Exercise 17-3 (Part Level Submission) Warning Don\'t show me this message again
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Exercise 17-3 (Part Level Submission)
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(a)
Date
Account Titles and Explanation
Debit
Credit
Exercise 17-3 (Part Level Submission)
On January 1, 2017, Whispering Company purchased 9% bonds having a maturity value of $370,000, for $400,342.96. The bonds provide the bondholders with a 7% yield. They are dated January 1, 2017, and mature January 1, 2022, with interest receivable January 1 of each year. Whispering Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified in the held-to-maturity category.Warning
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(a)
Your answer is correct. Prepare the journal entry at the date of the bond purchase. (Enter answers to 2 decimal places, e.g. 2,525.25. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)Date
Account Titles and Explanation
Debit
Credit
Jan. 1, 2017Debt Investments
400,342.96
Cash
400,342.96
(b) Prepare a bond amortization schedule. (Round answers to 2 decimal places, e.g. 2,525.25.) Schedule of Interest Revenue and Bond Premium Amortization Effective-Interest Method Cash Received Interest Revenue Premium Carrying Amount Amortized Date of Bonds 33,300| 33,300 33,300 33,300 33,300 33,300 1/1/20 1/1/21 1/1/22Explanation / Answer
Date Cash received Interest revenue Premium amortized Carrying amount 1/1/2017 400342.96 1/1/2018 33300 28024.01 5275.99 395066.97 1/1/2019 33300 27654.69 5645.31 389421.66 1/1/2020 33300 27259.52 6040.48 383381.18 1/1/2021 33300 26836.68 6463.32 376917.86 1/1/2022 33300 26382.14 6917.86 370000
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