600 3) 31.12.2015 Interest Expense 6325 Premium on Bonds Payable 275 Cash 6600 4) 1.1.2035 Bonds Payable 220000 Cash 220000
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