#15: BONDS ISSUED AT PREMIUM Garrison Comp ny i sued S2 000 000, 7%, 20-year rec

Question

#15: BONDS ISSUED AT PREMIUM Garrison Comp ny i sued S2 000 000, 7%, 20-year recta, 15. HW10 : Hwi 105. Interest is payable annually on January 1. Garrison uses straight-line amortization for bond premium. bonds on January 1 8 POINTS , 2017, at Instructions Prepare the journal entries to record the following events (a) The issuance of the bonds (issuance price S unamortized premium The accrual of interest and the premium amortization on December 31, 2017. The payment of interest on January 1, 2018. The redemption of the bonds at maturity, assuming interest for the been paid and recorded. (b) (c) (d) last interest period has 16. HVw10#16: APPS Company reported the following on its inconme statement: 5 POINTS Income before income taxes Income tax expense Net income An analysis of the income statement revealed that interest expense was $70,000. APPS Company's times interest earned was $420,000 $300,000 times. Round to 3 decimals.

Explanation / Answer

15 Date Account Titles and Explanation Debit Credit (a) 2017 January 1 Cash ($2,000,000 x 105%) $        2,100,000 Bonds Payable $        2,000,000 Premium on Bonds Payable $            100,000 (b) December 31 Bond Interest Expense $            135,000 Premium on Bonds Payable ($100,000 x 1/20) $                5,000 Bond Interest Payable ($2,000,000 x 7%) $            140,000 2018 (c ) January 1 Bond Interest Payable $            140,000 Cash $            140,000 (d) 2032 January 1 Bonds Payable $        2,000,000 Cash $        2,000,000 16 Income before income taxes $420,000 Add: Interest Expense 70000 Income before interest and tax $490,000 divide by interest expense ÷ 70000 Times interest earned 7 Ans

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